Minnesota House of Representatives


State Representative Alice Hausman

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Posted: Apr 4 2014 10:18AM
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StarTribune Editorial: Use bonds, not cash, for public buildings


Bonding has been called lawmaking “dessert” after the meat and potatoes of budgeting for basic government services. But even at $850 million, the bonding bill that the state House will consider is a portion so meager that its chef, Rep. Alice Hausman, proclaimed it “inadequate.”

Hausman reluctantly proposes to enhance the bill by using $125 million of this biennium’s still-available $600 million surplus for a few projects more. Her reluctance is justified. Calling on taxpayers in 2013 and 2014 to pay for projects that will serve the state for decades, and whose cost could be spread over 20 years at very low interest rates, is neither fair nor smart policymaking.

If it were up to Hausman and Gov. Mark Dayton, the bonding bill that would come to Dayton’s desk after the Legislature’s Passover-Easter recess would authorize upward of $1 billion in borrowing for buildings. If it were up to us, it would be larger still — and any thought of paying cash for bondable projects would be dropped.

Minnesota has erred in allowing a long backlog of public building and infrastructure needs to accumulate during the Great Recession years when interest rates dropped to record lows. The Legislature and the state’s last two governors opted for skimpy bonding bills for reasons more political than practical or prudent.

This should be a catch-up year. (See the House’s catch-up list in accompanying text.) Interest rates remain low, but can’t be expected to stay there much longer. The state’s debt load is well within established guidelines. Wall Street rating agencies have faulted Minnesota for insufficient general fund reserves, borrowing against future tobacco revenues via appropriation bonds and two partial government shutdowns in the past decade, but not for too much general obligation borrowing. (That’s the kind backed by the state’s “full faith and credit,” meaning its power to levy property taxes.)

Instead, an arbitrary cap with a nice campaign-literature ring to it has been imposed by minority Republican legislators, whose votes are needed to meet the 60 percent supermajority threshold that general obligation bonding requires. They insist that the state’s total new borrowing for the biennium not exceed $1 billion. With $150 million authorized last year, the GOP position puts an $850 million ceiling on this year’s bonding bill.

Keep the lid that tight, Hausman says, and only about a quarter of requested higher education repairs and renovations can be funded. State help for local road and bridge repair shrinks, putting upward pressure on local property taxes. Transit funding nearly disappears; high-speed-rail planning money vanishes completely.

Worse is the way the House proposal handles the four-year, $240 million State Capitol renovation project, now in year two. Hausman’s package includes only $20 million — in cash, not bonding — of the $126 million that must be provided this year to finish the job. The Senate is expected to bring in an all-cash bid closer to $126 million when its capital investment bill emerges.

Hausman’s low bid on the Capitol can’t stand. But it shines a revelatory light on the bad idea of using today’s cash for projects that have a long useful life span. The Capitol’s deterioration was at least 50 years in the making. The repairs and improvements now begun will serve this state for at least the next 100 years. Burdening today’s taxpayers with a disproportionate share of those costs might be deemed a gesture of admirable generational generosity, if it did not come at the expense of the ability to address the problems of today that aren’t susceptible to solution via bonding.

The state’s remaining surplus should go for tax relief, better Internet service in Greater Minnesota, higher wages for disability caregivers, school breakfasts and lunches, and other pressing needs. Better buildings and infrastructure are needed, too — and their cost should be spread over 20 years, with general obligation bonds.


(This editorial appeared in the StarTribune on April 4, 2014. It can also be found on the StarTribune website: http://www.startribune.com/opinion/editorials/253831931.html)

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