Editorial: Bonding sets table for state prosperity

  • Updated: January 17, 2012 - 8:31 PM

Dayton should emphasize investment, not short-term jobs.

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Gov. Mark Dayton

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Gov. Mark Dayton has the size about right in the building projects proposal he'll send to the 2012 Legislature, which convenes next week.

Adding $750 million to the state's general-obligation indebtedness is both affordable and, for the lion's share of the projects on Dayton's list, justifiable. It also leverages other investments.

But the argument Dayton made Tuesday as he unveiled his wish list was backwards.

"This bonding proposal is about putting thousands of unemployed Minnesotans back to work," the DFL governor said at the top of his media briefing.

Only after touting the short-term gain for the construction industry that comes from state building projects did Dayton add: "The bill is also about investing in the future of our state."

Leaders of the GOP legislative majorities were quick to pounce on Dayton's misplaced emphasis. That was to be expected, Dayton countered. Any DFL-backed "jobs bill" that involves spending taxpayer money is bound to raise Republican hackles.

But the Republicans make a good point: Short-term construction job gains -- even the 21,700 jobs Dayton says his proposal would create -- aren't sufficient reason for the state to shoulder 30 years of debt service.

Neither should construction job numbers guide decisions about which building projects warrant approval.

Rather, those decisions should reflect lawmakers' judgments about how best to set the table for Minnesota's prosperity for the next 30 years and beyond. That's the lens through with legislators should judge Dayton's recommendations as they craft the second of two bonding bills for this biennium.

(Years with even numbers are traditionally when bond sales for capital improvements are authorized. But Dayton wrested a $500 million bonding bill from GOP legislators last July as part of the shutdown-ending budget deal, so this year's bill will be Round Two.)

Fortunately, Dayton's bonding package is loaded with projects with long-term value. For example, $42 million is devoted to clean-water infrastructure projects requisite to industrial expansion.

Higher-education buildings, many of them sites for science and technology education, comprise 22 percent of Dayton's recommended total. Investing $25 million to repair local bridges draws down $50 million in federal funds while keeping goods moving to markets.

The biggest lever for federal and local funds is the $25 million Dayton asks the Legislature to authorize for the next leg of the Twin Cities' light-rail network, running southwest from downtown Minneapolis.

That's a sufficient match to net $225 million in local and federal funds, a major down payment on a 15-mile rail link between Minneapolis and Eden Prairie.

Dayton's package is unabashedly pro-downtown -- not just downtown Minneapolis, but also St. Paul, Rochester, Mankato and St. Cloud. He's backing Nicollet Mall's renovation, a new baseball "regional sports facility" in St. Paul, and long-postponed business-backed civic center projects in Rochester, Mankato and St. Cloud.

History teaches the value of keeping downtowns strong, Dayton said.

"I learned from my father and my uncles, who were pretty successful job creators in Minnesota, the importance of focusing on downtown. ... If you lose the core of the downtown, you lose the vitality of the region."

(We hope the governor applies that thinking to the question of where a new Minnesota Vikings stadium belongs.)

Dayton's list includes a number of items that could be postponed to another bonding year, but that will need doing eventually to preserve state assets.

Now's the time to proceed with those projects -- not as much for the sake of the construction jobs Dayton touts as for the advantage today's economic conditions offer.

Low interest rates, low material costs and low labor bids allow projects to be built at a discount today. Delay will only add costs.

Last week, Dayton dressed up his biennial bonding request as a "jobs bill," and linked it with another short-term stimulus idea: a proposed one-time tax credit for employers who hire a new veteran or recently graduated or unemployed Minnesotan before June 30, 2013.

That credit -- $3,000 this year, $1,500 the first half of next year -- is probably too small to convince employers to shoulder the long-term commitment that hiring entails. Dayton would do better to focus on building long-term prosperity, and to cast his bonding bill in that light.

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  • GAINING LEVERAGE

    Gov. Mark Dayton's bonding proposal is structured to draw down matching federal, local and institutional funds, thereby nearly doubling the state's general-obligation investment:

    State general-obligation bonds: $750 million.

    State trunk highway funds, including bonds: $33.6 million.

    Housing finance bonds: $25 million.

    University and other institutional bonds: $93.6 million.

    Local government match: $285.3 million.

    Federal funds: $287.9 million.

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