Pawlenty announces 'austere' bonding bill, deal to buy Vermilion Lake land for state park

ST. PAUL, MINN. — Gov. Tim Pawlenty said Friday that the state should borrow $685 million this year to pay for building projects on college campuses, repairing bridges and other road maintenance, flood preparation and other state construction needs.

The bonding bill is a fixture of even-year legislative sessions, as political leaders capitalize on the state's borrowing power to preserve state-owned assets and boost local economies. The Republican governor's proposal is modest compared to his own previous standards — he proposed $1 billion in bonding in 2008 — and he said Minnesotans shouldn't expect it to work miracles on a still-struggling state economy.

"To say that this should be the main state jobs strategy — you're really not thinking clearly," said Pawlenty, adding that the tough economic times is the main reason for his relatively austere proposal. In addition to $685 million in general obligation bonds, Pawlenty's package includes another $130 million in user-financed, highway trunk, college- and university-backed bonds and cash, for a total of $815 million in projects.

Democrats, who control the state Legislature, vowed to put forward their own, larger proposal when the session convenes in early February. Rep. Alice Hausman, the St. Paul Democrat who chairs the House Capital Investment Finance Division, said her proposal would be around $1 billion.

"This year is an important year to capitalize on the one positive thing coming out of the poor economy, which is more competitive bidding and low interest rates," Hausman said. "Taxpayer dollars go further this year."

Hausman called Pawlenty's proposal "a good starting point."

In past years, lawmakers have typically sent Pawlenty a bigger borrowing package than he asked for — prompting the governor to trim some projects using his line-item veto power. Pawlenty suggested Democrats do that "so that I'm the one who has to say no" — and warned that he might simply veto the entire package this year if it's bigger than he wants.

Hausman called that a cynical opening maneuver, and said legislators who assemble the bonding bill already turn down billions more in requests than they actually fund.

Still, this year's bill will be assembled in the shadow of a $1.2 billion state deficit that lawmakers must erase only months after Pawlenty trimmed $2.7 billion to get rid of last year's deficit. In addition, his administration is asking lawmakers for the authority to borrow money for fear that the state's cash balance could dip below zero by April.

As in earlier proposals, Pawlenty has concentrated on projects with statewide or regional impact and steered away from projects requested by cities and counties, leaving out funding for projects such as an expansion project at Mayo Civic Center in Rochester. Rochester Mayor Ardell Brede vowed to keep pressing lawmakers for the funding — a strategy likely to be repeated by dozens of community leaders hoping for a piece of the bonding capacity.

The biggest beneficiary of Pawlenty's proposal is higher education, with campuses in the University of Minnesota and Minnesota State Colleges and Universities systems together getting about a third of the money, or about $246 million. The biggest chunk, $53 million, would be to help pay for a five-story new headquarters for the University of Minnesota's physics and nanotechnology programs. Another $90 million would go to repairing and maintaining campus building around the state.

Transportation projects come in second, with $159 million. Pawlenty earmarked the biggest piece, $75 million, to repair or replace 960 bridges around the state rated as "deficient." Local road repair gets $20 million, and several Twin Cities transit projects get $10 million.

Public safety projects, including expanding bed space at the state's sex offender treatment facility, get $127 million. Natural resources projects get $114 million, including $50 million for flood mitigation centered in northwestern Minnesota's Red River Valley. It's not nearly as much as requested, but state budget commissioner Tom Hanson said it should be considered the first step in state flood relief efforts.

Other types of projects funded under Pawlenty's borrowing proposal include $90 million for economic development, and $33 million for veterans and the military.

Pawlenty said his list is geographically balanced, with about 53 percent going to statewide projects; 18 percent going to the Twin Cities metropolitan area; and 28 percent going to greater Minnesota.

The governor also said the state has reached an agreement with U.S. Steel to purchase for $18 million land alongside northern Minnesota's Lake Vermillion in order to create a new state park. That would require the Legislature to remove a price cap for the acquisition placed on an original 2008 appropriation for the park.

The Lake Vermillion park has long been near to Pawlenty's heart, and if successful he admitted it would rank high on his list of accomplishments as governor as the end of his tenure approaches. But Hausman, who'll be sitting across the bargaining table, said she thought lifting the cap would be a bad idea.