Lawmakers disagree over infrastructure funding in Minnesota, Washington

Minnesota legislators are facing off over how much to spend on construction projects, but they do agree on one thing: The state should not wait on the fate of President Joe Biden's $2.3 trillion infrastructure and jobs plan to shore up roads, bridges and water systems.

Democrats in the state House presented a $1 billion proposal this week, which Republicans quickly condemned as oversized. The Legislature traditionally passes large capital project bills in odd-numbered years, and approved the largest infrastructure package in state history in October. But DFL legislators said low interest rates and pent-up demand compel them to act on another major round of funding.

"Our expectation is that we can get the federal dollars. That doesn't mean we stop doing our job of funding immediate, critical infrastructure here in the state," said state House Capital Investment Committee Chairman Fue Lee, DFL-Minneapolis.

The Biden White House is making a public push for the Democrat's wide-ranging proposal, but there are no details yet on exactly how the plan would affect Minnesota.

"We have such a mix of metro, urban, suburban and rural, and you want to make sure there's something there for everyone," said U.S. Sen. Amy Klobuchar, a Democrat. "We've got projects crying out for help all over the state."

Biden has said he is "prepared to negotiate," amid Republican pushback that the plan is far too sprawling. "On this one, [Biden] says all the right things, want it to be bipartisan, etcetera," said Republican U.S. Rep. Tom Emmer, representing Minnesota's Sixth District. "But so far, the proposal is nothing like that."

At the state level, Republican legislators in both chambers are criticizing the scope of the House Democrats' proposal, which is nearly twice the size of Democratic Gov. Tim Walz's $550 million plan. Construction borrowing bills need a supermajority to pass the Minnesota Legislature, and the $1 billion House measure would not get the additional 11 votes needed from Republicans, said Rep. Dean Urdahl of Grove City, the ranking Republican on the Capital Investment Committee.

He supports a smaller bill, and wants more money to go to greater Minnesota communities. Urdahl suggested around $240 million in bonding, and he would also like to spend $179 million in federal cash on construction projects, money that Minnesota expects to get from the Coronavirus Capital Projects Fund included in the $1.9 trillion relief bill Congress passed last month.

It appears that money can be used for investments in water, sewer and broadband infrastructure, Urdahl said. But the U.S. Treasury has until May 10 to provide states, municipalities and tribal governments with the funds and specific guidance on how they can be spent.

"I would like to do something. But there [are] too many unknowns to do something as big as the House wants to do," said Senate Capital Investment Committee Chairman Tom Bakk of Cook, who is an independent.

He echoed Urdahl's support for a $240 million infrastructure bill this session, the amount included in the state budget forecast. Bakk said that would prevent the state from having to take on additional debt service costs beyond what's expected. Bakk suggests that Gov. Walz could then call a special session of the Legislature to sort out the distribution of dollars from the latest relief proposal.

A likely sticking point in the upcoming negotiations is House Democrats' proposed use of $300 million in redevelopment appropriation bonds to repair areas in the Twin Cities damaged during the riots last May and June. Walz's bonding bill includes $150 million for that.

Minneapolis, St. Paul, Ramsey and Hennepin counties are getting more than $800 million combined from the March federal relief package, Bakk noted, and said he wants to find out how municipalities are using that before deciding how much the state needs to help.

"It raises a question: Does the state really have to throw another $200, $300 million in? Really? It feels like the federal government is just raining money down on us," Bakk said.

Insurance coverage was insufficient for many business owners, Lee said, and he's heard from Minneapolis and St. Paul that the $300 million in the House bonding bill still might not cover all their redevelopment needs. "This is just a start for these businesses who have waited for almost a year now without any state action," he said.

State legislators do broadly agree that talks about an infrastructure bill in Washington should not hold up bonding negotiations in Minnesota.

"We can't count on that. We have to do what we need to do with infrastructure. If that happens, that's like frosting on the cake," said Sen. Sandy Pappas, the DFL lead in the Capital Investment Committee. "I'm not holding my breath for this summer."

In Washington, Democrats have narrow control of both the U.S. House and Senate, and unanimous support on an infrastructure package within their own party is far from a given.

Biden has shown he's "more than willing to listen to folks and hear their good ideas," said U.S. Sen. Tina Smith, D-Minn.

"But he also is not interested in doing a really watered-down bill," Smith said. "As long as the Republicans don't want to just water this down and shrink it so that it's not big enough to make a difference, I think we could find real common ground."

There is so much demand for local public works projects that if both the federal and state infrastructure bills pass this year, Minnesota could easily spend the money, Pappas said. A White House fact sheet published this week described Minnesota as having "a C grade on its infrastructure report card."

There's "no shortage of necessary projects," U.S. Transportation Secretary Pete Buttigieg said on a call with reporters earlier this week.

"We really view these federal investments as going hand in hand with states and communities that are stepping up," Buttigieg said. "We've seen a lot of states, even local communities, taking sometimes tough votes to raise the revenue to make needed improvements."

Jessie Van Berkel • 651-925-5044

Hunter Woodall • 612-673-4559