Bonding bill unanimously approved
The delays were the result of legislators trying to work out an agreement with Gov. Tim Pawlenty, but after passing a $925 million bill that is a full $100 million larger than what the governor requested, it seems unlikely to have his support.
“Their inability to say no led to a seriously bloated laundry list. We’ll be carefully reviewing it and considering our options over the coming days,” the governor said in a press release. He also described it as “fiscally irresponsible” and “having misguided priorities.” Regardless, the bill will be voted on by both the House and the Senate today.
If the bill passes, Pawlenty will have three days to sign or veto the bill. If the bill falls short of a three-fifths majority it will go back to the committee.
The Iron Range seems to have kept funding for local projects intact from earlier versions. Most notably, there is $28 million to build infrastructure for the Itasca County steel mill. That is the same as the House’s proposal and $2 million less than the Senate's proposal.
Other big-ticket items are $38 million for the Duluth Entertainment and Community Center and $20 million for the Bemidji Regional Event Center.
There’s also $3.5 million to drain the Canisteo Mine Pit, $2 million to finish the Paul Bunyan trail, $2.3 million for Ah-Gwah-Ching Redevelopment Center, $250,000 for pre-design plans of the Hibbing Memorial Center and $125,000 for Nassau Public Safety Facility.
The safety facility only received half of its request, but actually made out well since it was entirely unfunded in earlier versions of the bill.
The Lake Vermillion State Park money was left out because there has been no known progress in negotiations and therefore no known dollar amount needed.
At the beginning of the meeting, committee Chair Rep. Alice Hausman, DFL-St. Paul, opened with an optimistic outlook.
“For us to be here with an agreement on $925 million, we have come a long way,” she said.
The bill is the net result of more than $4 billion worth of requests. However, the governor has threatened a veto to a bill larger than $825 million.
The problem is the way the state calculates its debt-ratio.
Tom Hansen, the commissioner of finance, said using the current guidelines a bill larger than $825 million would push the state’s debt above the 3 percent guideline.
Legislators on the bonding committee disagree.
DFLers argue that the current method for calculating 3 percent of the general fund is so conservative that the state has been repeatedly under 3 percent. In addition, they are recommending that the administration take extra measures to ensure the state stays under 3 percent.
“If we're ever in danger (of exceeding the guideline), the administration could just wait a little while to sell some bonds,” said Sen. Keith Langseth, DFL-Glyndon.
Calculating 3 percent is complicated but it boils down to the assumptions you make.
The Legislature's calculations assume that future bonding bills will mirror the past 10 years’ average, or around $645 million. This has been the standard method used for budget forecasts.
Hansen and the governor assume future bonding bills will more closely mirror the current level, or $825 million.
Since the future bonding bills will impact the state’s debt-ratio, these are serious considerations when making calculations.
It’s a disagreement based on differing philosophies, Hansen said.
