Pick your bonding bill: House Ways and Means Committee approves three options

Will there be a bonding bill this session?

The debate over whether to help fund a fresh set of construction projects with state bond proceeds has mainly come down to two positions: Either wait and follow tradition by passing a bonding bill in an even-numbered year or take advantage of historically low interest rates and pass funding for a bunch of new projects.

The Senate seemed to favor waiting, as its capital investment committee didn’t meet for most of the session, and, on Friday, approved a bill featuring multiple corrections and alterations to projects in the $1.87 billion bonding law from 2020. Meanwhile, the House Capital Investment Committee spent much of the 2021 session putting together a $1 billion bonding bill.

That bill, HF337, sponsored by Rep. Fue Lee (DFL-Mpls), was approved, as amended, Friday by the House Ways and Means Committee on an 18-10 party-line vote, and may be heard on the House Floor before Monday’s mandatory adjournment.

But there also seems to be a Plan B and Plan C afoot.

For the committee also approved, along party lines, HF728, another Lee-sponsored bill that would appropriate $300 million specifically to redeveloping areas of Minneapolis, St. Paul and other communities damaged in last summer’s civil unrest.

And, if passing a standalone bill featuring only corrections to previously funded projects proves the best option for getting something passed by midnight Monday, HF506 (also sponsored by Lee) was also approved by the committee, 24-2. It’s basically a placeholder in case the House decides to take the correction language from HF337 and passes it on its own.

Friday morning, the Senate Capital Investment Committee passed a duplicate of that bill – SF637, sponsored by Sen. Tom Bakk (I-Cook) – for that very purpose. It also passed the Bakk-sponsored SF287, which lifts all of the technical corrections language from HF337.

Bakk emphasized a bill making corrections to projects already underway may be the only option that makes sense right now. Almost $5 billion is on its way to the state as part of the federal American Rescue Plan Act.

While only $178.9 million of that is earmarked for capital projects, there’s an emphasis upon infrastructure in the act. And with $2.83 billion for the state, $1.11 billion for counties, $644.2 million for metro cities, and $376.9 million for other local units of government coming, Bakk asked a pertinent question.

“Why borrow when you can use cash?”

He suggested the House and Senate capital investment committees, instead of approving plans to borrow for capital projects, could instead allocate federal funds for the same purpose before a June special session. Or counties, cities and towns could withdraw their bonding proposals and concentrate on using that federal money for the same infrastructure projects, if they’re eligible.

In its guidance, the U.S. Treasury Department said there should be an emphasis upon water, sewer and broadband projects, but – at a Tuesday Tax Conference Committee meeting – Minnesota Management and Budget Commissioner Jim Schowalter said his agency believes highway projects to also be eligible uses of the federal funds.

And about those corrections to projects from the 2020 bonding bill: Bakk pointed out that prices of lumber and steel have more than tripled in the past year, suggesting that counties and municipalities returning to the Legislature to ask for funding increases on their previously approved projects could become more common.