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Early Public Works Bill Could Strain State Cash Flow

Posted by: Pat Doyle under Funding, Minnesota legislature, State budgets Updated: February 9, 2010 - 11:49 AM

 

The push to pass a public works bill much earlier than usual could increase pressure on the state's cash flow problems, a state budget official said Tuesday.
Meanwhile, Gov. Tim Pawlenty renewed his threat to veto the entire bonding legislation proposed by DFLers, citing "misplaced priorities."
Public works projects are financed by bond sales that typically occur after the legislative session. DFLers want to pass a bonding bill early in the session to spark quicker job creation, but an early start could require borrowing from the general fund to finance projects until the proceeds from summer bond sales become available. 
Early passage of a large bonding bill "could, depending on a number of factors, have a debilitating effect on the state's cash flow," said Katherine Kardell, assistant commissioner for treasury and debt management at Minnesota Management and Budget. She spoke before the Finance and Ways and Means committees of the Minnesota House.
 
However, Management and Budget Commissioner Tom Hanson has said that about 46 percent of the governor's $685 million bonding proposal involve maintenance and preservation projects that could be funded by revenue streams from previous bonding bills, and therefore suitable for fast-tracking.
 
A large portion of the $1 billion bonding bills proposed by the House and Senate would also appear to qualify for using the earlier bonding revenue stream to get started early.
 
Moreover, Rep. Alice Hausman, DFL-St. Paul, head of a House bonding panel, questioned whether selling bonds during the session would be a problem, citing an earlier occasion when it was done.
 
“The Pawlenty administration’s cash-flow crisis is not a reason to delay this bill. It is a problem to be solved,” Hausman said in a statement Tuesday.
 
Kardell's comments came as Gov. Tim Pawlenty expressed concern Tuesday about the overall size and "misplaced priorities" in the legislative bonding bills expected to be approved during the next couple of weeks. He repeated a threat he made last month to veto the bonding legislation in its entirely, rather than line-item veto specific projects.
 
He was particularly annoyed that the bills did not include money to expand the sex offender treatment program at Moose Lake. Pawlenty has proposed $89 million to double the number of beds there.
 
Noting the absence of money for Moose Lake, Pawlenty added, "Yet they have money to fund an art...facility in Chatfield. They have money to do convention centers all over the state."
 
The Senate was expected to take up its version of the bonding bill today.
 
 
 
 
 

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