Not all government borrowing is created equal.
Plenty of Minnesotans are panning the budget agreement reached last week by Gov. Mark Dayton and GOP legislative leaders -- and they should. Its borrowing and payment delays are almost the definition of shoddy fiscal management. But one aspect of the deal deserves cheers. An economy-stimulating $500 million bonding bill, stalled all year, appears headed for passage.
That bill will be as welcome as a cool breeze this week for thousands of unemployed construction workers. Minnesota lost 6,700 construction jobs in the 12 months that ended in May. The sector's unemployment has matched or exceeded that of the nation since the recession began, even as the state's overall jobless rate has been smaller than the nation's.
By the calculus of the state AFL-CIO, a $500 million bonding bill would generate 15,000 jobs directly and indirectly in the next several years. But it comes too late in the season to spur much hiring this year. For those lucky enough to land jobs on projects that can begin immediately or are not weather-sensitive, a bonding bill will mean the return of a paycheck. For others, it will secure hope that 2012 will be a better year.
Important as those jobs are, they aren't the best reason to welcome a major capital investment bill this year. The bill's real significance lies in its long-term economic lift. Though final numbers were still being negotiated Monday, it was all but certain that the bill would contain these features:
•A new physics and nanotechnology building at the University of Minnesota.
•An integrated science and engineering building long sought for St. Cloud State University, and vetoed in 2010 by then-Gov. Tim Pawlenty. The U and St. Cloud projects would advance Minnesota's chance to be home to knowledge-based industries and the high-wage jobs they spawn for decades to come.
•Wastewater treatment facilities for Greater Minnesota communities in which business investment has been constrained by the inadequacy of outdated treatment plants.
•$55 million for flood mitigation, the largest state expenditure for that purpose in many years.
Those projects add up to a solid package. But the bonding bill won't be as strong as it should be unless it also includes these:
•Long-denied civic center upgrades for Rochester, Mankato and St. Cloud. These much-in-demand meeting facilities are truly statewide assets. They bring potential private-sector investors to Minnesota and allow homegrown businesses to raise their profile and expand their reach.
•The next down payment on the development of mass transit corridors in the Twin Cities. Dayton's original bonding proposal this year proposed a skimpy $12.5 million for Twin Cities transit upgrades. That's not sufficient for a metro area whose transit service is woefully behind its competitive peers.
Bonding was a partisan fighting word at the Capitol through most of the last decade. As recently as May, a flood-focused $47 million bonding bill foundered five votes short of passage on the House floor. Given that history, it was good to see the $500 million package coming together with relative ease Monday. That's in part because the constitution's supermajority requirement for bonding (see box above) compels a bipartisanship at this juncture that's been sorely lacking in other aspects of lawmaking this year.
It's also because the most unsavory portion of the larger budget-balancing deal -- using bonding to pull $700 million in future tobacco lawsuit proceeds into the 2012-13 general fund -- will be included in another bill. "If tobacco bonding were in the bonding bill, it would not pass," said Rep. Alice Hausman, the DFL minority's ranking capital investments member.
Hausman was making a distinction that's often lost on casual observers, and deserves noting: Government borrowing is not all bad. Bonding is an appropriate and desirable practice when it allows for investment in the infrastructure and amenities that will pay economic dividends in the long run. But it's a travesty when it's used for short-term consumption and leaves the future bereft. Lawmakers who cheer the first kind of borrowing and condemn the second are not being inconsistent. They're being wise.