Bonding: House borrowing, cash bills pass committee vote

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The House Capital Investment Committee passed an $850 million bonding bill and a supplemental cash funding package of $125 million on Wednesday, though both bills are considered initial volleys in what will likely be a lengthy negotiation. Committee chair Rep. Alice Hausman, DFL-St. Paul, has consistently said the capital investment proposal is “inadequate,” a pronouncement she repeated during Wednesday’s hearing.

Hausman told the committee that her plan is to wait until the Legislature approves supplemental budget bills and final changes to the state tax code, which could leave additional money available on the state’s bottom line.

“I hope that miracles happen,” Hausman said. “I’m hoping there might be more room in a cash target.”

Hausman’s hopes received a boost earlier Wednesday, when Gov. Mark Dayton said that he also wanted to see a larger bonding bill this session. Dayton proposed a $986 million capital investment plan in January, though Republicans in both chambers have said they would not go higher than $850 million. The three-fifths requirement to approve bonding legislation means Democrats need to gain eight GOP votes in the House and two in the Senate.

House Republicans gave some indication of their own priorities during the committee meeting. Rep. Matt Dean, R-Dellwood, the GOP lead on the committee, brought a delete-all amendment that contained significant differences from Hausman’s package. Most notably, Dean’s proposal would strip cash funding for Capitol restoration. Originally pegged at $20 million, an amendment passed during Wednesday’s hearing reduced the Capitol building outlay to $15 million in general fund spending.  Dean, meanwhile, sought to provide $120 million in general obligation bonds for continued work on the statehouse, and said this figure was the amount needed to avoid potentially costly delays in construction at the Capitol complex.

Dean intimated that fully funding the building’s construction needs was an element of a deal struck late last session by caucus leaders from both chambers.

“In order for us to move forward,” Dean said, “and to put the best interests of the state forward, we had to be able to work between the two caucuses, between the two parties — and also honor agreements. And it’s not always fun to do, particularly when you’re not the one making them.”

Hausman argued against Dean’s amendment, which was ultimately voted down, pointing out a number of programs and projects that would lose funding if the Republican plan was adopted. Also critical of the GOP amendment was Rep. Tim Mahoney, DFL-St. Paul, who said the realignment of spending would have cost the state about $35 million in matching funds. Mahoney also commented that Republicans had been relatively quiet during committee hearings that session, and should have offered their suggestions prior to the committee vote.

“These should’ve been brought forward long ago, rather than at the last minute,” Mahoney said.

Asked early in the debate about the lack of full funding for the Capitol, Hausman said the $20 million included in the cash bill is something of a placeholder, and reiterated her intention to see how much money might be available after tax and spending bills are moved.

“We hope to fully fund what we all believe is a project that we bear great responsibility for,” Hausman said.

The most contentious debate to surface during Wednesday’s hearing stemmed from discussion of the Rochester Mayo Civic Center. Rochester has requested $37 million for its downtown redevelopment for the past several budget cycles. In its current form, Hausman’s bill would dedicate $30 million in general obligation bonds to the project, but Rep. Kim Norton, DFL-Rochester, said that figure is not sufficient, and brought an amendment that would reallocate other expenses in order to fund the city project at the full $37 million.

Norton was visibly upset, saying some members seem to think Rochester should be happy with the $585 million in state and local tax breaks for the Mayo Clinic’s Destination Medical Center passed in 2013. That legislation did not provide a “truckload of money” to the hospital system, said Norton, who pointed out that the taxpayer funds would not kick in until Mayo Clinic has hit a spending threshold of private funds.

“Time and again, I hear members from my caucus and members from the other side of the aisle misrepresent what happened last year,” Norton said.

Norton went on to say the House does not know at what level the Senate will fund the Rochester proposal, and that the House should take the “strongest position possible” into the expected conference committee. Her amendment was voted down by a 12-9 tally that did not break neatly along partisan lines: Hausman opposed the amendment, while Dean and several other Republicans supported it.

The cash spending bill was altered by a number of minor amendments brought during the hearing. One amendment introduced by Rep. Jay McNamar, DFL-Elbow Lake, would add $5 million for economic development grants for Greater Minnesota businesses.

McNamar’s amendment, which had the stated support of Hausman, took $5 million from the Capitol construction fund, which now stands at $15 million. The already existing program, administered by the Department of Employment and Economic Development, has saved or added a combined 7,000 jobs to date in outstate areas, McNamar said.