Governor Dayton releases his capital investment proposal
On Tuesday morning, Gov. Dayton unveiled his $1.5 billion bonding proposal that would invest mostly in infrastructure projects thoughtout the state. A “snapshot” of his plan can be found here.
There are several notable things in this proposal, including:
It’s size. The proposal calls for issuing $1.4 billion of state general obligation bonds and $150 million of other bonds. General obligation bonds are backed up in full by the State of Minnesota. General fund dollars are used to retire this type of debt and the bonds are limited to projects owned or sponsored by the state or a local unit of government. The other bonds are mostly revenue bonds, meaning a specific revenue stream is identified and is the only revenue that must be used to pay the back.
Generally, the Legislature passes only one large bonding bill in the two-year budget cycle and traditionally the large bill is passed in the even-numbered year, like 2018. There will likely be some discussion about this since a large bill passed in the 2017 session. However, most people saw that as the bill that should have passed in 2016 (but ultimately failed in the final moments of the session). There is a precedent for passing two large bonding bills in one cycle — in 2004, the Legislature failed to reach an agreement on a bill and large bills were passed in both the 2005 and 2006 sessions.
What is in the proposal? The vast majority of the dollars in the Governor’s proposal would be spent on much-needed public infrastructure, including clean water initiatives (which are supported by the GMNP) and funding for University of Minnesota and the Minnesota State University System.
What’s not in the proposal? Economic development projects and local projects are mostly missing from the Governor’s plan. However, don’t lose heart if your community’s project is not included in the proposal. Governors often leave these projects out of their initial plans in order to set up negotiations with the Legislature. More troubling than the lack of local projects is that this proposal does not fund important economic development programs that the GMNP supports like the Greater Minnesota Business Development Infrastructure Grant Program (BDPI) and regional freight rail and port development projects.
Geographic balance. By the Governor’s own scoring, the proposal is out of balance with only 9.7% of the projects located in Greater Minnesota, 21.7% in the metro and 68.59% being scored as statewide. It somewhat hard to quantify the regional impacts of the projects labeled “statewide,” but in reviewing the proposal, it appears that the metro area benefits more from those projects than Greater Minnesota. But again, this is just the start of the bonding process — there is a long way to go until the final bonding bill passes.