This is a bonding year in the Minnesota Legislature. It is a session that should fund plans to finance improvements in public buildings, our roads and bridges, and water and wastewater facilities. It is also a year for a host of proposals on how to spend the state’s $1.3 billion surplus.
Democratic Gov. Tim Walz has a $2.6 billion “Local Jobs and Projects Plan ” proposal that focuses on early childhood programs, child care, affordable housing, infrastructure projects, public safety and higher education needs. It would be made up of $2.03 billion in general-obligation bonds and $571 million in cash from the general fund.
“I’ve said this often, budget documents are more than fiscal documents, they’re moral documents,” Walz said in framing the current budget battle. “This is an opportunity for folks to talk about what they value.”
Democrats who control the Minnesota House support Walz’s plans but with a more expansive nearly $3.5 billion proposal. Republicans who control the Senate prefer a bonding bill that is less than $1 billion. None of the plans come close to the $5.3 billion state agencies and local governments in the state are seeking in bonding support.
Passing a bonding bill takes considerable cooperation and compromise in the Minnesota Legislature, two qualities that are rare among polarized elected officials these days. It takes a 60 percent majority in both the state Senate and House to pass a bonding bill. That threshold means that at least six Democrats in the Senate will have to vote for the Republican’s plan. It means at least six Republicans will have to vote for the House plan.
Use of surplus will generate a debate all its own. If Walz has his way, not all those funds will be used to fund programs or tax breaks. Rather, he wants to see $491 million that was taken out of the state’s rainy day fund last year to balance the budget the House and Senate passed repaid. That would leave $839,000 million for other uses.
Democrats have what they call “The Great Start for All Minnesota Children Act.” It would direct $500 million toward child care assistance, early childhood education scholarships, and pay for child care center staff s. They also want another $210 million for funding for solar energy, disaster relief accounts, and expanding broadband service in the state. Finally, they want to add 1 percent to the public schools funding formula for the upcoming school year at a cost of $75 to $100 million annually.
Republicans would use the surplus to reduce Minnesota’s bottom tier tax rate, a tax paid by all income earners in the state, from 5.35 percent to 4.9 percent. Their plan also would eliminate the income tax on Social Security benefits with a price tag of $430 million. Republicans seek around $130 million for education tax credits and conforming state law to the federal Section 179 tax provisions for writing off capital investments.
In the first year, those $1 billion in Republican tax cuts and spending would come out of the surplus but in subsequent years there is no guarantee that there will be a surplus. If state revenues come in less, or even at a deficit, legislators will be looking at where to cut programs or raise taxes.
In proposing the tax breaks, Sen. Roger Chamberlain, R-Lino Lakes, the chair of the Senate tax committee said, “We’re going to allow them (citizens) to live their lives, empower them to do what they want, improve their communities, improve job growth, strengthen this economy, continue down the path we’ve been on for a few years.”
Who wouldn’t want to support such an optimistic outlook? Who wouldn’t want some of the money that has been building the state surplus back in their own pocket. But his words don’t align with reality. Citizens have little interest in voluntarily spending their money on improving
aging sewer lines beneath their streets. Citizens don’t willingly go out of their way to contribute part of their paycheck to upgrading a failing heating, cooling and air conditioning system at their courthouse. Citizens aren’t gladly writing out checks to ensure the local school doesn’t have to cut teaching positions in the sciences to balance the budget.
Through the years we have covered public bodies, from cities, to counties, to schools, to hospital governing boards, to economic development organizations, the one overarching theme has too often been: “We can’t do that. It’s too expensive. The taxpayers won’t support it.” It takes a courageous stand to move ahead with a needed project in the face of public opposition.
“Tax and spend” has earned such a derisive connotation though it really can mean “tax and invest.” With the taxes we pay we invest in the future of our children. We invest in the future of our communities. We invest in the future of our environment. We invest in the quality of life of citizens today and tomorrow.
Republicans have some good arguments on their side when they point to wasteful spending and mismanagement of taxpayer money. But the 5 percent bad always stands in the way of the 95 percent good. Highlight and drum into the public’s mind the few instances of waste, fraud and abuse, and you can hammer home scant public financing for schools, roads, water treatment facilities, educational offerings in schools, and daycare.
Why are communities faced with multiple bond levies to upgrade school, county and city buildings? Why are our water, wastewater, and road infrastructures aged and crumbling? Why are we spending so much fixing and repairing? Because year after year selected leaders fail to have the courage to make the investments required to upgrade those facilities and that infrastructure.
When interest rates are at near record lows we should be bonding at the state and local levels to do the required work.