A short-term $1.2 billion budget deficit and the critical, statewide need for jobs will dominate Minnesota’s 2010 legislative session.
The first order of business should be a state bonding bill, said Sen. Tom Bakk, DFL-Cook. But legislators are likely to quarrel with the governor over how much to do.
Gov. Tim Pawlenty has proposed borrowing $685 million in bonding, with nearly a third earmarked for colleges and universities. He argues that the state can’t afford to go higher without driving up its debt service — the total interest on outstanding bonds.
Bakk and other Democrats want $1 billion, adding that rock-bottom interest rates and a highly competitive construction industry benefit the state. “It’s a good time to go out for infrastructure bids,” said Bakk, adding that unemployment in the construction industry is 50 percent statewide. The state has plenty of projects it could fund, Bakk said, noting that there are over $2 billion in wastewater improvements alone on the state list.
State Rep. David Dill, DFL-Crane Lake, also supports bonding for more than the governor has indicated. But he added that each bonding proposal must be weighed on its merits. “We need to get the most effect that we can from bonding,” said Dill, noting that funds used to service the bond debt come mainly from sales and income taxes and divert funds from schools, nursing homes and other state programs. “There have been a lot of bonding bills introduced. There is a champagne appetite for bonding, but the truth is we have a beer pocketbook.”
Pawlenty, however, could have the last word on bonding. The governor won’t be shy about using his pen to eliminate projects or veto the bonding bill, according to Brian McClung, Pawlenty’s deputy chief of staff.
The Democrats may find it difficult to win over enough Republicans to veto-proof their bonding bill.
Budget troubles
Meanwhile, the state still must deal with a projected short-term $1.2 billion deficit that could swell to $5.4 million by 2013.
Pawlenty has already signaled that he won’t accept tax increases as part of the solution, but Bakk, who chairs the Senate Tax Committee, plans to introduce a proposal to generate about $300 million in new revenue for the state.
The proposal would mesh with another plan to cut taxes for businesses, according to Bakk, who couldn’t divulge any more details. “It’s still being fleshed out,” he said, “but it will be very tough for the governor to veto.”
Even if Bakk’s plan is approved, it still leaves an enormous deficit that the state will have to address through cuts. With roughly 75 percent of the budget going to education, aid to local governments, and health and human services, program typically shielded from cuts will be vulnerable this session.
“Everything is going to be on the table, including things like payment in lieu of taxes for state public lands to counties,” said Dill. Even if Pawlenty relents on his opposition to tax increases Dill said the state would still have to make deep cuts. “Even the rich people don’t have enough money to solve this problem.”
Both Bakk and Dill agree that the sooner legislators complete their work, the better.
Every day of delay costs the state about $50 million and narrows its options. “The cuts get deeper the more days that go by,” said Bakk. “Last year, the leadership failed and didn’t negotiate with the governor. I’m very concerned that people will be unwilling to make the tough decisions and are going to try to get this governor to choke on some new revenue.”
Bakk said legislators should get to work and be done by March 29.
“I’d be surprised if we have any kind of meaningful discussion about a special session,” said Dill, who added that a number of legislators are campaigning for governor and “don’t want that blood on their hands.”
Dill predicted a very limited agenda for the Legislature this session. As an example, he cited his own list as chairman of the House Game, Fish and Forestry Division. “I’m trying to do things that don’t cost the state money that people have written me about,” he said.
