When you think the Minnesota Legislature’s failure to appropriate funds for public construction projects this 12 months is saving you money, you’re right — within the short run. But you’re probably fallacious in the long term. Here’s why:
Minnesota Management and Budget officials estimated the state can pay an estimated $13.5 million less on debt service during this fiscal 12 months than it will have if the bonding bill that Gov. Tim Walz and legislative leaders tentatively agreed to in June had passed, MMB spokesman Patrick Hogan said last week.
But most of the projects in that package will still have to be built, and they’ll cost more in the long run due to rising construction costs.
The Associated General Contractors of America recently estimated, based on federal data, that construction input prices for materials and services increased 16.8 percent since June 2021.
If applied to the proposed spending on the state-backed construction projects, the worth tag would jump to $1.75 billion — a rise of greater than $250 million that may wipe out the $13.5 million in savings this 12 months persistently over.
The state’s failure to pass a bonding bill this 12 months means “we’re going to pay more in the long run for projects that have to be done,” Walz said in an interview last week.
“They’re projects that could make our state safer,” the DFL governor said, and people facilities would enable public institutions like St. Paul College to renovate classroom spaces to coach the expert employees that Minnesota nursing homes need.
Walz has proposed calling the Legislature right into a special session this 12 months to pass a bonding bill, and he reiterated he still wants to try this, but Republican legislative leaders oppose that concept.
In the event that they don’t get it done this 12 months and he’s re-elected in November, the governor said he “absolutely” will propose one other bonding bill next 12 months “and it would be robust.” He said it will “provide good construction jobs in every corner of the state,” construct local projects which might be sorely needed and supply economic-development opportunities.
‘HUGE CONSEQUENCES’
If lawmakers don’t fund construction projects inside a 12 months, it will have “huge consequences” for Minnesotans, said House Capital Investment Committee Chairman Fue Lee, DFL-Minneapolis. Some deteriorating roads and bridges is perhaps closed, aging sewer and water systems could fail, state parks and trails could fall into disrepair and college classrooms due for renovations may now not be protected, warm and dry.
Furthermore, Lee said, the state must provide matching funds for much of the billions of dollars in federal infrastructure grants that Congress passed last 12 months. If Minnesota doesn’t pay its share, he said, the cash could go to other states.
Senate Capital Investment Committee Chairman Tom Bakk, an independent from Cook, didn’t reply to a Pioneer Press request for comment. Neither did Sen. David Senjem, R-Rochester, vice chair of the bonding committee.
Sen. Sandy Pappas of St. Paul, the lead DFLer on the committee, said: “Bonding bills have deep but often unseen impacts across the state. For instance, the failure to pass a bonding bill will result in worsening quality of our air and water as we fail to take a position in water-treatment plants and state park conservation.
“If outdated wastewater infrastructure isn’t upgraded soon, it could force many cities to pay for essential repairs and upgrades. During this time of increased prices and economic difficulty, many families simply cannot afford that additional expense.”
LOCAL PROJECTS
In St. Paul, Pappas said, a scarcity of state funding could adversely affect such projects on the Keystone community food site, Hillcrest Redevelopment proposal and the Kellogg Boulevard Bridge at RiverCentre.
Rep. Dean Urdahl of Grove City, the lead Republican on the House bonding committee, said he believes lawmakers must address such public safety concerns as a contaminated water site in Andover and an antiquated wastewater system in Austin.
“We’d like to complete what we began,” Urdahl said.
He’d also just like the state to tackle some recent projects, similar to restoring facades of buildings in historic business districts where “bricks are falling onto streets and sidewalks.”
‘BONDING YEARS’
Even-numbered years, similar to this one, are sometimes called “bonding years” because that’s when lawmakers are likely to deal with funding construction projects. They pass two-year state operating budgets in odd-numbered years.
But in point of fact, yearly is a bonding 12 months. Legislators just authorize more public construction funding within the even-numbered years. Through the 10 years before 2018, they passed bonding bills averaging $800 million in even-numbered years and $230 million within the odd-numbered ones.
And lawmakers almost at all times conform to borrow large sums for construction projects. Since 1983, they’ve passed bonding bills in all but three years: 2004, 2016 and 2021, MMB’s Hogan said in an email.
State officials haven’t estimated how much money rising construction costs are more likely to add to infrastructure project price tags. Those costs will vary from project to project and rely upon the products used. The Associated General Contractors estimated that concrete product prices have increased 13.5 percent since June 2021, paving mixtures and blocks are up 17.7 percent, asphalt and tar roofing and siding products 22.2 percent, plastic construction products 27 percent and diesel fuel 111.1 percent.
Lawmakers could conform to appropriate more cash to cover rising construction costs next 12 months. But typically they’ve been reluctant to try this.
As an alternative they might ask local governments and state agencies to do more work with less money. Or they could resolve to not fund some non-essential projects or to phase in construction on high-priority facilities over several years to opened up costs.
If and when lawmakers get around to funding public works projects again, they’re more likely to deal with repairing and renovating buildings, lands and other structures that the state and native governments already own. In government jargon, that’s called “asset preservation.”
When Walz pitched a $2.7 billion construction package in January, he called for spending $1 billion — 38 percent of the entire — on fixing those aging assets. Bakk, the Senate bonding chair, agreed with that priority, saying, “Let’s fix what we own.”
The University of Minnesota and the Minnesota State higher education system — traditionally two of the primary beneficiaries of state bonding bills — made asset preservation their No. 1 priority in capital improvement requests. The U asked for $200 million for repairs and renovations, and Minnesota State sought $150 million.
Officials from each systems said most of their facilities are greater than 40 years old and have a backlog of needed maintenance.
In the identical vein, the Department of Natural Resources requested $149 million in each of the subsequent three two-year budget cycles to repair and upgrade its nearly $3 billion in aging buildings, roads, bridges, trails, public water accesses and other recreational facilities. “The growing list of deferred maintenance … poses considerable risk to the protection and value of DNR-managed assets,” the agency warned in its bonding request.
This 12 months, local governments and state agencies requested $5.5 billion for construction projects. The $1.4 billion that Walz and legislative leaders tentatively agreed to fund would have covered about one-fourth of that quantity.