Minnesota Gov. Tim Walz proposes $1.3 billion in infrastructure projects

Minnesota should borrow nearly $1.3 billion to repair college campus buildings, create more affordable housing and fix roads, bridges and other infrastructure, Gov. Tim Walz said Tuesday.

While many pieces of Walz's plan have widespread appeal, Republicans legislators said this is not the year for a large borrowing package. State lawmakers typically pass a bonding bill in even-numbered years. Walz, a Democrat, argued that with low interest rates and high needs, the state should strike a different path this year.

"It is fiscally irresponsible to pretend like our roads, our infrastructure, our prisons, our transportation system, anything that's out there, is going to magically fix itself without having the courage to talk about how we get there," Walz said.

He wants to use state-backed borrowing to spend about $350 million on transportation and transit and $300 million on higher education, evenly divided between the University of Minnesota and Minnesota State systems. The governor also aims to put $150 million toward housing.

He debuted his public works borrowing plan at Fort Snelling's Upper Post Veterans Community. The state helped fund the affordable housing complex to help end veteran homelessness. As Walz toured the facility Tuesday morning, one resident told the governor that he would be sleeping under a bridge if the veterans home wasn't available.

Walz has made housing a priority in the first couple months of his term, often mentioning how a stable home is tied to education and health. His bonding plan includes money to support the creation of new housing and preserve publicly owned housing for low-income residents. The housing advocacy group Homes for All said the bonding plan aligns with a goal of building 300,000 new homes in Minnesota by 2030.

Republicans have raised concerns with the amount of spending in Walz's budget, which he rolled out last week, and the size of the $1.3 billion bonding bill proposal.

"That's a good bonding bill for next year," said Senate Majority Leader Paul Gazelka, R-Nisswa.

Gazelka noted that the last budget forecast state officials released in November assumed lawmakers would authorize a $265 million public works borrowing package in 2019. The forecast anticipated a $755 million bonding bill in 2020.

Bonding bills, where the state leverages its debt capacity to fund construction projects, require the support of three-fifths of the House and Senate to become law. Lawmakers signed off on $1.5 billion last year for public works projects, funded by bonds and a mix of other sources.

This year, legislators will be focused on setting the two-year budget, said Rep. Dean Urdahl, Republican minority lead on the House Capital Investment Committee.

"It is historically a time when we do an emergency bonding bill with a smaller number, $200-$250 million," said Urdahl, R-Acton Township. "As we go through this process we certainly are willing to work with the governor, to work with the [Democratic] majority in the House to try to fashion a piece of legislation that can receive the 81 votes to move."

Walz said doing nothing this year will have future consequences. He said he will be making his case to Minnesotans about why there should be bipartisan support for his proposal.

"We're not saying 'no' to a bonding bill, we're saying 'not yet,' " Senate Capital Investment Chairman David Senjem, R-Rochester, said in a statement. "Over the next two years, we'll work with Gov. Walz on a right-sized bonding bill, with the right priorities, at the right time."

Minnesota Management and Budget Commissioner Myron Frans said bonding bills have become an almost annual practice in recent decades. Minnesota has been paying off bonds on a regular basis, Frans told lawmakers at a hearing Monday where he made the case for bonding. The state has maintained a moderate debt and is below its debt capacity, he said.

"The question is: Do we have asset preservation needs?" Frans asked the House Ways and Means Committee. "Do we have opportunities to expand and enhance what we can do for Minnesotans?"

There are many areas where the state is falling behind on maintenance, according to budget documents.

The Department of Natural Resources estimated it would cost $168 million a year to maintain its assets. Walz's bonding proposal recommends $71.5 million for upkeep of DNR trails, roads and other facilities and utilities.

The bulk of the bonding dollars Walz proposed for transportation and transit would be spent on replacing local bridges and constructing or rebuilding local roads. But he also suggested putting $20 million toward the D Line bus rapid transit that would run from Brooklyn Center Transit Station to the Mall of America.

Leaders at the Minnesota State and University of Minnesota systems expressed gratitude at Walz's proposal, which includes major investments in campus projects like roof replacements and electrical upgrades. The U had requested $232 million in bonding projects. Minnesota State asked for $150 million.

"These projects are necessary to provide safe, efficient, and modern teaching and research facilities that support all of our students, staff, and faculty," U President Eric Kaler said in a statement.

The state's corrections system, meanwhile, has $600 million of deferred maintenance. Walz said he counted 27 broken windows at the Stillwater prison on a recent visit. He said there's a cell block in the prison system that opens by manually pulling a lever, instead of electronically.

Attacks at prisons led to the deaths of two corrections officers last year, and Walz said prison safety is a priority.

He wants $20 million to start addressing the maintenance backlog and recommended other corrections projects, such as $7.5 million to renovate a space that serves prisoners with serious mental illnesses at the Lino Lakes prison.

"This is 2019. This is not Shawshank. This is not some movie," Walz said. "This is real life, where people deserve to be safe in their workplace."

Staff writer Torey Van Oot contributed to this report.