Minnesota Gov. Tim Walz pitches $518 million public works package

Gov. Tim Walz unveiled a proposed $518 million package of construction projects across the state Monday, saying that new public works spending would create jobs during the pandemic and help prevent roads and buildings from falling into disrepair.

Minnesota legislators passed a historic $1.9 billion capital projects measure in October, the state's largest borrowing package to date. But the DFL governor said that another round of funding is necessary and the state should take advantage of continued low interest rates. His proposal would use $490 million in different types of state bonds, along with $28.3 million in general fund cash.

"There are massive repercussions by doing nothing," Walz said Monday. "It becomes a backlog that is untenable, and it starts to create a situation where we start to be less attractive to have folks come here."

Significant pieces of his proposal include $150 million in redevelopment appropriation bonds to help parts of Minneapolis and St. Paul damaged during the civil unrest last spring, and $100 million in housing infrastructure bonds to build and repair affordable housing. Walz also proposed $43 million, a mix of borrowing and cash, to upgrade security around the Minnesota Capitol — a proposal he said was in the works before the insurrection in Washington, D.C.

About $119 million would be used for Minnesota State and University of Minnesota facilities, and the Department of Natural Resources would see more than $52 million to support parks, trails and other infrastructure.

GOP leadership did not publicly comment on the governor's proposal Monday.

Some Republicans have opposed Walz's bonding proposals in the past, saying they were too costly. When Walz unveiled his $2 billion proposal last year, Senate Republicans offered their own proposal that was about half that.

Walz stood alongside University of Minnesota President Joan Gabel on Monday to make his appeal for more borrowing. They kicked off the push at the University's Health Sciences Education Center, a building funded in part through state bonding.

"It's not glamorous, but it funds the backbone of what we're able to do," Gabel said of the borrowing needed to preserve and replace higher-education buildings. Of the 30 million square feet the University of Minnesota maintains, nearly 8 million square feet is in poor or critical condition, she said.

The borrowing measure that passed last year included $166 million for repairs and additions to college and university campuses.

While the Legislature has traditionally passed bonding bills only in even years, Walz contended that an annual measure is important to avoid bigger bills down the road.

"We should do it when it's necessary. We should do it to a level that the state has the capacity to comfortably do, fiscally responsibly," he said.

The Legislature must weigh the governor's bonding request as it tries to craft a $52 billion two-year state budget already strained by the economic fallout of the COVID-19 pandemic.

The governor has proposed a borrowing measure every year he has been in office, though of varying sizes. He pitched a $1.3 billion package in 2019 and lawmakers debated a bonding measure a third of that size but they were unable to strike a deal that year.

A divided Legislature will consider Walz's latest proposal. Last year the DFL-majority House and GOP-led Senate ultimately approved a plan by wide margins, but negotiations continued for months after the regular legislative session ended.

Capital investment borrowing bills are particularly complicated to pass because they require a three-fifths supermajority of support in the Legislature. Walz acknowledged that pieces of his proposal will likely face opposition from Republicans, namely the $150 million for rebuilding in the Twin Cities.

Sen. Tom Bakk, I-Cook, hinted at a disinterest in bonding this session. He said in a statement that the Legislature's priorities are creating the next state budget and responding to COVID-19.

"At the appropriate time, I am hopeful the Legislature and the governor will again come together to produce a bonding bill focused on the critical needs of Minnesotans," he said.

In a new political dynamic, Bakk was picked to lead the Senate Capital Investment Committee — giving him a key position in negotiating the fate of a bonding bill. Bakk was ousted as Senate DFL minority leader last year and then broke off from the party to form an independent caucus. Minneapolis DFL Rep. Fue Lee, Bakk's counterpart on the House Capital Investment Committee, said Walz's proposal puts the state on the right track.

"The governor's proposal funds $100 million in Housing Infrastructure bonds to address Minnesota's housing crisis, chips away at asset preservation, and includes $150 million in redevelopment appropriation bonds," Lee said in a statement. "Which would be instrumental in helping small businesses rebuild after last summer's civil unrest."

Labor organizations and the Minnesota Building and Construction Trades Council also cheered Walz's proposal on Monday. Harry Melander, president of the council, said it is balanced and inclusive.

"The proposal will help keep Building Trades members working through the COVID-19 pandemic and beyond, while strategically funding projects that need to be built or maintained," Melander said.

Jessie Van Berkel • 651-925-5044