CHICAGO — Minnesota Gov. Mark Dayton on Tuesday proposed $775 million of general obligation borrowing to support a $1.5 billion capital plan with an emphasis on projects that spur economic development and improve public safety while creating more than 20,000 jobs.
In addition to the state GOs, the package known locally as the “bonding bill” relies on $580 million in federal funds, local government matches and private gifts.
A total of $900 million of borrowing would go to fund the program when also counting state trunk highway GO bonding that is repaid with transportation revenue, and debt issuance by the state university systems, housing finance agency and rural finance agency.
About 36% of the state’s $775 million commitment would fund statewide projects, 28% would go toward state programs, and 37% would fund projects in the seven-county metropolitan region around St. Paul and Minneapolis.
“This bill is our chance to put thousands of Minnesotans back to work by investing in important projects throughout our state,” Dayton said at a news conference held to unveil the bill, which now goes to lawmakers who will likely tweak both the project list and the bill’s size during their new session.
Dayton said the recommendations balance Minnesota’s current fiscal limitations and the need to continue to invest in state assets. The two-year budget signed into law last summer assumes future debt-service payments to support the new borrowing.
Economic development projects would be the largest recipient of aid, receiving $205 million, followed by higher education, which would claim $159 million. Public safety projects and programs are slated to receive $128 million, environmental efforts $122 million, transportation and transit projects $65 million, and veterans and military programs $55 million.
Projects earmarked for funding in Dayton’s plan include $25 million for Minneapolis’ Nicollet Mall renovations, $27 million for a new St. Paul Saints ballpark, $35 million for the expansion of Rochester Mayo Civic Center, $15 million for state prisons and $21 million for repairs to the state capitol building.
Dayton, a member of the Democrat-Farmer-Labor Party, faces opposition in the Republican-controlled Legislature over the size, with leaders saying they want to limit the bill to $400 million.
The Legislature typically takes up a capital plan in the year after approving a two-year operating budget, but last year it approved a $500 million bonding bill as part of an agreement that ended a budget stalemate and a government shutdown.
The stalemate and heavy use of one-time revenues to erase red ink in the $35 billion budget drove a round of downgrades. Standard & Poor’s lowered its rating a notch to AA-plus. Moody’s Investors Service revised its outlook on Minnesota’s Aa1 rating to negative. Fitch Ratings downgraded the state’s $6 billion of GOs to AA-plus from AAA.
Minnesota’s latest revenue estimate, from early December, projected a $876 million surplus in the current budget. The entire surplus will go to help restore nearly depleted reserves. State statutes require that $621 million go into the budget reserve, raising it to $648 million, and $255 million into the cash-flow account, bringing it to $350 million.
Aside from the capital budget, lawmakers are being pressed to act on a stadium funding package for the National Football League’s Minnesota Vikings. The state received three formal proposals late last week by a deadline set by Dayton.
Ramsey County, which includes St. Paul, submitted a $1.1 billion plan that relies on a county contribution of $375 million, state support of $300 million and a Vikings contribution of $425 million. The county is asking for state approval to impose food and beverage taxes to repay a bond issue to cover its share. The Vikings support the Ramsey plan.
Minneapolis, which is part of Hennepin County and home of the Vikings’ current home at the Hubert H. Humphrey Metrodome, submitted a $907 million plan that relies on $300 million of state support, a Vikings contribution, and $313 million in local financing by redirecting existing taxes once its convention center debt is retired.
The suburb of Shakopee submitted a $920 million plan that relies on user fees and revenues from casino gambling at the state’s horse racing tracks to cover the public financing piece.