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Albert Lea’s bonding requests were not included in Minnesota Gov. Tim Walz’s $2.7 billion capital investment proposal unveiled Tuesday in a news conference outside the University of Minnesota’s Institute of Child Development. 

Walz used the construction site as a backdrop to highlight how 38% of his proposal, or more than $1 billion, is for asset preservation to maintain and upgrade properties that taxpayers already own.

“This is your property,” Walz said. “These are assets that belong to the people of Minnesota.”

Another 21% — more than $560 million — would go to various new public infrastructure projects, including $120 million for local bridge replacements, $90 million for local road improvements and $200 million for local water infrastructure.

Sixteen percent, or more than $450 million, would go toward housing, including projects to combat homelessness. And 10%, or more than $262 million, would go toward the environment, including $190 million for climate change projects.

The Shell Rock River Watershed District had requested $8 million in bonding for the final phase of dredging on Fountain Lake, and the city of Albert Lea had requested $30 million to go toward upgrades at the city’s wastewater treatment plant but neither project was included.

Watershed District Administrator Andy Henschel said he was disappointed the governor did not include the dredging project in the bill. 

“This is a strong project and is the result of decades of community work to restore and enhance water quality in Fountain Lake,” Henschel said in a press release. “The lake is the heart of the city and important to our quality of life, and that makes it stand out.”

The release stated for years Fountain Lake has been hampered by large amounts of nutrients from upland and internal sources. The Shell Rock River Watershed District and partners have been aggressively addressing this issue with systematic, multi-faceted efforts. 

The restoration project is a multi-phased project. Active dredging began in 2018, utilizing a previous bonding appropriation of $7.5 million and local option sales tax funds of $9.5 million. The additional funds the district requested are needed to complete the final phase of the project successfully.

In 2020 the district began the second phase of dredging that includes Main Bay and Dane’s Bay. The third and final phase will complete the project and include Main Bay (East Basin), Bancroft Channel and parts of Bancroft Bay. The additional $8 million in state funding will complete the third and final phase of the project. This phase is in the heart of downtown Albert Lea.

He said the district remains committed to restoring water quality in Fountain Lake and completing the final phase of the project.

“This is the beginning of the bonding process, and we’re very far from the finish line,” Henschel said. “We have great support from Rep. Peggy Bennett and Sen. Gene Dornink at the Capitol, and their continued support will be key as we continue working through the process.”

Albert Lea City Manager Ian Rigg said he, too, was disappointed that the city and the watershed projects were not included in the proposal. 

He noted, however, there is $200 million recommended for a funding source that may allow the city’s wastewater treatment plant project to move forward with similar projects. 

“This project is very important for the community but also the region,” Rigg said. “If we are able to get funding, we will be able to do more for our industries and their future growth. We will be able to do more for the environment. We will be able to better control costs for our residential users.”

The total improvements at the plant are estimated to cost $60 million. The wastewater treatment facility was constructed in 1981 and is facing new regulations for phosphorus removal through the Minnesota Pollution Control Agency.

He said the plant supports the industries that pay wages that the state taxes, and the investment from the state would have a 40-year lifespan. 

City staff will soon be officially submitting its plans for scoring at the state level, and staff expect the project to score well. 

“Our hope is that through the process we will have the opportunity to spend some time with legislators and the governor to showcase why our project is vital and will have a return on investment for the state,” he said. 

Public works borrowing packages, also known as bonding bills, are traditionally the centerpiece of Minnesota’s legislative sessions in even-numbered years. They’re meant to benefit future generations, who help cover the payments.

Walz is unlikely to get everything he’s seeking from the Legislature, which convenes Jan. 31. His proposal includes $2 billion in general obligation bonds, which require a three-fifths majority in each chamber to pass because they’re backed by the state’s full faith and credit. That means the final package will require at least some votes from the minority party in both the House and Senate. So bipartisan compromises will be essential. His plan also relies on $730 million from other sources, including $276 million in cash from the state’s projected $7.7 billion budget surplus.

Walz said the surplus means Minnesota can afford a big package, and noted that the state’s AAA credit rating will help secure low interest rates. Minnesota got interest rates of 4% to 5% on general obligation bonds that it sold late last year.

Minnesota Management and Budget Commissioner Jim Schowalter said their proposal is “fiscally responsible” because the state can afford to service the debt, so it will preserve the state’s high credit rating. He also said it will help address billions of dollars in deferred maintenance costs before that work gets even more expensive.

Democratic Rep. Fue Lee, of Minneapolis, who chairs the House bonding committee, applauded the governor’s support for housing and equity-focused projects. Walz earmarked $100 million for projects aimed at Black, Native American and other communities of color that often missed out in previous bonding bills.

“In communities throughout Minnesota, there is an immense need for investment in local projects and resources that bring jobs and opportunities to the region, especially when it comes to investing in marginalized Minnesotans and addressing our state’s housing crisis,” Lee said in a statement.

The chairman of the Senate bonding committee, independent Tom Bakk, of Cook, a former Democrat who votes with Republicans on procedural issues, told reporters he hadn’t had time to review the governor’s proposal because his panel is busy visiting 40 proposed project sites this week. Bakk said the governor’s $2.7 billion figure is “way bigger than we’ve ever done.” Bakk said he didn’t have a dollar target in mind, but that his priorities are public safety, asset preservation and deferred maintenance.

University of Minnesota President Joan Gabel joined the governor to express gratitude for the $213 million his package includes for asset preservation and other projects at the university. She highlighted the proposed renovation of the undergraduate chemistry teaching lab on the Minneapolis campus. It still has lab spaces that are “almost unchanged” since the 1930s when the science and teaching methods were very different. So, Gabel said, the antiquated labs put Minnesota students at a “significant disadvantage” to those at other universities.

 

— The Associated Press contributed to this report.