Winkler wants to ask voters to ban borrowing “scheme”

If the budget deal between Gov. Mark Dayton and GOP legislative leaders gets passed, it will rely heavily on borrowing $700 million against future payments from the state’s 1998 settlement with tobacco companies.

Rep. Ryan Winkler will offer constitutional amendment legislation in the anticipated special session to ask voters never to allow that sort of “one-time scheme” to happen again.

“We are constitutionally required to balance our budget every two years – that’s the right thing to do,” Winkler said. “Borrowing from our future revenues is simply using a loophole to skirt our constitutional responsibility and we should never do it again.”

Appropriation bonds are different than general obligation bonds because they are backed by anticipated revenues rather than the full faith and credit of the state. Unlike the federal government, state lawmakers aren’t allowed to issue general obligation bonds to fill the state’s operating budget.

If passed the Legislature, the amendment would be decided by Minnesota voters in the 2012 election.

Winkler said the state is estimated to pay $1 billion in debt service over the 20-year life of the so-called tobacco bonds, depending on interest rates. The added costs in future years could make future budget deficits worse, he said.

“We are marching down the road to Sacramento. Dysfunctional states like California reached a fiscal crisis because they didn’t face reality and solve their budget problems. I am introducing this constitutional amendment because I don’t want to pile any more debt on top of my children.”