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GOP, Dayton bonding bills a stark contrast in philosophies, priorities

Republicans are focusing bonding efforts on “asset preservation.” The governor favors job creation and priming the state’s economic pump.

Rep. Larry Howes
Rep. Larry Howes

Take a side-by-side look at House Republicans’ borrowing proposal and the one put forth a month ago by Gov. Mark Dayton, and an old ’50s song lyric comes to mind: “Two different worlds. We live in two different  worlds.”

That’s just how unrelated the documents seem to be.

The plans, which are lists of public works that the state would fund by floating bonds, both refer to the government of Minnesota, and they also cover the same departments. But there are few other similarities.  

For starters, the totals of proposed spending are in different galaxies.

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Dayton’s list of projects comes to $775.9 million, while the House GOP’s totals $280.2 million. Even adding in the $220 million the Republicans allocate in a separate bill to renovate the state Capitol (the governor’s plan put aside $20 million for emergency repairs and offer a second bill later to fund renovation), their proposal is drastically lower.

“For some people, $280 million is not enough,” said Larry Howes, Walker, chair of the House Capital Investment Committee.

He’s got that right.

House DFL wants bigger bonding bill

At a Wednesday hearing of the Capital Investment Committee, which oversees bonding, DFLers shook their heads in dismay at what they consider the bill’s inadequacy in addressing the state’s needs.

“My concern is underfunding,” said Lyndon Carlson Sr. of Crystal. “If you don’t fix things now, you’ll have greater costs in the long run.”

If, for example, the state doesn’t provide its universities with state-of-the-art labs and facilities or skimps on transportation, businesses won’t locate or flourish in Minnesota, he added.

The omission of scores of projects requested both by agencies and the governor prompted Alice Hausman, DFL-St. Paul, to propose an amendment that added back some of the governor’s proposals. Her list included more funding for MnSCU campuses in the Twin Cities (which were ignored in Howes’ bill), more money for public transit and roads and for projects that would qualify for federal matching funds. She ended up topping the governor’s total by nearly $120 million, give or take.  

GOP sees unending wish list

Republicans disparaged the add-ons.

Committee Vice-chair Peggy Scott likened the amendment to the JC Penny catalog she used to receive when she was growing up. “You’d look through it and then …,” she sputtered in frustration, suggesting — I don’t think I’m reading between the lines too much here — that you couldn’t have everything you looked at. “This is a JC Penny catalog,” she wound up.

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Steve Drazkowski, R-Mazzepa, tore into Hausman’s amendment as “irresponsible.” In a stream-of-consciousness economics lecture to his fellow members, he lambasted public transit subsidies, “green” projects, federal aid (“where do they get it?) and the Federal Reserve (they just print money), all of which would lead us down the path to a terrible unspecified place, possibly hyper-inflation.

Howes, a workman-like legislator, defended his $280 million proposal, pointing out that the bonding bill, when added to last year’s $500 million bonding package, would bring general-obligation borrowing for the biennium to $801 million, higher than the $776 million average.

Hausman disputed the number. “He’s just wrong,” she said. “Normally we bond more than $1 billion a biennium,” she said.

The Department of Revenue specified guidelines for debt management, which guide legislators. “We’re well within the guidelines,” she said.

Nonetheless, the committee voted down her amendment 12 to 9. Her next step is to scale it back by $100 million and eventually take it to the House floor.

Howes’ priority: Capitol restoration

Meanwhile, renovating the Capitol is Howes’ biggest priority. He would rather fund the entire project up front, rather than dribble out $20 million to $40 million over several years, as the governor’s plan does. “We need a full commitment,” he says.

If the renovation starts and then has to stop, the state would have to pay to remove trailers, scaffolding and all the other equipment and then pay more to bring them back.

After making allowances for that $220 million Capitol price tag, Howes admits, a lot of other projects went into the bill to win votes he would need to get it past the committee and, eventually, the whole House. (Bonding approval requires a supermajority of votes to be approved, rather than a simple majority.)

In contrast, the governor’s priority is job creation.

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Projects on his list are “shovel- and paint-ready,” according to spokesman Katharine Tinucci.  They would “put people back to work right away and make the necessary investments in infrastructure around the state.”

Dayton’s basic idea: to prime the pump of economic activity.

Pouring money into projects and needed repairs would produce higher spending by both workers and businesses around the state. And, new public works — say, for a baseball park in St. Paul’s Lowertown and a civic center in St. Cloud — would, in theory at least, trickle money into local restaurants and shops and spur more hiring.

Republicans argue however, that such jobs would be temporary. The emphasis, they say, should be on easing regulations and cutting taxes on businesses, which would create high-paying permanent positions.

Whether doing all that would cause a million or even a thousand high-paying permanent jobs to bloom in Minnesota is anybody’s guess. And, that approach effectively cuts out jobs in the construction and building trades which, by their very nature, are temporary — unless you’re talking about a 200-year project, like building Notre Dame Cathedral.

Senate committee unhappy with jobs bill

The temporary/permanent argument also surfaced in a meeting of the Senate Tax Committee Wednesday where the governor’s jobs bill came under consideration.

It proposes to grant employers a $3,000 tax credit for hiring members of three target groups this year: veterans, the unemployed and recent graduates. (The credit would drop to $1,500 in 2013.) To qualify, a job would have to pay at least $25,000 a year, and a business would be limited to a total annual credit of $50,000.

Revenue Commissioner Myron Frans contends the proposal would almost immediately create 14,000 jobs because “it’s a very direct and streamlined approach.”

Senate committee Chair Julianne Ortman, R- Chanhassen, countered that the credit would only reward companies that were going to create new jobs anyway. “It’s a short-term Band-Aid,” she argued before tabling the bill.

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Meanwhile, back to bonding.

To get a real feel for the differences between the House and the governor’s proposals, let’s wade into the spreadsheets each side has provided.

Fear not. We’ll start with something simple: pollution control. The agency itself requested $23 million. The governor scaled that back to $18.4 million. The Republican House proposal allocates just under $2 million or 89 percent less. The governor’s funds would go to three projects: coal tar ponds, closed landfills and capital assistance, the last presumably to help local governments fight pollution. The $2 million the GOP wants is for none of those. Their allocation would go to the Becker County Recycling Center.

What bears pointing out is that the two sides aren’t just disagreeing on spending levels and splitting the difference on projects; rather, they’re talking — or not talking — about completely different stuff.

For something more complicated, look at the Department of Natural Resources.

The DNR requested $160 million for 21 projects. The governor responded with $55 million for many fewer programs. The House GOP, meanwhile, allocated just $21.4 million.

Between the governor and the House, there is only one area of agreement: Both would devote $300,000 to “asset preservation,” keeping up what you’ve already got.

In two cases, the Republicans scaled back Dayton’s request by a few million bucks (dam repair and removal went from $7 million to $3 million, and roads and bridges from $5 million to $3 million). In one case, an allocation for a project called “Connecting People to the Outdoors,” Republicans actually increased Dayton’s $5 million allocation by $2 million.

The GOP, however, would spend only $4.4 million on flood mitigation, compared with the Dayton’s $20 million request — and only for two projects. Finally, the GOP dropped all his other projects and funded one he didn’t ask for: $1 million for reforestation in state parks.

The GOP rejected many of the governor’s sought-after public works projects: civic centers in Mankato and Rochester. It did fund the St. Paul baseball park but only for $2 million, rather than the $27 million the governor requested. Under the Republican plan, St. Cloud would receive only a tenth of the governor’s $10 million civic center proposal.

Given the disparities in amounts and projects, could the two sides possibly come together?

Surprisingly, there is hope. First, another group remains to be heard from: the Senate. Majority Leader David Senjem has said that its proposals should be out by early next week.

Howes expects that, even without the Capitol renovation, the Senate’s project list will total about $500 million. Compromises would be worked out in a conference committee of the two bodies.

Before they can get there, the bill — a bill — will have to pass the House, because that’s where financial legislation must originate. Republicans would need DFL support to achieve the required the three-fifths majority required needed for bonding bills.

Howes says that he is hoping for bipartisan support.

Although Democrats haven’t expressed a lot of excitement, there’s no point to their holding out for a bigger bill. Because no other must-do issues are hanging over the Legislature — no need to pass a tax bill or negotiate a budget, as there was last year — “it’s pretty much take-it-or-leave it,” he says.

He adds that he wants to get the thing moving along, noting that the bill will probably change dozens of times. It’s a long journey to the governor’s desk,” he said.

He prodded the committee to vote — overriding a bid from Rep. Drazkowski to identify specific projects that could be funded with Legacy money. In the end, the bill passed the committee 10 to 6, with three members electing not to vote.

Next stop: the House Ways and Means Committee.