Capital investment showdown

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A $1.09 billion capital investment bill is in the hands of the governor. Proponents call it a jobs bill to help an ailing economy. Critics call it veto-bait because it is about $100 million higher than the governor’s proposal, and does not adhere to a marker traditionally used to establish a bond spending limit.

HF380 lays out funding for higher education projects, transit corridors, parks and trails, new public safety facilities, hockey rinks and grants for local projects, such as wastewater treatment plants and flood mitigation measures.

Coming in at $925 million in general obligation bond spending, the bill reflects a compromise between the House and Senate. Sponsored by Rep. Alice Hausman (DFL-St. Paul) and Sen. Keith Langseth (DFL-Glyndon), the bill was passed 90-42 by the House April 2, and 57-10 by the Senate later that day.

“We are passing a jobs bill for jobs for tomorrow,” said House Majority Leader Tony Sertich (DFL-Chisholm), “The bill is balanced to every corner of Minnesota. Now we are looking for the governor to join us. This bill maintains our guidelines for fiscal responsibility.”

“We have to take the high road today,” countered House Minority Leader Marty Seifert (R-Marshall).

A miniature toy gorilla sits on the desk of House Minority Leader Marty Seifert, symbolizing a component of the capital investment bill that has been a target of his criticism. Included in the bill is $11 million that, in part, would improve the gorilla living quarters at the Como Zoo in St. Paul. (Photo by Tom Olmscheid)He said that Hausman gave assurances when the original bill was passed on the House floor that the final product would not be above the $825 million mark. He called the bill irresponsible because it comes in above the “state’s credit limit” and is full of “pork projects.” It is a reflection of the Senate, he said. “They rolled us again. … Stop the nonsense and send a message to the other body that we meant it when we said we would not break the debt limit.”

“This bill is fiscally irresponsible and has misguided priorities,” Pawlenty said after reviewing the April 1 conference committee report. “Their inability to say ‘no’ led to a seriously bloated laundry list. We’ll be carefully reviewing it and considering our options over the coming days.” The governor received the bill April 3, and has three days to act. He could veto the entire bill or line-item out provisions he does not support.

Calculating debt

Since about 1979, 3 percent of General Fund spending has been the target for general obligation bond spending. And the governor has said that a bill beyond that threshold would not make it past his veto pen.

Depending on how the numbers are calculated, there is dispute whether this bill exceeds that mark, an indicator questioned by House and Senate DFLers. Some advocate for one used by several states that is based off a percent of personal income. They also say that the sale of bonds can be staged in such a way that spending will not exceed 3 percent in any given year.

To assure the governor of legislative intent, a provision is included in the bill that affirms the use of Department of Finance guidelines in calculating the debt service limits.

What’s in, what’s out

Nearly half the conference committee agreement, $412 million, would be allocated to projects at the University of Minnesota and the Minnesota State Colleges and Universities system.

While the governor had asked for $40 million to acquire land for a new Lake Vermilion State Park, he comes up empty-handed, largely because negotiations with U.S. Steel continue for the northern Minnesota land with no agreed upon price, said Hausman.

The governor’s request for nearly $34 million to fund renovations to the Minneapolis Veterans Home is also absent. Hausman explained that there will most likely be a separate proposal this year to reevaluate how veterans needing long-term care are housed in the state. “Some think that we should be turning to local nursing homes, so they can remain closer to home.”

A proposal to fund biomedical science research facilities at the University of Minnesota would not receive direct funding from the state’s bonding capabilities. Instead, the bill calls for the university to use its own bonding authority to fund the project, with the state providing an appropriation for up to 25 years or not more than $219 million from the General Fund to pay the debt service.

Rep. Loren Solberg (DFL-Grand Rapids) said this is similar to the mechanism used to fund the new university stadium.

The bill lays out a complex transit system that, when complete, would connect the state’s regional centers, Hausman said. “For the first time, we are saying we are not doing a line-by -line, but a complete system.” Funding is also provided for study of a high-speed train from St. Paul to Chicago.

A proposal for $11 million to fund gorilla and polar bear exhibits at the Como Zoo is included in the bill. This once again raised the ire of House Republicans, citing it as an example of misplaced priorities.

“We have veterans who go to war and we don’t have money for the veterans home, but we have money for the gorillas,” Seifert said.

Also included in the bill is money for several hockey arenas and community and sports centers across the state, including $38 million for a new arena in the Duluth, a project that was in last year’s vetoed capital investment bill, and has the support of the governor.

Whatever the outcome of the bill, Hausman is committed to getting a bonding bill passed this year, unlike last year’s vetoed bill, which she sponsored. She said there are three other bill options waiting in the wings. “I won’t let a day go by without progress toward a bonding bill to put people to work,” she said.

Quick-start comes to quick-stall

The bill got off to a quick start when it was passed by the House and Senate on March 6, less than a month after the start of session, with the House, Senate and governor proposing about $965 million in general obligation bonding.

But things changed after the dismal February economic forecast was digested, forecasting a projected biennial deficit of nearly $1 billion. Using the 3 percent cap as a guide, the governor asked that the bill not exceed $825 million in general obligation bonds. While Hausman said she was open to a lower number, Langseth dug in his heels. “This is the time to have a large bonding bill — to get people back to work,” he said.

After several weeks of closed door negotiations, the Capital Investment Conference Committee met on April 1 and came to agreement. But coming in $100 million higher than the governor’s recommendation, and missing at least two of his key projects, opens speculation that the bill won’t sit long on his desk.

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