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Updated bonding bill exceeds $1.5 billion in total spending; waits for House action

As the clock ticks closer to midnight on the last day of the legislative session, the House and Senate have yet to pass a capital investment bill that can head to the governor’s office.

A bill is ready for their review.

Sponsored by Rep. Greg Davids (R-Preston) and Sen. Roger Chamberlain (R-Lino Lakes), the conference committee report on HF1226 was agreed upon Sunday afternoon.

The spending and borrowing adds up to a nearly $1.57 billion package heavy on infrastructure, including $825 million in general obligation bonding. It also includes $416.6 million in trunk highway bonding, $63 million in user financing, nearly $45.83 million in Environment and Natural Resources Trust Fund appropriations and $41.25 million in General Fund spending.

MORE: View the capital investment spreadsheet

Rep. Dean Urdahl describes provisions of HF1226, which contains language for a second bonding bill attempt. Photo by Paul Battaglia

“It’s a bill that meets a lot of the needs of the people of Minnesota,” said Rep. Dean Urdahl (R-Grove City), who chairs the House Capital Investment Committee.

Traditionally, the second year of a biennium is focused on capital investment; however, a nearly billion-dollar general obligation package was enacted last session. No bill was passed in 2016.

After receiving $3.3 billion in requests, Gov. Mark Dayton put forth a $1.5 billion plan in January.

“This is clearly a missed opportunity. We have the resources, we have the need and we are not taking care of the things that we need to take care of,” said Myron Frans, commissioner of Minnesota Management and Budget. He also said the administration thinks there are different projects where the money should be spent.

For example, Frans noted the governor’s plan would spend $542 million for higher education needs; the agreement is about $180 million, not including the $28 million in user-financing. Additionally, no money for transit is in the agreement.

“This is a lot of money,” Urdahl countered. “It’s not $1.5 billion in G.O. bonds, but it’s $825 million in G.O. bonds and it can do a lot of good for the people of Minnesota.”

Sen. David Senjem (R-Rochester), who chairs the Senate Capital Investment Committee, disagrees with the missed opportunity mantra when biennial bonding is viewed in total.

“You add it up and it’s about $2.6 billion,” he said. “I don’t think we have to be ashamed at all looking at the biennium in terms of meeting our state’s infrastructure needs. That money is more, in my view, than any two-year period in the history of this great state.”

Frans also questioned if the bill will pass muster with bond houses. As introduced in February 2017, the bill was to make clarifying and technical changes to tax policy.

“Normally an omnibus bonding bill either originates as the omnibus bonding bill or the House amends onto a standalone bonding bill,” he said. “The state’s position has been that we should avoid any question or any doubt when it comes to the issuance of debt. Because in order for us to issue debt, we have to receive an unqualified opinion from our outside legal counsel.

HF1226 does raise a question because the text currently states that it is a non-budget policy and technical bill that contains many provisions amending tax law, but does not clearly act to raise revenue for the state. … The Department of Revenue scored this bill initially to have no positive or negative effect on the state’s budget. It’s of the opinion that the attorney general’s office would need to research whether this file is an appropriate vehicle in order to give their unqualified opinion at a bond sale. As a result, we cannot say with certainty that the sale of bonds authorized by this bill would receive an unqualified opinion from our outside legal counsel.”

Davids doesn’t see an issue, saying the underlying bill “would raise revenue for the state” and would be collecting a tax.

General obligation spending in the conference committee report includes:

  • $80 million for higher education asset preservation evenly split between the University of Minnesota and the Minnesota State system;
  • $32 million for new veterans homes in Bemidji, Montevideo and Preston;
  • $28.1 million for mental health crisis centers;
  • $25.35 million for water and wastewater needs in a dozen cities;
  • $22 million for Department of Corrections asset preservation;
  • $20 million for flood hazard mitigation;
  • $18 million to construct a statewide Second Harvest Heartland charitable food facility in Brooklyn Park;
  • $15.07 million to construct a state-of-the-art medical examiner’s facility to serve Dakota, Hennepin and Scott counties with flexibility to accommodate future partner counties;
  • $15 million for the Upper Harbor Terminal Redevelopment in Minneapolis;
  • $15 million for a new visitor’s center at Fort Snelling;
  • $10 million for Capitol Complex security upgrades;
  • $10 million for public housing rehabilitation; and
  • $6 million in asset preservation at the Minnesota Zoo.

 


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