Dayton’s $1.4B bonding package sidelines transportation

Gov. Mark Dayton left light rail transit and expansive highway and bridge repairs out of his $1.4 billion bonding request, saying he instead expected a comprehensive transportation bill to fill those funding gaps.

The proposal, introduced Friday, focuses on higher education and upgrades to hospitals and correctional facilities around the state. It also sets aside substantial funding — more than $120 million — for freight rail and pipeline safety projects.

But with $3.4 billion in requests and already mounting political opposition, Dayton said he had to cull where it made sense. Already, several prominent Republican legislators have said they would support between $800 million and $850 million in bonding — well below the governor’s pitch.

Dayton sidelined the high-profile Southwest Light Rail Transit line, which would extend from downtown Minneapolis to Eden Prairie, and highway work.

His request includes funding for just two bridge repair projects: $42.9 million for the structurally deficient Kellogg Avenue bridge, linking St. Paul to the east metro, and $31.9 million to fully restore the failing 10th Avenue bridge in Minneapolis, which connects the University of Minnesota to the downtown area.

To support other transportation improvements, Dayton said he’ll rely on lawmakers to approve targeted legislation that includes sustainable funding streams for highway construction and related upgrades. Such a bill is expected to be among the most hotly debated measures when lawmakers return to St. Paul in March.

“I want to look at the structure of transportation funding,” the governor said. Lumping high-priced road and transit projects into bonding bills isn’t a long-term solution because it strips resources from projects that rely on bonding for support, he added.

Funding for the $1.77 billion Southwest line could be more complicated. Dayton said Friday he intentionally left the project out of the bonding discussion, and will instead stick to a proposal to back the effort through a metro-wide sales tax increase of 0.25 percent to 0.5 percent.

“The Southwest LRT, with the size of the other needs, is just not going to be fundable [through bonding],” he said.

Rep. Paul Torkelson, a Republican from Hanska who chairs the House Capital Investment Committee, said he was disappointed at the lack of transportation projects included in the governor’s proposal. He also noted that both of them are in the Twin Cities despite a need for outstate upgrades.

“Only two bridges are in the governor’s proposal,” he said. “There are a lot of transportation needs all around the state — not just in greater Minnesota, but in all parts of the state — that we feel should be at least in some way addressed in this bonding bill.”

Torkelson said he plans to work closely with the Transportation Committee to push a greater focus on transportation projects in bonding legislation.

Higher education projects top Dayton’s list of bonding priorities this year. His request includes more than $285 million earmarked for repairs and new facility construction at University of Minnesota and Minnesota State Colleges and Universities campuses throughout the state.

The priciest single project in that bundle is a new health science education facility that would fold into the University of Minnesota Medical School. The governor plans to invest $66.7 million in that facility, one he billed as a significant boost to the state’s education and research assets.

Dayton also set aside $27.2 million for a new science and engineering laboratory at the university’s Duluth campus. On top of that, his proposal makes $135 million available for preservation efforts at campuses statewide, plus $34 million to overhaul outdated facilities.

The education-related investments are vital to the state’s long-term growth plan, underpinned by its ability to churn out top talent, the governor said.

“To shortchange higher education as we have before is just terribly short-sighted,” he said.

Public safety improvements also rank high on the governor’s to-do list. His proposal earmarks $70.3 million to complete the renovation of the Minnesota Security Hospital in St. Peter — a perennial priority — and $19 million to revamp part of the St. Cloud Correctional Facility.

Overall, the bonding proposal includes projects in virtually every corner of the state — including a host of water infrastructure projects Dayton singled out on Thursday.

Sixty-six projects in the Twin Cities metro area would get $513 million, while central Minnesota would get $84 million for 34 projects. The proposal includes $123 million for 28 projects in the northeast and $102 million in 16 projects in the northwest. Southeastern Minnesota would see $91 million for 23 projects, with $108 million for 15 projects to the southwest.

The projects would create upwards of 39,000 jobs, according to state data. The projects leverage an additional $600 million in local, federal and other funding.

Even against the backdrop of a $1.2 billion surplus, lawmakers stand primed for a tough fight over competing priorities. Critics have balked at Dayton’s plans, saying tax cuts and constrained spending would be more fiscally responsible.

Republicans in the House and Senate have said they will push for steep tax and spending cuts.

Rep. Alice Hausman, DFL-St. Paul, told Finance & Commerce earlier in the week that it would be tough to trim back a bonding bill to the $800 million range. Particularly if general obligation bonds are used to back local transportation projects like roads and bridges, bonding requests could turn into a “bottomless pit.”

If those requests are covered in a separate cash bill, though, it may be feasible to bring the bonding bill below the $1 billion mark.

“But to get it to $800 million – that’s going to be hard,” Hausman said.

Election-year politics add another layer to the debate. The upcoming session will provide a platform for lawmakers to trumpet their own political priorities and challenge opposing views. Cost-cutting often becomes a central focus during election years.

The upcoming election will color decisions made by every member of the Legislature, Dayton said. He expects strong political headwinds in the bonding debate, but said he was ready to fight for his priorities.

“People say we can’t afford to do this,” he said. “We can’t afford not to do this.”

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A complete list of the projects in Dayton’s bonding proposal is available here.

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Additional reporting by Brian Johnson.