Minnesota needs more than $3 billion for aging infrastructure, Gov. Walz says

Gov. Tim Walz pitched a $3.3 billion plan Thursday to maintain and update Minnesota infrastructure, from roads to university buildings to housing.

The DFL governor released his proposal as legislators are moving quickly on a borrowing and spending bill about half that size. Minnesota faces a growing stack of requests from state agencies, local governments and outside groups seeking help with expensive construction and maintenance projects.

"We're here today to talk about a bonding bill that will put money into the projects like you saw right here at this facility," Walz said after touring the St. Paul regional public drinking water utility that is undergoing a massive overhaul. "Making sure Minnesotans have the things they need ... clean water, safe roads, good bridges. All of the things that make life better, make life safer and make our economy work."

State leaders have not passed an infrastructure bonding bill for the past two years, and legislators said the queue of projects now totals around $6 billion.

With a historic projected $17.5 billion budget surplus, lawmakers could use cash to tackle the backlog along with the traditional bonding approach. Walz's proposal includes nearly $900 million in cash, $200 million of which would go to community-based organizations, such as nonprofits, working on capital projects that serve communities of color.

Roads, bridges and water-related projects would see a sizable portion — around $650 million — of Walz's $3.3 billion plan. Local governments, higher education institutions and housing projects would also receive significant aid.

The governor proposed around $260 million for the University of Minnesota and a similar amount for the Minnesota State system. He also aims to devote $474 million to building and preserving housing and supporting emergency shelter facilities.

His full spending and bonding plan would leverage about $2 billion in federal dollars, noted Minnesota Management and Budget Commissioner Jim Schowalter.

At the end of the last legislative session, lawmakers came close to brokering a deal on a roughly $1.5 billion infrastructure borrowing package. House and Senate members leading the charge of shepherding the next bonding bill through the process said that is the starting point for negotiations this year, and they hope to pass some version of the old agreement quickly.

The latest version lawmakers are discussing would include $370 million in cash and $1.5 billion in borrowing.

"I'm really hopeful we can get one done in the next month or so. There has been good conversation and movement from all parties involved," House Capital Investment Committee Chair Fue Lee, DFL-Minneapolis, said Thursday. He said members of the Walz administration have been involved in recent discussions.

Lee wants to see the early bonding bill pass, then a second infrastructure bill later this session and another "big one" in 2024. He hopes this year lawmakers can agree to even more construction spending than Walz proposed, around $2.2 billion in borrowing and $2 billion in cash.

Approval of cash requires a simple majority. But three-fifths of legislators need to support the passage of general obligation bonds typically used to fund infrastructure projects, meaning many Republicans also need to be on board.

With Democrats controlling the governor's office and both chambers of the Legislature, the infrastructure measure is one of the only areas where the GOP wields power to push for its priorities this session.

Nonetheless, Rep. Dean Urdahl, R-Grove City, said they are "darn close to having everything put together" in closed-door negotiations on the $1.5 billion in borrowing and $370 million in cash, and he expects it to move early this session.

"The need is there, the demand is there," Urdahl said. He was unsure whether they would pass a second bill in the spring like Lee wants and was wary of the scale of Walz's $3.3 billion plan, calling it "a hard pill to swallow."

DFL House Speaker Melissa Hortman suggested this month that Democrats could lean on cash for infrastructure projects if they can't get GOP members on board with borrowing.

"We'll cross that bridge when we get there. I am making the commitment, these projects need to get done, and we're going to figure out a way to get it done one way or another," Walz said, but added that he would prefer to get supermajority support for some long-term borrowing.

State leaders' failure to pass a construction bill last year was "shameful," said Dan Olson with the Laborers' International Union of North America. He stood alongside Walz on Thursday and emphasized that the governor's plan would support the state's construction workforce.

"What happened last year set us back," Olson said. "Everybody knows that the cost of things go up every single year, and supply chains are also driving up costs. So what better time than now, today, to move these things forward?"