CHICAGO – Minnesota lawmakers approved a $566 million bill to finance capital projects, before moving on to the more contentious issue of a $1 billion, partially bond-financed stadium for the National Football League’s Minnesota Vikings.

The House overwhelmingly approved the capital package Monday, sending it to the Senate, where it also received strong support. The Senate did make some minor changes in the project list and the House on Tuesday approved the changes, sending it to the governor’s desk.

The capital budget, referred to locally as the bonding bill, provides $64 million for University of Minnesota projects and another $132 million for the Minnesota State Colleges and Universities system. About $44 million would pay for renovations to the historic state capitol building. Another $46 million goes to fund natural resources projects and $49 million is earmarked for transportation projects.

Neither package provides aid for the a light-rail line extension between downtown Minneapolis and Eden Prairie, which supporters said jeopardizes federal funding for the $1.25 billion project. Gov. Mark Dayton had called the project a top priority in his larger $775 million capital package unveiled earlier this year.

Though less than what he wanted, Dayton has said he was willing to sign a smaller package. The state’s bonding bill relies primarily on general obligation borrowing.

The Legislature typically takes up a capital plan in the year after it adopts a two-year operating budget, but last year it approved a $500 million supplemental 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.

With its economy on the mend, Minnesota, in its latest revenue forecast issued in early March, said it expects to collect an additional $323 million in its current two-year budget cycle. Under state law, the first $5 million goes to replenish its reserves that were diminished to help balance past budgets hit hard by the recession. The new deposit will bring the account’s total to $653 million.

The remaining $318 million goes to speed up the K-12 education aid payments the state pushed off to help balance its books for fiscal 2012-13.

Minnesota last year pushed off payment of $2.7 billion in aid to public education, squeezing districts’ budgets and forcing many to turn to short-term cash flow borrowing.

While economic indicators suggest the state’s economy has stabilized and is on the mend, the forecast still projects a deficit in the 2014-15 biennium of $1.1 billion. That figure is down slightly from the $1.3 billion of red ink anticipated in the November forecast.

The House late on Monday approved a bill for a new publicly subsidized Vikings stadium in Minneapolis after increasing the team’s contribution towards the $1 billion package. Debate began in the Senate Tuesday and was expected to continue through the night.

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