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How the bonding bill went bust

A bill to fund $1.8 billion in public construction projects in Minnesota now appears dead — due to a dispute over Gov. Tim Walz’s use of emergency powers to combat COVID-19. 

House Minority Leader Kurt Daudt
House Minority Leader Kurt Daudt during a Monday morning press conference: “The majority caucuses wanted to negotiate things so bad they forgot to include everybody in the negotiations. So they just did it between their two caucuses.” Deputy Minority Leader Anne Neu is at left.

A compromise bill to fund public construction projects — which would have been the first bonding measure approved in three years by a divided Minnesota Legislature — now appears mostly dead due to a dispute that had little to do with the state and local projects it would help build.

Gov. Tim Walz
REUTERS/Lucas Jackson
Gov. Tim Walz
Taking advantage of a constitutional requirement that the issuing of general obligation bonds require authority of 60 percent of the House and Senate, minority House Republicans voted against the bill, House File 3. Their reason: a lack of movement by Gov. Tim Walz over his statutory power to call peacetime emergencies and issue executive orders without legislative consent.

While there were some conversations between the DFL governor and House Minority Leader Kurt Daudt on the bill, no agreement was reached. A proposal that Daudt termed “eminently reasonable” was seen by Walz as unacceptable. Without it — or some variation of it — the GOP leader successfully kept his members in line and prevented the bill from reaching the 81 votes needed for passage.

Walz and the Legislature could try again next month to authorize the package, which includes $1.35 billion in general obligation bonds, $300 million in trunk highway bonds and $147 million in appropriation bonds, including $100 for affordable housing. Each time Walz extends his peacetime emergency for the permitted 30 days, he must give lawmakers a chance to rescind it, something the Senate GOP has voted to do twice but the House DFL has blocked.

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But a mid-August session will only add to the hurdles a bonding bill faces. It will be that much closer to the general election, while also coming at the same time the state is selling bonds from previous legislative authorizations. Walz said bond buyers don’t favor a state making significant changes to its finances in the middle of a sale, something he compared to potential home buyers not doing anything while a mortgage application is pending.

“I would just say the outlook for a bonding bill in August is murky,” said House Speaker Melissa Hortman. 

Election politics only make the ability to compromise even shakier in September and October. That means the state could go a full four years between authorizing bond sales, something that had been a near-annual occurrence before 2018.

Linking bonding to emergency powers

Walz and Hortman blamed Daudt for linking the emergency powers issue to what Walz dubs the “local jobs and projects plan.” 

House Speaker Melissa Hortman
MinnPost photo by Peter Callaghan
House Speaker Melissa Hortman
Daudt blamed Walz and DFL leaders for not doing anything to balance power between the legislative branch and the executive branch. Senate Majority Leader Paul Gazelka mostly stayed out of the fray, supporting Daudt’s concerns over executive powers under the pandemic but endorsing a bonding bill that included projects that many of his members favored.

Senate Republicans had agreed to the bonding bill as well as to a $58 million supplemental budget and a $99 million tax cut. Because they were combined, both the bonding bill and the tax cut would need 60 percent yes votes. So Gazelka and Hortman had a deal, but both needed their minority caucuses to help pass it. Though expressing their own complaints about being left out of bonding bill talks, Senate DFL leadership were expected to provide enough votes but House GOP leadership did not.

“The majority caucuses wanted to negotiate things so bad they forgot to include everybody in the negotiations. So they just did it between their two caucuses,” Daudt said Monday morning. 

That was a mistake, he said, because in short special sessions, majorities need minority votes to suspend rules to move bills quickly. And the bonding bill needed 60 percent majorities to pass, giving minority caucuses rare, and coveted, bargaining clout.

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It was Daudt who first linked the bonding bill to emergency powers, announcing in early May that his caucus would withhold votes until Walz ended the peacetime emergency. Since then, some Senate DFLers linked passage of a robust police accountability bill to votes on bonds; Hortman and Gazelka put the tax bill inside the bonds and on Monday night, Hortman said she was told by the Senate that it would not vote on the supplemental budget unless the bonding bill passed.

“Nothing should be linked, but unfortunately everything kind of is linked,” Daudt said.  “Everything is linked by everyone. I understand I was the first one to make that statement but I’m willing to consider anything individually as long as it makes sense for Minnesota.”

Senate Majority Leader Paul Gazelka
MinnPost photo by Peter Callaghan
Senate Majority Leader Paul Gazelka
He did voice some objections to some of the projects in the bonding bill, but his objection mostly was due to Walz exercising his emergency powers for four to five months with no legislative check on his actions. A bill Daudt authored would have required legislative approval of emergency actions through a separate House-Senate commission or they would expire in 30 days. The governor could then reissue emergency orders, but they would have to follow the same process. 

Hortman, who was minority leader as recently as 2018, said she certainly used the clout the 60 percent bond-vote requirement gave her. But she said it manifested itself into getting some DFL-member projects into the bill, not tying it to other issues or seeking to veto projects sought by other members. “Everybody uses it to get projects,” she said. “The thing that Kurt Daudt is trying to do is get elevation to co-speaker. You can’t parlay your votes on a bonding bill into co-speaker or co-governor. 

“Rep. Daudt is still having difficulty processing the result of the 2018 election,” she said. “We believe COVID-19 is an extreme public health crisis and that Gov. Walz needs these emergency powers to protect the people of  Minnesota. Rep. Daudt’s proposal is nothing short of completely eliminating the governor’s ability to act in a time of crisis. And we are not willing to go there.”

Walz: ‘My frustration is very high’

A bonding bill contains local projects that most legislators are happy to take back to their districts, especially in an election year. Getting to the 60 percent threshold often entails including projects from reluctant legislators, which often means there are projects funded in the bill that each member loves — and hates.

The 2020 version had money for flood projects; dam repair; parks and trails; pollution control; water and sewer projects; a new state emergency operations center; roads and bridges; local economic development projects; and construction and repairs for colleges, universities and other state buildings. It also contained a historic investment in transitways, with two new bus rapid transit projects fully funded.

Walz Tuesday said he was disappointed in the failure. “My frustration is very high,” he said. “I think it is extremely unfortunate that we can’t lift the highway in Henderson so it doesn’t flood every year because I’m ordering masks for a long-term care facility,” he said, a reference to one of the things he did with an executive order under his emergency powers. “The Legislature could do that in 90 days and we could do it in about 48 hours.”

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In a lengthy letter Walz sent to Daudt Tuesday evening [PDF], Walz outlined the meetings he held with the GOP leader, his offer to run executive orders past the bipartisan COVID-19 commission and his concerns about the impact of rescinding existing orders such as the eviction ban and the reopening orders. He also listed a set of orders he would be willing to cancel. 

“My office has engaged in good-faith discussions to explore possibilities and made real concessions,” Walz wrote. “Nevertheless, you have rejected our compromise proposal and refused to reach an agreement. I am disappointed that you have sought a petty political victory rather than a substantive change that would have benefited the people of Minnesota.” 

Walz noted earlier that 49 of the country’s 50 governors — and President Trump — are currently responding to the pandemic with executive orders authorized by the declaration of a peacetime emergency.  

“I was not willing to give up and say that the minority members of the House of Representatives have veto power over everything I did,” Walz said. But he agreed that the odds of a bonding bill this year are small.

“There’s an aversion to doing anything the closer you get to an election so I think it gets very difficult,” he said. “I don’t say that definitively but I do say it somewhat dejectedly because we were very clear about this. This thing was done, it was a good compromise.”