Minnesota House and Senate leaders — minus the House minority leader — said again this week that they likely have a deal to pass a $1.37 billion bonding bill as well as small changes to state spending and taxes.
But as with anything having to do with this Legislature, this bill, this year, it could all fall apart — again.
The plan to put those issues in a single bill has been around since July. But because the House DFL is six votes shy of the 60 percent supermajority needed to authorize increasing state borrowing, a united House GOP minority caucus had bargaining clout and used it to block the agreement between the House DFL majority and the Senate GOP majority.
On Monday, however, House Speaker Melissa Hortman said that the House Republican caucus may no longer have that unity. She said she anticipates at least six Republicans to support the deal when it comes to a vote Wednesday. Then, the Senate could approve it with bipartisan support when it next meets in session on Thursday. The DFL majority said they added projects in GOP districts as a way of attracting additional votes.
“The numbers that matter for the next three days in the Minnesota House is whether six Republicans will take three days to decide to save thousands of jobs,” said House Majority Leader Ryan Winkler, DFL-Golden Valley, referring to the construction jobs that result from the bonding projects.
Last chance before the election
This week’s session was called under a state law that permits the House and Senate to pass judgment on state of emergency declarations after 30 days — and after each 30-day extension. This is the fifth special session called under that law, and each time the GOP-controlled Senate has voted to rescind the declaration and the DFL-controlled House has not. That happened again Monday.
But while in St. Paul, lawmakers took yet another opportunity to break through a political dispute over whether to pass a bonding bill and how large it should be. There has never been a question that House Republicans want some sort of bonding bill, by which the Legislature designates and funds public construction projects throughout the state.
A yes vote on the bill would also get some tax cuts favored by Republicans, especially a measure to sync state tax treatment of capital investments for small businesses and farmers with federal code. The supplemental spending in the bill has money to keep open two small prisons — Togo and Willow River — slated for closure as a way to balance a Corrections budget hit with increased staffing costs systemwide.
The question was what House GOP leader Kurt Daudt could get in return for support from his caucus, in addition to the traditional inclusion of funding for projects in GOP districts. His first demand in the spring had been an end to Gov. Tim Walz’s emergency powers. He then insisted that certain provisions in the bill favored by DFL members be excised. Finally, he wanted all of the increased debt service — principal and interest payments — on the newly sold bonds to be covered by spending cuts.
But with the election approaching, some of Daudt’s caucus members thought the time for negotiations was ending. This session is the last opportunity before Election Day for incumbents to be able to show they won money for a local project.
Senate majority Republicans have been supportive of the three-part deal, and the bonding bill heard in the Senate Capital Investment Committee Monday morning is nearly identical to the House measure.
But in a statement released Monday, Senate Majority Leader Paul Gazelka, R-East Gull Lake, said the deal isn’t yet a done deal. “There is not an agreement on the bill — yet,” said Gazelka, who is not attending the session in person because of his exposure to President Trump during his Minnesota visit nearly two weeks ago. “The important things in this bill, about $200 million in tax relief for main street and farmers, $700 million for road and bridges, and $300 million in wastewater treatment are being put in jeopardy by additional amendments, conversations, and backroom antics we are not a part of.”
What’s in the bonding bill
The 179-page bonding bill includes both a project list and the authorization for borrowing. The new debt would include $1.13 billion in new general obligation bonds paid off with general state taxes and $300 million and trunk highway bonds. Including other funding methods including bonds with non-general fund debt service and spending from highway funds, the package reaches $1.874 billion in the Senate version and $1.879 in the House and is well within state guidelines for how much it can borrow. But the two sides must agree on identical versions for it to go to the governor for signature.
The end-game budget is significantly less than what Walz had requested back in January: $2 million in general obligation bonds and a total budget of $2.6 billion
The latest version includes money for state colleges and universities, including a new child development program building at the University of Minnesota that was championed by Lt. Gov. Peggy Flanagan, and a new state Emergency Operations Center to replace a crowded facility in downtown St. Paul. Walz has said both the pandemic and the civil unrest in the Twin Cities following the death of George Floyd showed the inadequacy of that facility.
It also includes hundreds of millions in local projects: roads, bridges, wastewater treatment and economic development. St. Paul would get $52 million to help replace the 3rd Street/Kellogg Bridge, Minneapolis would get some funding for the amphitheater project on the north Mississippi and some – but not all – of its request for help replacing a stormwater tunnel.
The Met Council would also get historic funding to complete two bus rapid transit lines: the D Line from the Brooklyn Center Transit Center to the Mall of America via downtown Minneapolis; and the B line from the western edge of West Lake Street to Union Depot in St. Paul via Lake Street and Marshall Avenue.
It also contains what is called the “Equity in Bonding” proposal, which includes $30 million in cash grants to community-based organizations such as the American Indian Center in Minneapolis, the Baldwin Square building in North Minneapolis, the Victoria Theater in St. Paul and for the Hmong American Farmers Association. These would not be funded by the sale of bonds but from the state general fund.
And it contains $16 million in general obligation bonds for public housing rehabilitation money and $100 million in housing infrastructure bonds that can be used in partnership with private and nonprofit organizations to provide affordable housing.