The theory behind the legislative bonding process is pretty straightforward: purchase bonds now, and pay them off later, when dollars are cheaper due to inflation.
Problems arise when you’re stuck in a cycle of regressive tax cuts pushed by a governor who clearly doesn’t care about long-term outlooks.
Don’t get me wrong, the current bonding bill is likely to have an immediate impact, much as the federal stimulus package has, to put Minnesotans to work on important public works projects around the state.
But without sound fiscal policy on the other side of the ledger — during odd-year budget negotiations, involving tax, education, and health care policy — we’re putting more debt on the books without a real plan to pay it off in a cost-effective manner later. Interest rates are low right now, true, but we’re taking risks with our state’s bond rating with the bevy of one-time fixes the governor has unilaterally (and unconstitutionally) put in place.
I applaud the State Senate’s quick movement on passing the current bonding bill — it provides immediate funding for some very big projects, and State Senators didn’t get too bogged down in nitty-gritty details. I look forward to the 2011 session, where the Senate, House, and a DFL Governor can put sound policy back on the budgetary side of the books.
But of course, this year’s bill faces a possible veto from Republican Gov. Pawlenty, who complained about two things:
1.) The bill is about 45 percent larger than he wanted it to be (this criticism makes no sense. Would he prefer the state pay for its obligations now through increased tax collections, or later through bonding? It’s one or the other, Mr. Governor, you can’t have both. Or neither.)
2.) The bill doesn’t include funding for expansion of a state-run sex offender treatment facility. This criticism also makes zero sense — the same day Pawlenty makes this criticism, he comes out with a proposal to increase jail time for those same sex offenders. It’s likely to be pretty popular; perhaps rightfully so. But his reasoning is interesting: jail time is cheaper for the state than the non-criminal incarceration system at the treatment facility.
So…you want to increase mandatory jail time because it benefits the state, but you don’t want the bonding bill because it doesn’t help expand the program whose costs you’re hoping to save through that jail time hike.
It would seem the bonding bill presents a case of Pawlenty vs. Pawlenty, and as the post’s title suggests, it’s about priorities. Which will win — policy or politics?