Minnesota legislators contemplate scaled-back $1.3B infrastructure plan

Minnesota leaders agree the state needs to spend more to keep its roads, water systems and other infrastructure functioning. But a deal to pay for upkeep is caught up in final legislative session negotiations, leaving local government and construction industry officials on edge.

Earlier this year, lawmakers hoped for fast passage of a $1.9 billion infrastructure package that combined the usual borrowing with cash. But with roughly a week remaining to wrap up bills — and a goal of ending the session early — DFL leaders have shifted to a scaled-back, all-cash approach that doesn't require GOP cooperation.

"It's clear that the Minnesota Republicans in the Senate don't want to participate in a bonding bill. So instead of doing more than $2 billion worth of projects together, we'll be doing $1.3 billion alone," said DFL House Speaker Melissa Hortman, adding that she wants to pass another $1 billion cash bill next year.

Legislators reviewed the $1.3 billion proposal Friday, with some saying they still hope to reach an agreement along the lines of their original deal — something Hortman said Friday will not happen. Members from both sides of the aisle lamented potential trims to projects in the all-cash plan, which Republicans said favors the Twin Cities.

"We want to continue to work to get this done. I think it's extremely disappointing and really feels like a punch in the gut and retaliatory, this all-cash bill that has been put forward," said Sen. Karin Housley, that chamber's lead GOP negotiator on infrastructure.

In March, the House approved a $1.5 billion borrowing bill with the necessary three-fifths supermajority and also signed off on a nearly $400 million cash measure. But Senate Republicans, who wanted the deal to be tied to tax cuts, blocked their chamber's version of the bill.

Cities looking to the infrastructure package to help pay for local projects, and construction industry groups that rely on the bills to create jobs, have been anxiously watching the action at the Capitol. Minnesota hasn't passed a big infrastructure bill since 2020 and advocates say needs are piling up.

"City officials are definitely wringing their hands, waiting for hopefully something to happen. And I don't think it's over yet," Anne Finn, a lobbyist with the League of Minnesota Cities, said after Friday's hearing. "There's still a desire, especially for some of the Republicans, to get some of their projects back into a bill."

The $1.3 billion proposal would reduce earlier funding figures for a range of projects, including cutting tens of millions of dollars for colleges and universities, water infrastructure, public housing, transit, road and bridges.

The cash plan includes grants for 54 nonprofits and community organizations. Of those, only four are located in greater Minnesota, Republicans said.

Democrats' idea of spending $1.3 billion this year and another $1 billion next year will hold up projects and create job uncertainty, said Tom Dicklich, executive director of the Minnesota Building and Construction Trades Council.

The pared-back cash proposal is a "huge disappointment," said Tim Worke, CEO of Associated General Contractors of Minnesota. He said "robust" borrowing makes sense, because infrastructure projects are long-term investments and the cost of the work will continue to climb.

"This is the building blocks, the basic blocking and tackling, of government and they hold these things hostage to other more challenging issues to leverage them. And this year it seems to be tax breaks or anything the Republicans in the Senate want," Worke said, noting that whatever party is in the minority always tries to use the supermajority requirement for a borrowing bill as leverage.

Lawmakers attempted this week to resurrect the old borrowing plan. Senate Capital Investment Committee Chair Sandra Pappas, DFL-St. Paul, proposed passing the exact version the House signed off on earlier in the session. She told the Senate Finance Committee on Thursday they can no longer count on enough House GOP votes to approve an infrastructure borrowing deal again. The Finance Committee voted 5-5 on her proposal, blocking the House version from proceeding to the full Senate for a vote.

Senate Republicans have tossed out various offers over the past week, saying they would support the previous bonding bill if Democrats agreed to other items, including $800 million for taxpayer rebates and $200 million for nursing homes and long-term care facilities.

But GOP Senate Minority Leader Mark Johnson said Friday that while the smaller all-cash bill will hurt individual projects in GOP members' districts, overall it might be the better approach because it prevents Democrats from using the dollars on other priorities "that aren't aligned with Minnesotans."

"If it's going to be cash, I'm fine with that," Johnson said.