Lawmakers weigh building projects to boost Minnesota's economy in pandemic

Minnesota's political leaders agree that public construction projects could create jobs as the economy lags, but they head into the final weeks of the legislative session split on how much long-term debt the state should take on for that work.

The COVID-19 pandemic has given new dimension to the usual debate at the State Capitol over the scale of a public infrastructure bill. Gov. Tim Walz and legislators in both parties say they are determined to pass a borrowing package that will quickly create jobs.

"It makes absolute sense to view it as a stimulus act that will have a positive impact on businesses, positive impact on revenue, and of course changing the layout of deteriorating infrastructure," Walz said in a recent call with the League of Minnesota Cities.

With just three weeks remaining to finish the work of this year's session, House DFL Capital Investment Committee Chairwoman Mary Murphy said lawmakers are working daily on the borrowing measure, called the bonding bill. But the scope of the projects the bill might include remains unclear.

Legislators are selecting from hundreds of requests from state agencies, local governments, colleges and universities.

The bonding bill is typically the biggest spending measure the Legislature passes in even-numbered years. It often comes together behind closed doors in the final hours of the session. With the coronavirus forcing legislators to do most of their work remotely, the process is even less transparent.

Walz provided the starting point for the discussion in January. He proposed a nearly $2.6 billion capital investment package ranging from local roads to college buildings. Despite the budget challenges of the pandemic, he is still pushing for that amount.

House Speaker Melissa Hortman said Monday the bonding bill should be more than $2 billion, or "as big as is responsible." Republican Senate Majority Leader Paul Gazelka has repeatedly suggested the state could bond for $755 million without taking on additional debt payment costs. But he said this week he is willing to borrow more than that, though he did not give a number.

Gazelka said deal making is tied up with two other pieces of legislation moving at the Capitol: a tax bill, and the push by Senate Republicans to gain more oversight on how federal funds to the state are used to fight coronavirus.

Both the House and Senate leaders say the final shape of the bonding bill will be influenced by an updated budget forecast which Minnesota Management and Budget is expected to release next week. Hortman expects bonding talks to be "expedited" after that.

Plans for a bonding bill have been scaled back since this winter, said Sen. David Senjem, GOP chairman of the Senate Capital Investment Committee. He expects the state will face a budget deficit and said Minnesota needs a measured approach to taking on additional debt.

"As we're seeing the gloom and doom of how this is affecting everybody … we need to be a little more guarded. I just don't think that we're going to be setting any records this year," Senjem said. Lawmakers could probably agree to a bonding bill around $1 billion, he said, but "$2 or $3 billion, those numbers are kind of off-the-charts right now."

While legislators said they are hard at work on a bonding deal, the efforts are not easily apparent to the public or even lobbyists, who are used to grabbing legislators around the Capitol to push their projects. Neither the House nor Senate Capital Investment Committees have met publicly in the past month and a half. The Senate committee on Wednesday will hold its first hearing since the coronavirus hit. The panel is scheduled to talk about rebuilding the state's economy through transportation infrastructure investments.

League of Minnesota Cities lobbyist Anne Finn said city officials are constantly calling their organization to see what they can do to keep local projects in the mix at the Capitol, but the League hasn't been privy to negotiations.

"Since the pandemic started, there's a much bigger sense of urgency around getting a robust bonding bill in 2020," she said. "We think that this will help stabilize the economy."

Walz made a similar argument last week. He said the coronavirus is likely to prompt an economic crisis approaching the magnitude of the Great Depression.

"With that being the case, there's going to be an argument about austerity, meaning just cut everything down. … That's the worst thing you could do," he said.

Cash-strapped businesses are not going to be able to jump-start the economy. That responsibility will fall on the federal government, because it is allowed to run a deficit, and states can use bonding to pay for projects, Walz said.

More than ever, the borrowing bill should focus on projects that don't need additional planning and can put people to work quickly, Senjem said. "We would like to see shovels turning dirt, and hammers pounding nails ... concrete being poured," he said.

Staff writer Briana Bierschbach contributed to this report.

Jessie Van Berkel • 651-925-5044