Myron Frans
Minnesota Commissioner of the Office of Management and Budget Myron Frans in December 2018. Forum News Service file photo
 

ST. PAUL — Minnesota lawmakers hit the road last week to start three months of tours to sites of public works projects that state agencies and local governments are asking them to fund next year. Total cost: $5.3 billion.

That is a record-shattering figure for state bonding requests. Funding appeals for capital improvements always go up, but this year the ask shot up from $3.3 billion in 2018.

What gives? “Deferred maintenance” is the main culprit, state Management and Budget Commissioner Myron Frans said in an interview last week.

After an assessment of state-owned building conditions in 2018, the Department of Administration projected state agencies, the University of Minnesota and Minnesota State college campuses will need a combined $8.2 billion for catch-up maintenance, restorations and replacements over the next 10 years. That would require $1.6 billion every two years or substantially more than governors and lawmakers currently authorize in each two-year capital budget. And that figure doesn’t include money sought by cities, counties and other local government entities.

State agencies and public colleges own nearly 7,500 buildings, and the Department of Natural Resources has more than 26,000 other facilities. “And this stuff just gets more expensive to fix,” Frans said.

Legislators share the blame for falling behind on repairs and upgrades.

“Maintenance is a place where it’s easy not to spend because we can always do it next year,” said Senate Capital Investment Committee Chair David Senjem, R-Rochester. “Well, in some respects, we’ve waited for too many next years.”

In addition, lawmakers often are more inclined to fund projects in their home districts than state structures. “That’s because a vote for a community asset is a good political vote,” Senjem said. “A vote for a state asset has less political impact. They have less ribbon-cuttings.”

There's never enough money

State agencies have requested $4 billion for public works projects next year, while cities and counties will seek $1.3 billion.

The Legislature typically grants less than one-third of the amounts requested.

“There’s never enough money,” Senjem said.

Over the past decade, the state has approved borrowing an average of $775 million for capital projects in even-numbered or traditional “bonding years” and $220 million in odd-numbered years.

Speaking for his staff, Frans said, “We’re going to go big” in drafting a bonding recommendation for Gov. Tim Walz this fall. He expects to suggest spending “close to $2 billion” for public works projects, based on relatively low interest rates on state bonds — ranging from 1.17% to 2.21% on recent sales — and the projected cost of preserving state assets or “taking care of what we have.”

Walz must propose a capital budget — called a “bonding bill” because the state sells bonds to investors to finance public construction projects — by Jan. 15. He hasn’t said how much he wants to spend next year, but last winter he proposed a $1.27 billion public works program that didn’t pass the Legislature, due mainly to Republican opposition.

Senjem and House Capital Investment Committee Chair Mary Murphy, D-Hermantown, said they will set their spending targets after MMB issues a revenue forecast in February telling them how much money is available.

Frans said they could spend as much as $3.18 billion under the state’s debt guideline, but he doubts they’ll go anywhere near that big.

On the road

The 19-member House bonding committee launched its first road tour Wednesday, a three-day swing through northwestern Minnesota to hear state agency leaders and local government officials make pleas for their infrastructure projects.

“They are thrilled to tell us what they need and why they need it,” Murphy said. That helps committee members learn more about the projects they are being asked to fund.

They were scheduled to hear requests for parks, trails, dams, museums, sewer and water systems, college buildings, public safety training facilities, railroad crossings and other projects.

Murphy wasn’t surprised by the number or amounts of the requests. Some of those projects have been on waiting lists for years, she said, “and new things keep popping up.”

While declining to put a price tag on next year’s bonding bill, she said the state should do a better job of meeting its emergency and “absolutely necessary” infrastructure needs.

Senjem said the Senate bonding committee will start its fall hearings this week with a three-day tour of northeastern Minnesota. It will “follow the turning leaves south,” he said, conducting about 30 days of meetings across the state by mid-November.

Frans said he and his staff also plan to tour many of the project sites this fall. In addition, Walz wants to hit the road this fall. “He wants to take a look at a lot of these projects himself,” Frans said.

Not much glitz and glam

Don’t expect to see a lot of flashy new building projects in next year’s bonding bill. The greatest needs are for roads and bridges, water projects and basic infrastructure, Senjem said.

Those are also the fastest-growing areas of demand.

Of the $1.5 billion increase that state agencies are seeking for land and building improvements, $1 billion is for roads and bridges, Frans said.

Many of Minnesota’s streets and highways are in bad shape and getting worse. Last spring, the Republican-controlled Senate rejected the 20-cents-per-gallon gas increase that Walz and House Democrats proposed. Now state policymakers may look to bonding as an alternative way to pay for improvements.

Cities and counties also are clamoring for more transportation dollars. Roads and bridges account for $384 million of the $500 million in additional bonding dollars that local governments are seeking.

Cities and counties have identified 920 deficient bridges that should be replaced over the next five years at a cost of $573 million. Local streets and roads also are aging and deteriorating rapidly.

Water projects are another fast-growing area of demand. Local governments have applied for $200 million in state grants and loans for sewer and water projects over the next two years.

State officials saw that coming. A 2017 Minnesota Pollution Control Agency report identified $5 billion in aging local water infrastructure that will need to be repaired or replaced in the foreseeable future.

 

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