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Spend or save?
By Laura McCallum
Minnesota Public Radio
December 10, 2001
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When Minnesota finance officials announced a projected $2 billion budget shortfall, some lawmakers began calling for a big public works bill to jumpstart the state's economy. Supporters of borrowing a lot of money for building projects say it will create jobs. Others are urging fiscal restraint in a time of deficit.

In non-budget-setting sessions, like the one that will start in January, the Legislature puts together a package of public works projects. The money for those projects doesn't typically come straight out of the state treasury. Rather, the state spreads the cost over many years by borrowing the money through bond sales.

Because the immediate impact to the budget is negligible, some lawmakers see an opportunity to stimulate the economy at little cost.

Shortly after lawmakers found out about the $2 billion shortfall, Senate Majority Leader Roger Moe, DFL-Erskine, said it's time for an aggressive bonding package.

"For one single reason: to put Minnesotans back to work. And if people are back to work, they're going to be paying taxes and they're going to be buying things," he said.

The largest capital projects bill came in just under $1 billion in 1998. Some legislators are calling for a $1.5 billion bonding bill this year, but a bill that large is highly unlikely.

State finance officials say Minnesota's bonding capacity is slightly over $1 billion. If the state borrows more than that, bond agencies will become concerned and could lower the state's credit rating.

Rep. Jim Knoblach, R-St. Cloud, chairs the House Capital Investment Committee, which will put together the bonding bill in the House. He says he wouldn't want to go as high as $1 billion.

"I think a lot of the stimulus arguments you hear are for people that just really want to spend a lot of money on the traditional pork-barrel projects, and they're trying to figure out some sort of rationale for how they can get people to do that," according to Knoblach.

Knoblach says he also doubts that a big bonding bill will put people back to work quickly. "A lot of times, it's a couple years before someone has actually got a job pounding nails, building a building, and so unless you expect the recession to continue for a long time, this isn't a particularly good way to stimulate the economy," he said.

Knoblach's counterpart in the Senate disagrees. Sen. Keith Langseth, DFL-Glyndon chairs the Senate Capital Investment Committee. He says the Legislature could push through a smaller bill at the beginning of the session with projects that could start right away.

"If there's some things that (approving) them earlier would make the difference between them being able to get going this summer versus putting it off for a year, we're taking a look at that because we want as much as possible started this coming year," Langseth said.

The Legislature has never passed two bonding bills in the same session. Gov. Ventura has until Jan. 15 to present his bonding recommendation.

Spokesman John Wodele says lawmakers shouldn't expect it to be anywhere near $1 billion. "The governor has made it clear since he was elected that billion-dollar bonding bills were the thing of 1998, but not since he's been governor," Wodele said.

As a candidate for governor, Ventura critized 1998's record high capital projects bill as an example of pork-barrel spending. Wodele says Ventura is starting to focus on the bonding bill now, and may visit some of the sites requesting money.

House and Senate committees have been doing that for weeks. So far, more than $2 billion worth of requests have come in.

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