Future of area bonding projects still unsure after Senate vote

Published 8:41 pm Friday, March 17, 2023

Area bonding projects remain up in the air after Senate Republicans on Thursday moved to table the $1.5 billion capital investment bill, arguing that it should be tied to tax cuts.

The move sent Democrats, who hold a narrow majority in the chamber, back to the drawing board, and it frustrated local leaders and labor groups who’ve waited three years for lawmakers to approve a capital investment bill.

Lawmakers typically pass a capital investment bill — known as a bonding bill — every other year. But they failed to pass one in 2021 and 2022 under divided control in the Legislature.

Email newsletter signup

District 23 Sen. Gene Dornink said Senate Republicans had asked if the tax bill could be passed at the same time as the bonding bill as a compromise, but DFL leadership declined and then brought the bonding bill alone to a vote.

He said DFL leaders have said they support tax relief, but no other specifics about their level of support have yet been discussed. Without knowing the DFLers plans for tax relief, Dornink said he and all of the other Republican senators voted to table the bill, at least for the moment. He said bonds aren’t released until August, so it could have been approved later in the session.

The senators also hoped part of the state’s $17.5 billion surplus could be used to fund projects, rather than issuing bonds.

“We’re just a little concerned with all the money that’s being spent and that they’re trying to put it on the credit card before we find out some of these things,” Dornink said.

Democrats hold a 34-33 majority but needed at least seven Republicans to cross the aisle for the bill to pass. Bonding bills require a three-fifths majority because they would incur debt by issuing bonds to pay for the projects.

“It was a hard vote, and I hated it,” Dornink said, noting it had been a difficult week for him.

The bill includes funding for the final phase of dredging on Albert Lea’s Fountain Lake, as well as funding for both Albert Lea and Austin’s wastewater treatment plants.

Albert Lea’s plant has grown from $30 million in cost to $60 million and most recently topped $73 million because of inflation.

Albert Lea City Manager Ian Rigg said the bill — and the funding for Albert Lea — is extremely important.

The city divided off part of its overall project to first focus on the $4.1 million grit building replacement to provide the state time to come up with the remainder.

“I do not know how much longer we can wait for this critical piece of our plant to be replaced,” Rigg said.

Shell Rock River Watershed District Administrator Andy Henschel said he was disappointed the bill did not pass, but he is still confident something will get done since the bill was laid over for action on a later day.

“The Shell Rock River Watershed District will continue in its push for bonding and completing the Fountain Lake Restoration Project,” Henschel said.

The district has requested $9 million for the final phase of dredging. Active dredging on Fountain Lake first began in 2018, with the first two phases funded by an initial $7.5 million in bonding appropriation and $9.5 million in local option sales tax funds. 

The final phase of the project includes the east basin of the main bay, Bancroft Channel and parts of Bancroft Bay. Costs are higher than initially anticipated for this portion because the dredge had to be removed from the lake because the funding was not available.

Dornink said though he recognizes that local government leaders are frustrated that the bill has not been approved, he still is hopeful.

“I believe we’ll get it done,” he said. “We were just trying to make an appeal for the taxpayers.”

He said if the DFL would be more upfront with the Republicans, it would make things easier.

“It’s hard for me to swipe a credit card before we kind of know what’s going on with the rest of the budget,” Dornink said.

Capital Investment Chair Sandra Pappas, DFL-St. Paul, said Thursday her committee would now pivot to a cash-only bill.  Because it wouldn’t use bonds, it would not require GOP support to pass. And Pappas hinted that Republicans might not get projects in their districts included in a cash-only bill.

“It’s going to be very difficult to replace the $1.5 billion in bonds, and fund all these projects that are in these two bills for all of our communities all over the state,” Pappas said. “And frankly, it breaks my heart. I have heard these bills, I have visited these communities. I know how desperate they are for assistance from the state. I know they can’t afford it.”

Pappas also said that moving to a cash-only capital investment bill could divert money from other uses.

“Going to an all-cash bill will squeeze not only your number one priority, tax relief, and make that more difficult to do, but will make it more difficult for me to fund all of these projects that are in this great bill today,” Pappas told Republicans on the Senate floor.

At a capital investment committee hearing later in the day, frustration about the vote came to a fore. Pappas said she wouldn’t be able to hear some GOP lawmakers’ proposals for local projects that were set to be considered for a second bonding bill.

The move frustrated Republicans on the panel, who had proposals that were dropped from discussion.

“So you pull the Republican bills because your bill didn’t pass when you knew it wasn’t going to pass,” Minority Lead Karin Housley, R-Stillwater, said. “Madam chair, this appears to the public, especially those who are driving for hours to get here, that this is definitely the Democrats’ way this year; it’s just a pay to play.”

Asked why a pair of bills had been pulled from the agenda, Pappas responded that it was because the authors had voted against the $1.5 billion package.

“You should tell them I’m waiting for Republicans to pass the bonding bill. And I’d be happy to hear their bills, if that’s the case,” Pappas said.

She later said that the committee would take testimony from local leaders who’d traveled to talk about projects in their communities.

House leaders said they would also pursue an alternate path forward on a public works bill.

“It’s regrettable the Senate GOP chose gridlock over progress for Minnesotans today. In the coming days, the House DFL will continue to work with the House GOP and Senate DFL to move a capital investment bill to the governor’s desk — with or without the Senate GOP,” House Speaker Melissa Hortman, DFL-Brooklyn Park, said.

The state tracked more than $6 billion in current requests around the state for roads, bridges, wastewater treatment plants, parks and state and local buildings.

Ahead of the Senate vote, construction workers and local leaders said the funding package was overdue.

“We shouldn’t be talking about these projects, we should be talking about the next round of projects,” Bradley Peterson, executive director of the Coalition of Greater Minnesota Cities, said. “There are local elected officials around the state who are tremendously frustrated that this has not gotten done. They live in a state of uncertainty about their projects, how they will be paid for, who will pay for them, and whether or not they will come to fruition.”

— Minnesota Public Radio News contributed to this story.