Governor’s bonding bill focuses on facilities preservation rather than new projects

Gov. Tim Walz’s proposed bonding bill sets aside lots of money to maintain and update buildings and other state-owned assets – leaving some representatives of Greater Minnesota wondering where the funding is for local projects. 

In separate presentations earlier this month to both the House and Senate Capital Investment Committee, Erin Campbell, the commissioner for the Minnesota Management and Budget Office, discussed the focus of the governor’s proposal. 

“We have decided in this bill to focus very heavily on asset preservation,” she said. “And the reason that we did that is because we know that we have a responsibility to maintain our state assets and protect the investments that taxpayers have made in facilities across the state.” 

Rep. Dan Wolgamott, DFL-St. Cloud, asked Campbell why such a large amount of funding went toward preservation when there were many funding requests for local projects. 

“I do hope that we can work as a committee and with you and the governor and lieutenant governor to find that balance where we are meeting the needs of asset preservation throughout the state while also meeting the needs that we have as representatives of communities for those local projects,” Wolgamott said. 

He added: “Our communities are counting on us to be strong advocates of delivering for local projects.”

The legislative package, known as a capital investment bill, would allow state agencies, local communities and universities, among others, to secure hundreds of millions of dollars in funding for public and private construction projects. The bill authorizes the state to finance those various projects through the sale of bonds. 

How big are we talking? 

The total plan is around $982 million – $830 million in general obligation bonds and $152 million made up of other financing modes. 

The governor’s plan is estimated to leverage around $640 million in additional funds, both federal and local, Campbell said — and stays within the state’s debt capacity guideline of $830 million. 

Campbell said some of the projects will unlock federal funding; for instance, a state investment of $40 million in bridges will unlock around $160 million in federal funds.

Last season, Walz proposed 43% of the package to go toward asset preservation, but only 10% of the enacted package did, Campbell said during a Senate Capital Investment committee meeting. This session, he’s emphasizing asset preservation. The proposal sets almost half of the funds — 45%, or $441 million — toward asset preservation and the renovation of existing state spaces. 

Some House members raised questions about that number, saying local communities need a bigger chunk than the amount allocated in the plan — around $40 million for local projects. 

“I do like the fact that it’s (the proposal is) heavy on asset preservation, water, transportation,” said Rep. Dean Urdahl, R-Grove City. “Those are important things that we should be concentrating on. We’re going to need to prioritize. We’re going to need to scale back some of these things because I think that $40 million is going to be tough to put together a local project bill.”

Wolgamott had put forward a $100 million request for downtown St. Cloud revitalization. “Can you explain how you got to that $40 million number considering there were $2.9 billion dollars in requests,” he asked Campbell during the meeting. 

A fifth of the funding is for water and transportation infrastructure, 14% ($143 million) is for public safety, 10% is for housing and the environment and the remaining 9% ($85 million) is for other priorities, including grant programs, Campbell said. 

Projects that fall under the “other” expenditures include the local project grants, $20 million for the Department of Transportation to improve its facilities, $12 million for the Department of Natural Resources’ betterment of buildings and $5 million for Department of Human Services early childhood facilities grants. 

‘Taking care of what we’ve already built’

Campbell said capital projects, which include asset preservation and renovation, are in high demand.  

Those capital requests total $7.6 billion dollars, with $4.7 billion requested from state agencies (a 16% increase from the last cycle) and $2.9 billion from local governments (more than double what was requested during the last cycle). 

Campbell referenced two reasons for the governor’s focus on asset preservation. 

“It’s cheaper to maintain infrastructure than to fix it when it fails,” Campbell said in her presentation, saying the state estimates it costs $14 per square foot to repair buildings that are in “excellent” condition — but $159 dollars per square foot to repair buildings that are in “crisis” condition. 

She also added that the average age of state buildings is 42 years and the most expensive projects occur when a building is over 30 years old. The state owns assets in all 87 counties — and 56% of state building systems are in fair, poor or crisis condition. 

“The headline here is that the governor’s infrastructure plan takes care of what the state has already built,” Campbell said. “This plan is designed to focus on the most critical needs.” 

In the proposal, the funds for asset preservation are split between different entities: $202 million for the state’s agencies, $22 million for other state agency renovation projects, $103 million for the University of Minnesota and $130 million for the Minnesota State system, Campbell said. 

The Minnesota Management and Budget Office went on what Campbell described as a “bonding tour” to determine what areas of the state have high needs for these funds. One of those tours was to a wastewater treatment plant. 

Other areas of funding

The governor’s proposal allocates $216 million for water and transportation infrastructure, including $109 million for water infrastructure loans and grants; $40 million dollars for MnDOT to address bridges in poor condition; $37 million for the Met Council to advance the bus rapid transit project; and $10 million for grants to address contaminants in drinking water. 

Fourteen percent, or $143 million, is for public safety, including a new Bureau of Criminal Apprehensions (BCA) office and laboratory, design and land acquisition for the Bemidji BCA office and lab and $47 million for Department of Corrections education and programing at Rush City, among other things. 

Moreover, $98 million is set aside for housing and environment, which includes $50 million for housing infrastructure bonds, $7.5 million for the Minnesota Housing Finance Agency and $16 million to update the Minnesota Veterans Home in Minneapolis, among other projects. 

Finding a balance 

Campbell responded to the House members’ concerns about the lack of funding for local projects.

“Having that (asset preservation) as the starting point for half of the bill and then understanding some of the other very significant priorities in places like water, infrastructure, public safety and transportation,” she said. “We wanted to make sure that was a recognition of local projects ultimately being an important part of the bill. But we’re trying to do that within a more constrained resource environment.” 

She added that 25% of the governor’s recommendations are for grants to non-state entities, although they’re not all delineated by community.

Editor’s Note: Ava Kian wrote this story for MinnPost.com.

Kian is MinnPost’s Greater Minnesota reporter. Follow her on Twitter @kian_ava or email her at akian@minnpost.com.

This article first appeared on MinnPost and is republished here under a Creative Commons license.

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