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July 18, 2009

Area bonding requests top $36M

Little word on size of bill Pawlenty would support

By Mark Fischenich

MANKATO — South-central Minnesota will have more than $36 million at stake in 2010 when the Legislature and Gov. Tim Pawlenty negotiate a state construction borrowing bill.

Projects ranging from civic center improvements in Mankato to sewer upgrades in Vernon Center are on the official list of requests compiled by the Minnesota Management and Budget Department last week. The list of local requests also includes design and planning funds that could lead to tens of millions of dollars of future appropriations.

Statewide, requests total $2.65 billion — just more than $2 billion from state agencies and $619 million from local governments, according to Management and Budget Commissioner Tom Hanson.

Pawlenty will submit his recommendations by Jan. 15, Hanson wrote in a letter to lawmakers who chair the committees that will oversee the development of bonding bills. Hanson gave no hint to the size of the bill Pawlenty will support.

As an even-numbered year, 2010 will be the legislative session traditionally devoted to finalizing a list of construction projects to be financed through the sale of bonds. The odd-numbered years are used to develop a two-year state budget.

Lawmakers have supported borrowing bills of about $1 billion in recent bonding years, with Pawlenty typically calling for slightly smaller totals.

The upcoming session is destined to be more complicated, however, because the Legislature and governor will also be debating a possible supplemental general fund budget to address the cuts and shifts Pawlenty approved through his unallotment authority.

Pawlenty used that authority when he and the Legislature failed to agree on a way to eliminate a $4.6 billion budget shortfall. The Republican governor’s cuts and a school funding shift were roundly criticized by the DFL-dominated House and Senate, but at least technically created a balanced budget through July 1, 2011.

A new revenue forecast on July 1 didn’t bode well for that budget staying balanced. Revenues to the state were $150 million lower than anticipated as the lingering economic crisis drove personal income down, along with the income taxes collected.

State Rep. Kathy Brynaert, DFL-Mankato, expects many Minnesotans will be perplexed by talk of spending as much as $1 billion for items such as sports facilities, new college classroom buildings, parks and trails, and other projects in the midst of deep cuts in programs for the sick and disabled.

Lawmakers and the governor will need to explain that bonding funds for construction projects can’t be transferred to general government programs.

“And that even in deficit (situations), there’s a role for bonding,” Brynaert said. “There is definitely a strong school of thought that looks at bonding as a way to help the economy.”

In times of high unemployment, government-funded construction projects can create much-needed jobs, she said. Interest rates on bonds sold to finance the projects also tend to be low when the economy is in recession.

“I would say that the Legislature would definitely like it to be a full billion-dollar bill,” Brynaert said. “I don’t know if the governor will support that.”

Pawlenty opposed many of the projects proposed by the Legislature in 2009 in a supplemental bonding bill aimed at economic stimulus, but he often indicated that his opposition to a particular project came from a belief that it could wait until 2010.

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