Minnesota Legislature's bonding opportunities

  • Article by: STAR TRIBUNE EDITORIAL
  • Updated: April 16, 2013 - 7:24 PM

State leaders, the ‘recession discount’ won’t last. Pass a bigger bill.

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Cousins Andrew and Charlotte Backhaus watched a western hognose snake during Zoo Day at the Capitol in March 2013.

Photo: Glen Stubbe, Star Tribune

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The Great Recession battered state government and its taxpayers in many ways. But it also offered one benefit — an unusually long spell of low costs for building projects.

Last year, despite a downgrade in the state’s credit rating, the 30-year general obligation bonds used for campus buildings, bridges, transit and many more public works fetched an historically low interest rate of 2.05 percent on Wall Street. Meanwhile, abundant labor and deflated material costs have depressed construction prices for at least five years.

But the “recession discount” is akin to the winter of 2013 — it’s lasted a long time, but it can’t go on forever. Too often, lawmakers in previous sessions have behaved as if they believed it would. For reasons that appeared more political than prudent, they opted for no bonding bill at all in 2007, bills shrunken by veto sprees in 2008-10, and midsize bills of $500 million apiece in 2011 and 2012.

With the housing market rebounding and job levels rapidly returning to prerecession levels in Minnesota, the state may have only one year of discount remaining. Many worthy projects have been in the bonding queue for years. That’s why we favor an inversion of the Legislature’s traditional two-year bonding cycle. The 2013 Legislature and Gov. Mark Dayton should enact a big bill this year, and a smaller version in 2014.

Though Dayton and the House DFL majority make no promises about 2014, they have proposed hefty bonding packages for this year. Dayton seeks authorization for general obligation bonds totaling $750 million; the House’s package weighs in at $800 million.

But the Senate’s DFL majority appears to prefer a small bill this year — again for reasons that appear more political than prudent. They recognize that like no other issue, bonding brings Republicans to the end-of-session bargaining table. General obligation bonds, which are backed by the taxing authority of the state, require approval by a 60-percent supermajority vote. Getting to 60 percent this year will require two GOP votes in the Senate and eight in the House.

Republicans are understandably coy about their intentions. But they should appreciate that both Dayton and House DFL bonding chair Alice Hausman included in their proposals a number of projects in districts with GOP representation. (See the adjacent box for Dayton’s list.) They also should see merit in early action on many of the projects on the two lists. These in particular should win approval this year:

• The State Capitol: Work started last year on what will be a $250 million renovation of Minnesota’s 108-year-old “people’s palace.” But only $44 million of the total tab has been authorized. Orderly, cost-effective progress toward completion of the project in 2016 requires approval of at least $109 million more this year. Some legislators are ready to OK the remaining $97 million this year as well. If that helps win GOP votes, it’s a good idea.

• Regional convention centers in Rochester, Mankato and St. Cloud: The wait exceeds five years for three downtown large-meeting facilities that were long ago teased with state money for planning, generally a tacit promise of more help to come. Each of these facilities would offer a boon to business and civic enrichment. The Mayo Clinic’s big expansion plans underscore the case for Rochester’s Mayo Civic Center, but fairness demands support this year for all three.

 State hospital at St. Peter: Housing the chronically mentally ill and sex offenders in the same outmoded facility is a recipe for trouble that the state ought to alter without delay. Dayton seeks $46 million, the House $36 million for an upgrade.

• Southwest Corridor and other transit improvements: The fate of Dayton’s proposal to raise metro sales taxes to pay for transit is in doubt, but the state’s share of funding for the next leg of the metro area’s light-rail system should not be. Hausman’s bill contains $50 million for transit capital improvements, enough to keep Southwest Corridor on track toward projected completion in 2017.

These projects can’t wait. Some items on the Dayton and House lists arguably could. But lawmakers who favor delay should know that the state can afford a big bill this year. Its current debt level ranks Minnesota in the middle range of the 50 states, and stands comfortably within the debt capacity guidelines set in 2009.

Improving state revenues allow for a bump in annual debt-service costs. But the economy that’s boosting state revenues is also bound to drive up capital costs in short order. The state should grab the “recession discount” while it’s still available.

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An editorial of the Star Tribune (Minneapolis). Follow the editorial board: on Twitter  |  on Facebook   |  on Instagram | on Google+

  • IN GOP districts


    By Gov. Mark Dayton’s count, his bonding proposal includes 138 projects in legislative districts represented by 65 of the Legislature’s 89 Republican members. Big-ticket items on that list include:


    $35 million: Mayo Civic Center, Rochester


    $31.7 million: St. Cloud prison


    $10.1 million: St. Cloud Civic Center


    $10 million: Minnesota Zoo


    $5.1 million: Shakopee prison fence


    $3.9 million: Winona State University classrooms


    Source: Office of Gov. MARK DAYTON

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