When a veteran DFL state senator who recently turned independent was tapped to help lead the Legislature’s efforts to finance public construction projects across the state, it may have raised expectations at the Capitol that a bill would come together.
Sen. Tom Bakk — a former Senate majority leader who is retiring from the Legislature after this year — is known at the Capitol as a savvy negotiator able to break through stalemates and cut deals across the political divide. Bakk himself also predicted that, despite a divided Legislature, a successful bonding bill was likely because it wasn’t linked to the other intertwined parts of a larger budget deal.
“The bonding bill actually is the thing that everyone expects is going to get done the election year,” Bakk told reporters on the eve of the legislative session’s final day of action in May. “Maybe it’s the only thing that passes. It could be that maybe everything else falls apart.”
Everything did fall apart – including the bonding bill.
“Our folks are pretty disappointed and really kind of befuddled that the Legislature was not able to pass a bonding bill this year,” said Bradley Peterson, executive director of the Coalition of Greater Minnesota Cities, which lobbies on behalf of cities seeking bonding support for wastewater infrastructure and other projects.
There is still a chance a bonding bill could come together before the end of the year in a special legislative session. If it doesn’t, it would be the first time since at least 1983 that the Legislature has failed to pass one in a two-year budget cycle, said Patrick Hogan, a spokesman for Minnesota Management and Budget.
Popular but tricky
Every bonding bill is different but they usually pay for things like roads and bridges, wastewater infrastructure, renovations to colleges and universities, affordable housing and upgrades to state parks and trails. Lawmakers tend to approve smaller bonding bills in odd-numbered years, when legislators are focused on writing a two-year state budget, and much larger bonding bills in even-numbered years.
They are often politically popular. Local government officials and construction unions often support bonding, saying it creates jobs and helps cities and counties build projects by spreading out costs across the state instead of saddling a small number of local taxpayers with huge bills.
Yet bonding bills can also be politically tricky. General obligation bonds at the core of capital budgets need approval from a 60-percent supermajority at the Legislature. That means the majority party has to work with the political minority to secure passage.
Still, lawmakers tend to broadly support bonding bills for creating jobs and public works projects across many districts.
The Republican-led Senate and DFL-majority House had plans for a bonding bill in 2021, when Bakk became an independent, but negotiations stalled amid opposition from minority House Republicans frustrated with a larger budget deal.
Many predicted it would happen this year instead, so what happened?
Bakk this week declined to comment on the impasse. Before the session ended, he told reporters he had been negotiating with House and Senate leaders on a bill with “heavy emphasis” on preservation of state assets and deferred maintenance. That spending was always his priority. A pool of money for purely local projects was still a point of contention. Later, on the last night of session, House Minority Leader Kurt Daudt, R-Crown, said the House GOP was open to bringing a bonding bill to the House floor, but talks “broke down at some point” and he wasn’t sure exactly why.
Rep. Fue Lee, a Minneapolis DFLer who chairs the House’s Capital Investment Committee, said they never did cinch a deal. Lawmakers agreed the bonding bill should be worth $1.4 billion but left the details undecided. And Bakk has previously opposed some of Lee’s plans, including for certain spending aimed at on racial equity nonprofits in a bonding bill.
Lee claimed however that the bigger picture, in which the House and Senate could not complete an agreement to spend Minnesota’s historically large surplus, tanked a capital budget.
Meanwhile, proponents of the bonding bill say there are several factors at play.
Joel Smith, president and business manager for the Minnesota and North Dakota chapter of Laborers’ International Union of North America, said there was plenty of blame to go around, but he said he was frustrated with Senate Republicans for “walking away” from the broader taxes and spending agreement struck with Gov. Tim Walz and the House DFL. The Senate GOP has argued the DFL wouldn’t budge enough in negotiating several key issues like health and human services spending.
Walz has been holding out hope for a special legislative session that would include a bonding bill. He has suggested the Senate GOP is squeamish to pass bills ahead of an Aug. 9 primary where several incumbent legislators face challenges from their political right.
More broadly, Peterson, from the Greater Minnesota cities coalition, said the “increasing polarization and politicization of every issue” has become a hurdle to the bonding bill in recent years.
He also said incentives have changed for legislators. There are fewer swing districts as Democrats concentrate power in the Twin Cities metro and Republicans in Greater Minnesota, and so lawmakers aren’t punished for failing to pass bills like they once were, he said. And Peterson said newer legislators are driven more by ideology than outcomes, a generational break from an older era of Bakk-style, horse-trading dealmaking.
Peterson said the Legislature has also become reliant on the concept of a “global deal” where either everything is passed or nothing is passed. “All of these pieces are so tied together,” he said.
Rare miss on capital budget with real consequences
If the Legislature does not approve a capital budget this year, it will be notable.
The three other years since 1983 in which there was no bonding bill were 2004, 2016 and 2021, said Hogan, the Minnesota Management and Budget spokesman. (In 2019, lawmakers did authorize new debt, but the Legislature was only shifting bonds from 2018 backed by the Environment and Natural Resources Trust Fund to general obligation bonds in response to a lawsuit.)
Peterson said the Legislature has “generally made good” by coming back and passing a large bonding bill after missing a year. But supporters of capital budgets say there is good reason to act now.
Inflation has made projects more expensive, for one. Austin Mayor Steve King said in late June that the cost of the city’s overhaul of a wastewater treatment plant spiked to $100 million from $84 million in just a few months. The need for water infrastructure across the state is about $12 billion in the next 20 years and growing, Peterson said.
It’s complicated to measure how many jobs a bonding bill creates, but using a model from the Associated General Contractors, LIUNA estimates a capital investment bill of $1.7 billion generates around 21,500 direct and spinoff jobs.
Without bonding legislation, lawmakers could also miss out on some federal cash or delay funding from the congressional infrastructure bill. Smith of LIUNA said he’s hopeful a deal could still happen. Legislators in 2020 passed the historically large $1.87 billion bonding bill in October, after all.
For Lee, a bonding bill could help deliver on a promise to help people of color and poor Minnesotans get investment in a process he said they have had difficulty navigating. Since taking over as the House’s bonding committee chair in 2021 for Hermantown Democrat Mary Murphy, Lee has pushed for projects in a bonding bill he says will advance racial equity.
For Bakk, a bonding bill could be a key accomplishment ahead of his retirement from the Legislature. Leaving the DFL after the 2020 election gave him a chance to lead the Senate’s bonding committee in the Republican-controlled chamber.
So far, at least, Lee and Bakk together are 0-for-2 on bonding bills.
That means dozens of projects across the state – including some in their own backyards – have received no bonding money.
Walz recommended $3 million for Vermilion Community College in Ely to renovate six classrooms constructed in 1971 and 1985, fix a leaky roof causing ongoing water damage, and upgrade two bathrooms so they comply with disability law. Without the money, “classroom conditions will continue to deteriorate possibly to the point where prospective students will look elsewhere for a more modernized, technologically adequate college,” says a proposal in Walz’s budget documents.
The governor also recommended $12 million for the state Department of Natural Resources to build a new visitor center, expand trails, campsites and make other upgrades at the Lake Vermilion-Soudan Underground Mine state park in northeast Minnesota. The DNR request was the most for any single park in the governor’s proposal.
“I think it’s going to provide people with a lot of unique information about the park,” Ann Pierce, director of Parks and Trails at DNR, said about the visitor center. “It’s really our mining history that is highlighted in that park.”