Dear Neighbor,
Before I get into legislative news, I want to say how pleased I was to share in the celebration of area resident Jack Zimmerman's Alive Day last Wednesday.
Jack, a double-amputee, is a veteran of our nation's armed forces who made great sacrifices in the name of liberty. During a private ceremony, I read a proclamation from the governor that last Wednesday be observed as statewide Jack Zimmerman Day in Minnesota. Thank you to Jack and his family for so graciously allowing me to join them in celebrating his life.
As for work at the Capitol, the 2016 legislative session is underway and the process of introducing bills and hearing them in committees is off and running. A massive Capitol renovation is a key reason the session started a bit later than usual, meaning time is of the essence.
One of the things I look most forward to this session is discussing a bipartisan bill I authored to help bring state debt payments back into line. The state's debt payments have grown wildly within the last decade and this trajectory simply is unsustainable.
Below is a news release that provides more information on this issue and illustrates how my bill would help our state's fiscal outlook.
Stay in touch and, as always, I welcome your thoughts on the issues.
Sincerely,
Bob
Vogel bill would help stem growth
of state debt payments
ST. PAUL – Rep. Bob Vogel, R-Elko NewMarket, is the chief author of a bipartisan bill that would reinstitute a ceiling for debt payments related to state capital investment borrowing – aka, bonding.
Vogel, a banker by day, said a variety of factors have raised payments made on debt service by nearly double over the last several years. Nonpartisan reports show growth from $409 million in 2008 to $752 million in 2015, a trend Vogel said started around the time the state's limit on debt payments was removed. Vogel said he proposes setting a debt-service cap at 3.5 percent of projected General Fund revenue because he sees the current rate of growth in debt service as unsustainable and threatening to overburden the state's taxpayers.
"There are other tests the state does in assessing debt capacity, but right now we are just looking at how much debt is outstanding and not measuring the amount of payments the state is making in relation to revenue it is receiving," Vogel said. "This is similar to a private citizen or business that maxes out their debt capacity in that it handcuffs your future. You shouldn't borrow to the fullest just because you qualify."
Vogel's bill would cap state payments on borrowing at a fixed percentage of the state's General Fund revenue. His legislation only addresses bonds that come from the General Fund, where that spike in debt service has occurred of late. He said there is concern the current track could negatively impact the state's credit rating.
"The credit rating agencies haven't expressed concern just yet, but the fear is if they get to the point of caring it will be too late because the debt already would be incurred," Vogel said. "Prudence in borrowing now leaves us more nimble, with the ability to borrow later to respond to natural disasters or other situations that may arise.
"This is taxpayer money. We need to be prudent with how much needs to be allocated to bond payments because they are the obligation of workers in our state, and if we don't have the discipline necessary today, we set ourselves up for the potential of big problems later. Our kids and grandkids would then be left to pay for indiscretions."
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