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Pawlenty offers $685 million bonding bill

File Photo: Gov. Tim Pawlenty said the state needs to trim its budget, even though a budget report was better than expected. (Don Davis/State Capitol bureau)

ST. PAUL -- Gov. Tim Pawlenty wants to spend $315 million less to build and repair facilities around Minnesota than legislative leaders want.

Republican Pawlenty this morning said he hopes lawmakers approve $685 million in public works spending, to be repaid by general tax dollars, while Democratic-Farmer-Labor party legislative leaders prefer spending about $1 billion.

"You have got to be willing to say, 'No,'" Pawlenty said.

Public colleges and universities would get the biggest chunk of money, 30 percent, mostly for fixing existing facilities. That is $245 million.

Helping Red River Valley communities that were flooded last year, as well as preparing for a flood diversion project, would amount to $50 million under Pawlenty's plan.

While not part of his proposal today, the governor also announced the state has reached a deal to buy land along Vermilion Lake in northeastern Minnesota for a new state park.

Lawmakers already approved the funds, but the deal to buy land from U.S. Steel came in above a state appraisal, which he said means the Legislature must approve the $18 million purchase price before the state may proceed. State law limits land purchases to near an appraised amount.

Pawlenty would not say how much the state's appraisal listed as a fair selling price, but said the deal was reached for a price between what the state wanted to pay and U.S. Steel wanted.

The governor said if lawmakers do not approve his request to spend the money, U.S. Steel will begin developing the land for housing this summer.

While Pawlenty lists some specific projects in the proposal he released today, much of the money would go to general categories, where state agencies can decide exactly where it is spent. For instance, the Minnesota State Colleges and Universities system would receive $50 million for repairs. Lawmakers will not approve specific projects, but MnSCU will divide it up.

In every even-numbered year, legislators give priority to funding public works projects around the state, ranging from new state buildings to repairing existing ones to buying land for parks. These projects are funded by the state selling bonds, much like taking out a loan, and repaying them over a period of years with interest.

More than $3 billion of public works requests were presented to the Pawlenty administration and legislators, and some still are coming in as the legislative session years.

In each public works bill, much of the bonding money goes to public colleges and universities.

The bonding debate in many ways is separate from the state budget debate, which also will be a key issue when legislators meet for their 2010 session beginning Feb. 4. But Pawlenty said repaying for public works project does affect the state budget, giving that as a reason he kept his proposal lower than DFL lawmakers.

House bonding Chairwoman Alice Hausman, DFL-St. Paul, compared bonding to a family buying a house with a long-term mortgage. The projects that are to last years are repaid while they are being used. Most of the state budget, meanwhile, is spent for salaries, utilities and other needs that are not appropriate for borrowed money.

Pawlenty often opposes larger bonding bills, saying he wants to keep the state's bond payments low. He has vetoed several projects over the years. In his announcement, the governor said he could veto the entire bill instead of individual projects of lawmakers want to spend too much.

Hausman said interest payments for a $1 billion bonding will would cost the state $21.5 million in the fiscal year beginning July 1 and $9.7 million the following year. After that, interest payments would top $20 million a year for the 20910 bonding bill.

For the next few years, interest payments would be nearly 3.5 percent of the state's budget if a $1 billion bonding bill were enacted.

The Legislature passed bonding bills in 2006 and 2008 in the $1 billion vicinity.

Pawlenty does not approve of what are known as local projects, items such as helping build a city's event center. None were in his 2010 proposal.

However, Hausman said, projects in regional centers help a large number of people and help bring jobs.

"It is in our best interest to have strong regional economies," she said

The Republican governor cited economists who say that each job created by a bonding project costs the state $100,000.

Costs are down now, Hausman said, because contractors have cut their prices just to stay in business during rough economic times. That makes this a good time to build and repair, she added.

One area projects was fully funded as a result of Pawlenty's bonding proposal, while another was left out.

The Luverne Veterans' Home entrance enclosure projected received all of its requested $450,000 under Pawlenty's plan. A total of $4,641,000 for fieldhouse renovations at Minnesota West Community and Technical College's Worthington campus was requested, but received no money from the governor's plan.

Davis works for Forum Communications Co., which owns the Daily Globe.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.