House backs forgiveness for Xcel Center loan

The Minnesota House passed the state's economic development budget Tuesday, but not without friction over a proposal to forgive $32 million of a loan that was used to build the Xcel Energy Center and uncertainty over whether Gov. Tim Pawlenty would veto the bill to block the move.

The debate over the nearly decade-old arena dominated a day in which DFL legislative leaders at least publicly continued to chug toward a May 18 adjournment even though many of the state's biggest budget issues, including taxes, health and human services, and education, remained unresolved. "Theoretically, we could be out of here before [May 18] -- theoretically," said Senate Majority Leader Larry Pogemiller.

The day also featured state employee union leaders criticizing the governor for not doing enough to collect tax revenues and trim his "bloated management" structure, a move they claimed could save $350 million as the state struggles to solve a $4.6 billion deficit.

Jim Monroe, executive director of the Minnesota Association of Professional Employees, one of two unions representing state employees, said Minnesota failed to collect $120 million a year in taxes and that cutting back on the administration's top-heavy management could save at least another $50 million annually.

Pawlenty, according to Monroe, had ignored the suggestions during recent contract negotiations with the unions.

Revenue Commissioner Ward Einess said the union's recommendation was based on an incorrect assumption and that much of the debt was not collectible.

Support, opposition bipartisan

Although the state's economic development budget passed the House handily, a provision to forgive much of a $48 million no-interest loan given to the city of St. Paul in 1998 drew the ire of legislators who complained that doing so when the state faces a large deficit does not make sense. Under the plan, the city would continue to pay on the loan for four more years and then use the money that would have gone to repay the debt to instead build The Pond, a community ice facility across from Xcel Energy Center that would in part be used by the Minnesota Wild as a practice arena.

"Everyone says it's for the Wild. There'll be about 2,500 events, and some of the events are obviously the Wild practice facility," said Rep. Tim Mahoney, DFL-St. Paul. "It's going to bring another quarter million people downtown.

"It's a good economic development project for the city of St. Paul. It's a good value for the state," he added.

Republicans, and even some DFLers, were not swayed.

"So many of the things that are wrong in Washington, D.C., I see starting to creep into the state of Minnesota," said Rep. Keith Downey, R-Edina, who compared the loan forgiveness to the federal bailouts of failing companies.

Rep. Mindy Greiling, DFL-Roseville, who also voted against the state economic development proposal, said she too found the loan forgiveness troubling. "I just think sports does not take precedence over employment," said Greiling, who said she could not justify the loan forgiveness at a time when the state is facing hard choices on education funding. "It doesn't seem very moral to me."

Veto possible

While St. Paul city officials hailed the vote, DFL and Republican legislators argued over whether Pawlenty might veto the entire economic development bill over the loan forgiveness. House Minority Leader Marty Seifert, hinting that the governor might exercise a veto, advised DFLers to get a veto-proof, 90-vote majority on the bill because "you're going to need it." The proposal passed 74-57.

Brian McClung, Pawlenty's spokesman, didn't promise a veto, but called the provision "extremely troubling."

McClung said DFLers had "completely ignored" the governor, whom McClung said wanted the loan forgiveness tied to language that would force St. Paul to use the savings for "higher priority purposes such as [hiring and retaining] police officers."

Staff writer Patricia Lopez contributed to this article. Mike Kaszuba • 651-222-1673