As part of a budget balancing effort, the state sold $757 million in bonds that will be paid back with the state's tobacco settlement money.
Minnesota budget officials will use $640 million to help balance the state's nearly $35 billion budget. The rest will be used for interest, a debt service reserve fund and the administrative costs of the bond sale.
"This is the first time a sale like this has been completed in Minnesota and it went extremely well," said Kristin Hanson, an assistant commissioner with Minnesota Management and Budget. "The response from the market was stronger than expected."
DFL Gov. Mark Dayton and Republican legislative leaders agreed to borrow the money rather than raise taxes or cut more services. The agreement was part of a larger package to resolve the state's $5 billion projected deficit and end a two-week state government shutdown.
The bonds are backed by tobacco settlement money, not taxpayer dollars. The arrangement typically means the bonds are paid back at a higher interest rate than government-backed debt. The interest rate on the bond sale was 4.75 percent.
