Tag Archives: bonding bill

Hoppe, Leidiger, Ortman vote against bonding bill [UPDATED]

The Minnesota House has passed a $496 million bonding bill by a 99-32 vote this afternoon.  The bill will fund a number of key infrastructure projects and will create a number of jobs.  You can see the details of the bill here.

The fact of the matter is that this an excellent time to aggressively use our bonding capacity to upgrade our infrastructure.  Why?  Let’s quickly summarize the reasons:

  • Interest rates remain at or near historic lows.  In fact, even with Governor Dayton’s proposed $775 bonding package, our average interest expense over the life of the bonds would actually decline over the current payments.
  • Minnesota’s construction industry still has lots of excess capacity, despite the economic recovery finally just starting to take hold.  State and local governments have been consistently receiving bids lower than estimated for what projects have been completed in recent years.  We can get good bang for the buck in the current environment.
  • While  bonding is additional debt, it’s the very best kind of debt.  Bonding goes to projects, like new buildings and renovations at our colleges and universities, flood prevention and mitigation, roads and bridges, pollution control, and public safety.  These projects are the foundation for future prosperity, and will give benefits to the state for years and decades to come.

Carver County’s House delegation of Rep. Joe Hoppe and Ernie Leidiger voted no on the proposal.

The Minnesota House’s voting tracker for the bonding bill. (Screen capture via The Uptake)

This is a disappointing vote.  The bonding bill is shaping up to be one of the few highlights of this year’s session, and our representatives are on the wrong side of the issue.  Hoppe and Leidiger are going to have very little to show for themselves when voters ask about what they have accomplished since the 2010 election.

[UPDATE]:  The State Senate took up the bill this afternoon, passing it on a 45-22 vote.  State Senator Julianne Ortman of Chanhassen also voted against the bill.

[UPDATE #2]:  Reps. Hoppe and Leidiger voted against the final conference committee version of the bonding bill on Tuesday afternoon.  The bill passed 97-33.


$148 million short and 5 TBDs too many

Legislative Republicans released the framework of their proposal to use general obligation bonds to fund the state’s share of a new Minnesota Vikings stadium.

What’s notable about the proposal is how much is still left to be worked out at this point.  The full document released (sketchy as it is) is at the bottom of the post.

The proposal would cap the state’s contribution to the new stadium at $250 million.  This is meant to represent various infrastructure costs related to construction of a “roof-ready” stadium.  The city of Minneapolis would still kick in $150 million, using the same means as the previous stadium bill — utilizing existing city sales taxes that support the Convention Center.   The team, meanwhile, has reiterated that its contribution is capped at $427 million, the amount in the previous stadium bill.

That leaves a $148 million hole in the financing for the stadium that has to be filled — the cost of the roof.  That’s “has to be”, as in not optional, as the GOP was claiming yesterday.  Legal consensus is that a stadium without a roof would not be eligible for general obligation bonds.  Where’s the plan for that?  Well, it’s “TBD” — a phrase that appears five times in the single-page proposal.

Is there a path forward here to fill that gap?  Is the team going to kick in that much?  Not likely.  You may be able to squeeze a few more million out of the team and make them responsible for cost overruns, but they certainly aren’t going to be putting in the full amount.  Given the struggle of getting $150 million past the Minneapolis City Council, doubling that amount is a non-starter.  Bringing in Hennepin County as a second local partner isn’t likely, either.  So the most likely and most reasonable option would be to bond the full $398 million state contribution from the previous bill.

But upping the stadium contribution likely means you’re looking at a total bonding bill in excess of $800 million.  (Remember that bonding bills have to pass the legislature by a 60% supermajority.)  DFL votes will be required and they’re not going to sign on to a package that scrimps on needed local projects.  Is an $800 million-plus bonding bill more acceptable to Republican majorities than the previous stadium bill?  Given that many Republicans were perfectly fine with having no bonding bill at all this year, I would say that’s a dubious proposition.

Some of the harsh rhetoric may have faded, but until there’s a real plan to fill that gap and get rid of those TBDs, my post from yesterday still stands:  this proposal isn’t terribly serious and is doing more to kill chances of a stadium than advance it.

GOP Priorities set: handouts to wealthy people and corporations first, handouts to wealthy people and corporations second, jobs last [UPDATED]

State Senator Julianne Ortman has laid down the law:

Let me be very clear: Before we even consider a vote on a Stadium to benefit one business enterprise, we must secure permanent tax relief for ALL Minnesota businesses and property tax payers.

So what’s in Ortman’s tax bill that is so critical?

$299 million in tax cuts that largely go to the wealthy and corporations over the next three years ($104 million in 2012, and the rest over 2013-14).  The major provision is a phasing out of the state property tax on commercial and seasonal recreational property — a total of $173 million.

The 2012 cuts are paid in the Senate bill for by transferring $104 million out of reserves (on top of the $416 million that the Senate has already offered to transfer out of reserves to pay back part of the K-12 school shift).  There is no payback plan specified for the next budget cycle, so the $195 million will be added on to the existing $1.1 billion deficit.  The House version of these tax cuts finances them on the backs of renters, by slashing the tax credit low- to middle-class renters receive every year.

To summarize:  in order to give tax cuts to wealthy Minnesotans and corporations, legislative Republicans are either  going to drain reserves this year and add to the deficit in the next budgeting cycle OR raise taxes on working families.  That doesn’t sound like a good deal to me.

And only if they’re allowed to accomplish that — and if they get Governor Dayton to cave to their demands for an obscenely small bonding bill — will they move on and give the stadium bill a vote on the floor of both the House and Senate.  There’s one word that describes the performance of the Republican majorities this session:  failure.  It’s time for some new voices in St. Paul.

[UPDATE]:  The conference committee report detailing the final bill agreed to by members of the House and Senate Tax Committees was released last night.  The revised bill is less bad than the original bills that passed both houses.  The total tax cut over the next three years has been reduced to $189 million, $48 million in 2012 and the remaining $141 million in the next biennium.   Instead of phasing out property taxes paid by businesses and cabin owners, the bill instead freezes the amount of taxes paid from these classes of property (today, the total take is indexed to the rate of inflation).  The cost of this proposal is $82 million over the next three years.

However, the revised bill still does not include any long-term financing mechanism.  The $48 million cost for 2012 will be financed from budget reserves and a Revenue Department fund transfer, while the $141 million in the next biennium will be tacked onto the existing $1.1 billion deficit.

Comparing the bonding proposals

With the Minnesota Republican Senate caucus finally releasing their bonding proposal this morning, we now have all three proposals to review and evaluate.

Gov. Mark Dayton has proposed $775 million in general obligation bonds, Senate Republicans $462 million, and House Republicans $280 million.  House Republicans also proposed a $221 million package of bonds for renovating the State Capitol over the next four years.  $60 million of that package would be reflected in this biennium’s spending, so the total House Republican general obligation bonding spend would be $340 million.

Let’s take a look at some of the key ways these different proposals are different.

Higher Education:  The main difference between the three proposals is Gov. Dayton’s $54 million plan to turn the  Old Main Utility building on the University of Minnesota campus into a new heat and electrical plant.  Dayton and Senate Republicans also provide significant funding to many projects in the MnSCU system that the House bill does not include.

Environment:  Again, Dayton and Senate Republicans share many of the same priorities here, providing funding for flood mitigation and invasive species control that does not exist in the House bill.  Dayton also provides more funding to the Pollution Control Agency than both of the Republican caucuses.

Military Affairs and Veterans:  Dayton and Senate Republicans fund two projects (totaling $44 million) not included in the House bill — nursing care bed replacement at the VA Hospital and expansions at Camp Ripley.

Administration and State Capitol:  The House’s $60 million proposal for Capitol renovations is the key delta between the three proposals.

Human Services and Corrections:  Dayton proposes significant spending in these categories that does not exist in either of the Republican bills.  Specifically, Dayton calls for expansion and remodeling of the St. Peter Security Hospital as well as expansion of the St. Cloud prison and construction of a fence at the Shakopee Women’s Correctional Facility.

Employment and Economic Development:  Dayton proposes a much broader list of local projects in this category, including renovations to Nicollet Mall and construction of a new ballpark for the St. Paul Saints.  Regional civic centers are an item to watch.  Dayton proposed expansion of renovation of facilities in Mankato, Rochester, and St. Cloud, while the Senate only included funding for Rochester and St. Cloud, while the House had none of these in their proposal.

Met Council:  Dayton proposed $25 million in funding for the SW Corridor Light Rail project, which did not make the cut of either of the Republican bills.

Bonding bills need to pass the Legislature by a 60% majority, so there is much work to be done before the end of the session to ensure passage.

Dayton unveils $775 million bonding package

Governor Mark Dayton today revealed his proposed bonding bill for the upcoming legislative session.  Dayton proposes $903 million in state funding, $775 million of which is general obligation bonding. The total plan includes an additional $575 million in federal or local matching funds, which would result in an estimated 21,000 new jobs.  Some of the proposed projects include:

  • $111 million in projects around the Minnesota State Colleges and Universities system, including a combined $44 million for expansions and renovations at North Hennepin Community College, South Central College, Minneapolis Community and Technical College, and Ridgewater College
  • $107 million in projects in the University of Minnesota system, most notably renovation of the Old Main Utility Building to function as a multi-utility power plant for the Twin Cities campus
  • $76 million in transportation projects including repairs to 82 bridges, expansion of transit in Greater Minnesota, and expansion of four maintenance facilities
  • $60 million in expansions and remodeling at civic centers in Rochester, Mankato, and St. Cloud
  • $42 million in clean drinking water and wastewater infrastructure projects
  • $40 million in remodeling/expansion at the St. Peter Security Hospital
  • $33 million in expanded loans and financing for farmers
  • $29.9 million expansion to the St. Cloud prison
  • $28.5 million in maintenance and upgrades to the State Capitol and nearby office buildings
  • $27 million for a new St. Paul Saints ballpark
  • $26 million for a new state emergency operations center
  • $25 million for the Southwest Corridor Light Rail Transit line
  • $25 million for renovations of the Nicollet Mall in Minneapolis

Republicans are critical of the package, although as of yet they have not released their own bonding proposals.

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