CHICAGO — Minnesota Gov. Tim Pawlenty late yesterday sent state lawmakers a letter warning that he intends to veto the $1 billion capital bonding bill approved by the Democrat majorities in both of the Legislature’s chambers.
Pawlenty favors a smaller capital budget and criticized lawmakers for leaving out several key projects he supports. “The people of Minnesota expect us to spend their tax dollars frugally and wisely. This bill does neither,” Pawlenty said in the letter. The Legislature, warned of the veto, still approved the bill late last night.
House and Senate conference committee members worked through the weekend to reconcile differences in the two bills approved by the separate chambers, while Pawlenty attended the National Governors Association conference in Washington, D.C.
The governor earlier this year unveiled a $700 million capital budget. Lawmakers sought to move quickly on the budget, hoping the infusion of funds for projects would spur job creation. The state’s capital budget is approved in even-numbered years while the operating budget is approved in odd-numbered years.
Pawlenty’s veto of the bonding bill will likely affect the tone of negotiations over how the state should deal with a $1.2 billion deficit in its $57 billion two-year budget. He has proposed erasing the red ink through a mix of spending cuts and increased federal Medicaid assistance.
Minnesota’s rating is under pressure because of the deficit and its reliance in the past on one-time revenues to cover shortfalls. Moody’s Investors Service this month revised the outlook on the state’s Aa1-rated general obligation debt to negative from stable. The state has top marks of AAA from Fitch Ratings and Standard & Poor’s, though Fitch assigns a negative outlook.