State Capitol stalemate could risk federal infrastructure dollars

Minnesota leaders have been anticipating an infusion of federal cash to bolster the state's infrastructure — from bridges and roads to cybersecurity and drinking water pipes — on a scale not seen since the New Deal.

But some of that money could be in jeopardy.

State matching dollars are key to unlocking a portion of the $7.3 billion in federal funds Minnesota expects to get from the massive federal package Congress passed last year. But those state dollars are tied up in a broad spending and tax agreement that collapsed at the end of the legislative session Sunday.

City and county leaders, construction workers, utility companies and others are urging the politically divided Legislature and DFL Gov. Tim Walz to return to the Capitol for a special session to sign off on a deal. They warned the state could lose out if leaders don't act, giving other states a chance to share what they hope will be Minnesota's cash.

"Bridges will remain in poor condition, [electric vehicle] charging infrastructure deployment will be delayed, cybersecurity vulnerabilities will remain," said Daniel Lightfoot, a lobbyist with the League of Minnesota Cities. "Leaving historic federal funds on the table when our infrastructure improvements needs are so vast should not be an option."

Minnesota could lose up to $100 million in additional annual federal money if legislators fail to pass a transportation bill, according to estimates from the state Department of Transportation. MnDOT spokesman Jake Loesch said inaction would lead to project delays because the state agency wouldn't be able to put the federal dollars to work without legislative approval.

"Inflation from those delays, even by just one year, could mean less purchasing power for MnDOT and higher project price tags," Loesch said.

But others at the Capitol said the consequences for skipping a special session wouldn't be so dire.

Sen. Scott Newman, who leads the Senate Transportation Committee, said he would like to pass some matching dollars before August, when MnDOT needs to submit a plan for the funds to the federal government.

"But it's not fatal if we don't," said Newman, R-Hutchinson. "Because if we fail to do it, I believe the commissioner of transportation has the authority to shift previously appropriated funds for that purpose."

Newman said he would rather not have to rely on the MnDOT commissioner making financial shifts, but it's a fallback that means Minnesota wouldn't lose the federal cash.

"I don't think there is the emergency they are claiming," he said.

The hold-up in the transportation package negotiations comes down to a disagreement over whether to use auto parts sales tax dollars to cover the matching requirements, Newman said. Senate Republicans, along with some unions, business groups and others, are pushing for that because they want those dollars to go specifically to roads and bridges, while Democrats want to use them more broadly.

Newman's transportation committee counterpart in the House, Rep. Frank Hornstein, DFL-Minneapolis, disagreed with tying the auto parts sales tax to the federal funding. He said the end-of-session agreement that legislators reached included $282 million in the current two-year budget cycle and $377 million in the next budget cycle for this purpose — with all the money coming from the state's general fund.

"We have the money in hand, agreed to by the leaders. This is urgent. We can get this done now," Hornstein said. "It is historic in nature, biggest federal program since the New Deal. And Minnesotans across the state, whether you drive, take transit, bike — you can live in a rural area, in the city — you will benefit. This will make a difference for our infrastructure."

Legislative leaders and the governor typically attempt to sort out most legislation issues ahead of a special session, so they can gather and quickly vote on deals they have struck in private.

The transportation and bonding bills, which both contain dollars tied to the federal infrastructure bill, are just a couple of the areas that leaders are trying to work through. They also continue to clash on the education, public safety and health and human services measures.

Nonetheless, Walz stressed this week that he hopes legislators return for a special session soon after the Memorial Day weekend. He said the lack of action on matching infrastructure dollars is one of his big concerns.

"If we don't get something done, we are out of the competitive process with other states to bid on projects, on roads and bridges and other things," Walz said. "It would be shame to leave that on the table."