Minnesota House Speaker Melissa Hortman has framed the 2021 legislative session as something of a rerun of 2019, when a politically divided government struck a late budget deal before convening a special session to approve the year’s work.
“You’ve seen this movie before and you know how it ended,” Hortman, a DFLer from Brooklyn Park, said last week when announcing a compromise on spending plans. “The sequel is pretty similar to the original.”
There is one area, however, where many at the Capitol are hoping for a different result: the bonding bill.
Top lawmakers in 2019 tried to move a package of publicly financed construction projects. But the bill, which needed approval from three-fifths of the Legislature, ran into opposition from minority House Republicans.
This year, another bonding plan is being formulated behind closed doors for projects like clean water infrastructure. Yet House Republicans, who are frustrated with Gov. Tim Walz’s ongoing emergency powers, may halt it once again to exert leverage over broader issues.
A ‘modest’ bonding bill in the works
In 2019, the Republican-led Senate and DFL-majority House struck a deal for a $500 million bonding bill as part of a larger agreement on a two-year operating budget for state government. House Republicans had other ideas.
Left out of talks and frustrated with parts of the final product, the GOPers in the House held out, and lawmakers failed to pass a bonding bill. (The House GOP later stalled a larger bonding bill in 2020 over Walz’s emergency powers, but relented in October, clearing the way for a massive $1.9 billion construction package.)
This year, House Democrats released a $1.03 billion bonding plan that included $300 million for redeveloping areas of Minneapolis and St. Paul damaged by riots after the murder of George Floyd by former officer Derek Chauvin. The proposal was part of a larger budget plan from House Democrats that included new taxes on high-earning Minnesotans, which DFLers later dropped. The Republican-led Senate never released a broad bonding plan, but Sen. Tom Bakk, an independent from Cook who chairs the Capital Investment Committee, said he wanted a smaller bill focused on traditional bonding initiatives like upgrading water infrastructure and preserving buildings and assets of the state’s higher education systems and state agencies like the Department of Natural Resources.
Lawmakers traditionally pass smaller bonding bills during odd-number years like 2021, when they’re writing a two-year operating budget. They often pass much larger construction packages in even-numbered years like 2020, when the difficult budget negotiations are behind them.
When legislative leaders announced their 2021 budget deal last week, they didn’t include spending “targets” for bonding. But on Monday, Sen. Sandy Pappas, DFL-St. Paul, said top House and Senate lawmakers are close to reaching a deal for how much money the legislature can spend on a bonding bill. Pappas, who is the top Democrat on the Senate’s Capital Investment Committee, said the final plan will be “significantly south of a billion dollars.”
Pappas said it will be focused more on asset preservation initiatives and water infrastructure, though she said the Senate will need to pledge at least $15 million for projects that help organizations doing racial equity work as the House has.
“I’d like a huge bonding bill,” Pappas said. But she said that wouldn’t get Republican support. “I think it’s going to be a modest bonding bill.”
While a bonding bill may be smaller than DFLers would like, money from the federal stimulus American Rescue Plan can pay for some things that are considered infrastructure or are often wrapped up in a bonding bill. Minnesota’s share of the ARP has $179 million specifically for capital projects. Stimulus money earmarked for broader use could also pay for some infrastructure initiatives.
Pappas said there’s an “expectation” federal money could be used on drinking water and wastewater treatment infrastructure, an area she said has huge needs across the state.
State leaders have also agreed to spend $70 million in cash on broadband infrastructure separate from any bonding bill and $100 million in what are known as state appropriation bonds on housing infrastructure — both things that only need a majority vote for approval.
Pappas also said House DFLers had moved the $300 million for redevelopment efforts in Minneapolis and St. Paul to negotiations in another committee, since the type of bonds for the push don’t need 60-percent approval and such a plan isn’t likely to get a supermajority if tied to the larger bonding bill. In all, the original $1 billion House bonding plan written by Rep. Fue Lee, DFL-Minneapolis, only had $500 million in general obligation bonds, which do need three-fifths support.
Walz told KMOJ radio Monday he expects lawmakers’ budget deal will include $150 million for rebuilding damaged businesses, though House and Senate leaders haven’t said the same. In response, a Senate GOP spokeswoman on Monday forwarded a previous statement from Sen. Eric Pratt, a Prior Lake Republican who chairs the Senate’s Jobs and Economic Growth Finance and Policy Committee. “We have not targeted funds specifically for Minneapolis and St. Paul,” in spending targets for economic development, Pratt said. “But we have tried to make sure the needs of all small businesses owners affected last year are met.”
Pappas said she is still canvassing fellow Senate Democrats about a potential bonding bill, but said DFLers are “not so crazy about linkage — about saying ‘we won’t do this because of this.’”
“We believe in bonding bills and so we’re more likely to be supportive,” Pappas said.
Why Republicans may stall a bonding bill
After top leaders announced the budget deal last week, House Minority Leader Kurt Daudt, a Republican from Crown, said “there literally hasn’t even been a single conversation about bonding” between he and DFL leaders. General obligation bonds will need 11 GOP votes if every Democrat votes for them. “That number is not going to be easy to get; our members are not happy that we weren’t included, and we’re not necessarily happy with the agreement that was reached,” Daudt said.
On Monday, Rep. Anne Neu Brindley, a Republican from North Branch and Deputy Minority Leader, said there has been a “little back and forth” on bonding but negotiations haven’t begun in earnest. “I don’t know if we’re close,” Neu Brindley said.
In theory, House Republicans are open to a smaller bonding bill focused on “critical infrastructure” like roads, bridges and wastewater infrastructure. But Neu Brindley also said the House GOP isn’t ruling out holding up a bonding bill to try and force the DFL to bend on other issues. She said her caucus hasn’t talked about a bonding plan yet, but said “the number one priority has to be getting a good budget done.”
“I think at this point we think that negotiations are still ongoing with the budget and there are plenty of, sort of, leverage points for Republicans …” Neu Brindley said. “So there are opportunities for us to bring an end to emergency powers or get concessions.”
Besides the federal money there is a big difference between 2019 and 2021: negotiation time. Two years ago, lawmakers announced the framework of a budget deal on May 19 and passed the final product May 25 during a special session after additional frantic backroom negotiations. The bonding bill was dropped amid that whirlwind.
This year, lawmakers are likely to come back to the Capitol for a special session around June 14, nearly a month after the initial agreement was struck. Legislators have been quiet, given all the time. They held no public meetings last week after Monday’s partial budget agreement was announced even though they are still hashing out the details of this year’s operating budget and policy bills.
“The reality is a bonding bill is something that doesn’t come together until closer to the end,” Neu Brindley said. “There’s a lot of time to come to an agreement on bonding.”