What was Dayton thinking with his $842 million bonding proposal?

They won’t be laughing about $360,000 for a swimming pool or an additional $255,000 to replace the town’s fire hall in Hallock, where these things matter.

The most remarkable thing about Gov. Mark Dayton’s $842 million bonding proposal made Tuesday morning was that he presented it with a straight face.

Given the Republican majority in the House, which has taken a hard “no bonding bill this session” stance, there’s little chance that such a large proposal will get a serious look this session. Truth be told, there’s not much appetite for such a big bonding bill in the DFL-controlled senate, either.

So what was the governor, who is an astute politician, thinking?

Outwardly, of course, he says he was thinking about “what’s best for the future of Minnesota.” Given the surplus and still-low interest rates and needs across the state, he says now is the time “to build and rebuild our communities. 

In putting together a bonding proposal that would do everything from put $211 million into education projects to $99 million in rail safety improvements to $360,000 so that the city of Hallock can replace its swimming pool, the governor said he is striking state needs at just the right time.

“Why walk away from sound business practices?” Dayton asked Republicans, who always are saying that the state should be run more like a business.

Still, he knows that beyond the GOP’s inclination to say “no,” there are other factors that make his proposal, at least as it was outlined Tuesday, little more than a political fantasy.

Start with the fact that there’s a kind-of tradition in the Minnesota legislature: Odd-numbered years are budget years, even-numbered years are bonding years. Dayton pointed out that old “tradition” really doesn’t exist. The last time the Legislature didn’t pass a bonding bill was in 2007.

What he didn’t say was that those odd-numbered bonding bills tend to be relatively small, a fraction of the $842 million Dayton is proposing.

Beyond that, bonding committees tend to be made up of some of the most earnest members of the legislature. Between sessions, they tour proposed bonding sites. They talk to mayors and county commissioners and everyday people about why projects should receive state money. They sweat over which projects receive bonds.

Given the late date of Dayton’s proposal, there’d be no realistic chance for legislative bonding committees to do any of the normal vetting, said Rep. Paul Torkelson, R-Hanska, the rookie chairman of the House capital investment committee. 

“I’ve not toured anything,” Torkelson said. “I’m new to this committee. I said when I became chairman that we would pass a bonding bill that we all can be proud of.”

Torkelson did say that he would be happy to take his committee on a tour of the sites Dayton’s proposed prior to next session. 

Because of the relatively robust state of the Minnesota economy — even the construction industry, so crippled during the recession, is doing okay —  Dayton can’t even promote this bonding bill as “a jobs bill.” In making his presentation, Dayton made only a couple of quick references to the need to get people back to work, saying that his proposal would create 23,000 jobs.

So what was Dayton really thinking by putting out this huge proposal two days before his state of the state address?

Presumably, he was putting some pressure on Republican legislators. Particularly in greater Minnesota, few things are as popular as bonding bills. Sure, there will be guffaws behind the scenes about $360,000 for a swimming pool in Hallock and an additional $255,000 to replace the town’s fire hall. But they won’t be laughing in Hallock, where these things matter.

“If they don’t want to support this,” Dayton said of Republican legislators, “let them go back to their districts and explain.”

Rep. Greg Davids

Rep. Greg Davids, R-Preston, finds the sort of political posturing by Dayton mean-spirited. “I don’t believe you should blow smoke up people’s noses, get them all excited about something and then pull the rug out from under them,” Davids said. “He’s getting people’s hopes up and he knows that it’s not going to happen.”

But, on the other hand, Dayton already has seemed to win something. From the first day of the session, House Republicans made “no bonding bill” this session something of a mantra. Suddenly, though, there was a softening of that position.

Suddenly, House Speaker Kurt Daudt had gone from “no bonding” to saying “anything is possible at the end of session.” By that, Daudt didn’t mean Republicans are ready to swallow anywhere close to the entire $842 million but suddenly a small bonding bill seems possible.

Daudt made it clear that Republicans’ priority is to get Dayton’s proposed gas-tax increase for transportation funding off the table. If that would disappear, “we’re open to almost anything,” Daudt said.

In the end, it will probably come down to priorities and trade-offs and midnight deals, as it almost always does.

All of this doesn’t mean that there aren’t worthy arguments for much of what was contained in Dayton’s bonding proposal. 

Rep. Alice Hausman

Rep. Alice Hausman, DFL-St. Paul and former chair of the bonding committee when the DFL controlled the House, said that there are economic implications in bonding projects beyond the projects themselves. She pointed to the $18 million Dayton wants to spend for a University of Minnesota Isolation Facility and the current outbreak of bird flu that’s hitting Minnesota turkey farms hard. Studies of such outbreaks would be handled at the isolation facility.

“Do we want to wait until we’re hearing, ‘We will not be buying turkeys from Minnesota?”’ Hausman asked.  “Do we really want to wait a year to deal with something like that?”

Even Davids, who expressed contempt at the governor’s big proposal, noted that there’s $950,000 for repair of a historic dam in his district in the Dayton proposal. “That dam is in MY bill — for 2016,” Davids said.

The simple fact is that we won’t know what Dayton really wants, and what the GOP will really resist, until the fading hours of the session. We only know that nothing in the neighborhood of $842 million is going to happen.   

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Comments (14)

  1. Submitted by Sean Olsen on 04/08/2015 - 10:14 am.

    End-of-session

    … is the game here. A bonding bill has been frequently used in the odd year as a way for divided government to come to an agreement on a budget. By setting a high target, Dayton can still compromise down to a significant package of projects and allow Republicans to claim victory on shrinking the bill down to a more reasonable size while preserving the “most important” projects.

  2. Submitted by Paul Udstrand on 04/08/2015 - 12:11 pm.

    Posturing?

    Don’t people’s hopes up? You mean like promising a laser focus on job or better transit spending in rural areas and then offering nothing but tax cuts that actually reduce jobs and spending? Yes, please, let’s all stop pulling the rug out from under voters.

    I think Dayton’s game here is pretty obvious. Most people don’t know anything about these so-bonding rules or “traditions” so it just looks like Dayton is sticking by his promise to find a way to invest in our infrastructure. And one could argue that that’s really all he’s doing. He didn’t get the spending he sought last year why shouldn’t he try to get again somehow this year?

    Near as I can tell republicans are still planning on magic of some kind to turn their tax cuts and spending cuts into “growth”. Dayton is simply drawing a clear distinction that republicans will have to respond to.

    Democrat legislators should be following Dayton’s lead but instead it looks like they’re positioning themselves in solidarity with the republicans again. Oh well.

  3. Submitted by Logan Foreman on 04/08/2015 - 12:37 pm.

    The bonding bill may well be

    More expensive if the Fed starts raising interest rates. Most of these clowns in the legislature have no clue on running a business or the state.

    • Submitted by Eric Ferguson on 04/08/2015 - 04:51 pm.

      Except the Fed hasn’t raised interest rates

      Maybe wait until the Fed does decide to raise interest rates, and even that doesn’t guarantee the state will pay higher rates. If you’re going to borrow, now is the time thanks to interest rates being near record lows. Even if they rise, it’s not like they’re going to go from 2 to 20% in a single jump. More like 2 to 2.5%. The fact is we allowed our infrastructure to rot, so even with the strong state economy meaning we no longer have a crying need to create just any sort of jobs, we either have to bond to rebuild, rebuild from cash, or let the rot continue. If we don’t want to use the surplus for infrastructure projects, then the choices are bonding or rotting.

  4. Submitted by Joel Stegner on 04/08/2015 - 03:35 pm.

    Bondiing

    The governor is welcome to suggest bonding for what he considers to be state priorities. Whether it is considered this year or next year is the legislature’s call as is what off Dayton’s list makes sense to them, in terms of policy and politics. It is a very obvious way for the governor to point out that there are public purposes for spending tax dollars, which makes the Republican idea of giving it all back and cutting existing programs to finance their wish list look even more ridiculous.

  5. Submitted by Mike Downing on 04/08/2015 - 04:34 pm.

    You assume that Gov Dayton “thinks”

    Your title for the article, “What was Dayton thinking with his $842 million bonding proposal?” makes the assumption that Governor Dayton thinks and assumes he understands how to work WITH the MN Legislature. All indications re that Gov Dayton is an “individual contributor” who has never learned to work on a team.

    He should have learned that the 2014 voters want to prioritize roads and bridges and de-prioritize other line items in the state budget. Unfortunately, Gov Dayton thinks we are trust fund babies just like him and can afford 6-12% increases in budgets.

    I find Gov Dayton out of touch with reality.

  6. Submitted by Tom Anderson on 04/08/2015 - 06:54 pm.

    Bonding every year

    With interest rates so low we keep hearing that we need to bond just under a billion dollars EVERY YEAR. If the bonds are for 20 years and we do this nearly every year as we have been doing, we end up with $20 billion dollars of debt that we pay interest on and it never goes away because as each 20 year old bond matures, we add another one this year. Sure, the interest rate is low, but we’re still paying interest on an amount that is almost half of our annual budget (until the last biennium).

    • Submitted by John Appelen on 04/08/2015 - 08:14 pm.

      Principal

      Folks here often forget that bonding is just another name for spending now and passing the bill on to future tax payers. (ie my children)

      I keep thinking of all those poor folk who got poor listening to someone who sold them on a “low interest” loan.

  7. Submitted by Hiram Foster on 04/09/2015 - 06:53 am.

    Astute

    In his column, Mr. Grow described the governor as “astute”. Initially, that struck me as odd because the governor, in public at least, often appears vague and uninformed. But thinking about it a little more, it occurred to me that he often somehow ends up on winning sides of deal. There was little reason and little public support for a Vikings Stadium, yet somehow the building is magically appearing, largely because of late night back room maneuvering by this governor, so I thought I would think a little bit more about the bonding bill

    In broad terms, Republicans won the 2014 election because they persuaded greater Minnesota that the DFL controlled legislature wasn’t doing enough for them. In the DFL, we always found this disingenuous because we thought we did quite a lot for greater Minnesota, and we would have done quite a bit more had not Republicans prevented us. It’s how we do.

    So Republicans won and we lost. But now the problem for Republicans in this legislature, is that this, maybe rather astute governor after all, is taking Republicans at their word. He is saying, if you want to help greater Minnesota here is the bonding bill that would allow you to do it. Take this chance, the governor is saying to Republican legislators, to vote on behalf of the folks who voted you into office, not the out of state money guys who funded your election. It puts Republicans in an awkward position. It’s not just mean spirited, it’s outright mean.

    • Submitted by Rachel Kahler on 04/09/2015 - 09:17 am.

      Not mean

      I don’t think it’s mean to put someone in the awkward position of keeping a promise they made. I think it’s ridiculous of the GOP to even suggest it. They’ve been outmaneuvered and they know it. And I suspect that the Minnesotans that believed their promises will see that they were duped. Not that I feel terribly bad for them–it’s not the first time they’ve been duped by many of their so-called representatives, and they’re not the only ones paying for it. But, perhaps they can help Dayton remind their reps as to why they’re in St. Paul.

    • Submitted by Paul Udstrand on 04/09/2015 - 09:26 am.

      Astute indeed

      As far as the 2014 elections are concerned, as near as I can tell the Democrats refused to campaign on their success. Instead of aligning themselves with a Governor who was winning, they distanced themselves from the policies that made him popular, so he won and they lost. Then they the follow up by jumping the republican small guvmnt bandwagon and complaining about commissioner raises… he got more popular and they got more irrelevant.

      Republicans are still a one trick pony, no matter what they promise during elections when they get elected all they care about are tax cuts. They cut taxes, create budget crises, declare we have a spending problem not a revenue problem, and the government ends up in a death spiral until voters come to their senses. We’ve seen this all before. Dayton gets it. Bakk doesn’t. It’s that simple.

      Dayton’s boding bill gambit is simple, we want to invest in Minnnesota, so either we bond for it or raise taxes to pay for it, but you don’t get more investment by cutting taxes or spending. Republicans made promises that have to be paid for, typically they make promises and then start cutting taxes, it’s their bait-n-switch. Dayton’s gambit is that if he keeps us focused on the bait the republicans won’t be able to make the switch. So far Dayton has had better luck dealing with the republicans than the MNDFL typically does. My money’s on Dayton.

  8. Submitted by Bob Petersen on 04/09/2015 - 09:06 am.

    This is Just More of the Same

    This is just the governor doing what he does best, wanting more money to spend more. He orchestrated with a DFL legislature the largest tax increase in our history to ‘solve’ our budget problems.

    Now that there is a projected surplus, he wants to spend it all. That solves nothing except to cause problems in the future if tax revenues slow down.

    Then he wants tax increases to pay for road and infrastructure, but wants everyone to pay more. Yes, they are a priority, but apparently not enough to fit in to a regular budget. Just add more.

    Now he wants gargantuan bonding bills to pay for stuff. Some stuff is good, but we pay for that in the long run – it punts the payments to the future plus interest.

    People say the Repubs are the party of no. This may be true. But growing government much higher than inflation or what people make is not sustainable.

  9. Submitted by Hiram Foster on 04/09/2015 - 01:35 pm.

    Instead of aligning themselves with a Governor who was winning, they distanced themselves from the policies that made him popular, so he won and they lost.

    My sense was that the governor was rather passive and vague. Dayton is simply not a forceful personal presence in election terms. He has always bought his election victories through heavy campaign spending, and through name recognition. His successes, such as the Vikings Stadium were the result of backroom dealing in the legislative equivalent of the dark of night. His astuteness really has more to do with evading public opinion rather than working with it.

    But there was also a broader political problem. The statewide DFL candidates won by piling up huge majorities in the cities. There it was ok to remind the voters of DFL record, and money that was under control, not of the DFL but of the Dayton and Franken campaigns was effective in doing that. But that messaging was far less successful in greater Minnesota, where the big money folks were a lot less motivating and turning out voters who would vote against the top of the ticket candidates. So DFLer’s in those areas were left with messaging not appealing to their voters, and without the resources to campaign effectively on their own, in ways that distinguished themselves from the DFL message that was working in the cities. Oh well.

  10. Submitted by Amy Juntunen on 05/06/2015 - 01:41 pm.

    Rail portion

    Anybody else think that $100 Million in improvements to rail crossings,etc., to compensate for the huge influx in train traffic from NoDak ought to be paid for by the rail road?

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