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Quick action predicted on bonding

Minnesota House Staff member Melva Radtka, left, helps the Capital Investment Committee Chair Alice Hausman with the "Bernoulli Ball," an interactive exhibit on wind, on Thursday morning at the Headwaters Science Center. Pioneer Photo/Monte Draper

Since public works bonding creates jobs, the chairwoman of the Minnesota House panel that oversees capital bonding said action will be swift next year to approve a major bonding bill.

"There's a reason why we want to be aggressive this year," House Capital Investment Committee Chairwoman Alice Hausman, DFL-St. Paul, said in an interview. "We hear, from the wastewater infrastructure projects, from the college projects, from transportation projects -- all bids everywhere are coming in way under what they thought. So we know this is a good time to do a lot of work."

Hausman and panel members were in Bemidji on Wednesday night and Thursday morning to hear some $30 million in local requests for 2010 public works bonding, the year when the Legislature considers a major bonding bill.

"We'll get way more for our taxpayer dollar if we do these projects now than if we do them two years from now," Hausman said. "We'll be doing it early, and doing it as quickly as we can. Were we to pass a bill in February, it means that money could be out the door when the spring thaw comes."

There's a secondary reason for quick action on a bonding bill, Hausman said. "We have a high unemployment rate, For a while it looked like it might be higher than the national average. Certainly in northern Minnesota, there are spots that are significantly higher than the national average."

The DFL-controlled Legislature "wants to make certain the state is doing everything it can do to provide a good climate for jobs," she said.

The one clear thing in the short term that can be done is pass a significant bonding bill and do it early, Hausman said., "and get those projects out the door."

There is bipartisan urgency for a bonding bill this year, she added.

There are already nearly $620 million in project requests from local governments in Minnesota, while Gov. Tim Pawlenty's state agencies have $2.6 billion in requests, she said.

"We know we'll be facing something like $3 billion to $4 billion worth of requests, and we know our bill is going to be $1 billion or less," Hausman said. "We know we're going to be saying 'no' to more projects than we're saying 'yes.,' to probably three out of every four."

The House panel is currently traveling the state to view project requests "to make the right choices," she said, "to understand the community, to understand the impact on communities. It's time well spent. This was certainly time well spent in Bemidji."

Hausman's panel will come with the bonding bill as the session opens in February, while the Senate Capital Investment Committee, chaired by Sen. Keith Langseth, DFL-Glyndon, is at work on its bonding bill.

Gov. Pawlenty is expected to submit his capital bonding bill by December or January, Hausman said. "I know they're working at gathering information."

New debt service guidelines are also in the works, she added.

Traditionally, the Legislature hasn't approved a bonding bill that has debt service that exceeds 3 percent of the general fund budget. As last year's budget was larger than normal in order to match federal stimulus funds, debt service changes are necessary if any kind of substantial bonding bill is to pass in 2010.

"We're really responsible, in terms of the debt we take on," Hausman said. Bond companies that rate state government bonds aren't going to pay as close attention to the 3 percent figure, she added.

"That's not so relevant," she said. "They (the Pawlenty administration) specifically asked the question in New York and they were told by the rating agencies that really we don't care that much about a percentage. We care about the big picture -- how do you balance your budget, how do you manage the state's responsibility."

Despite much controversy, ":we do have a balanced budget," Hausman said.. "We will have some new guidelines presented by the Governor's Office, and there will be more flexibility in them. That shows an openness."

Higher education bonding is always a high priority for bonding, she said, as well as transportation. And local government projects are tested if they are regional in nature and worthy of state funding.

"That's the question we have to ask ourselves -- are these projects of regional and statewide significance?" Hausman said. "That is always a challenge, but we believe that ultimately we look at a regional economy, like Bemidji, or Duluth or St. Cloud, and ask how a project fits into the emerging economy in that area."

Healthy economies around the state ultimately benefit all Minnesotans, she said. "There is an interest that the state has in partnering with regions around the state, and of course we have to be equitable to all taxpayers."

The Legislature last year granted Bemidji $25 million fin bonding or the Bemidji Regional Event Center, and allowed the city to use its 1-cent sales tax to pay for BREC construction.

"We love this city, we love this city," Hausman said. "It's really fine, there's good spirit here, the people are wonderful, the students are wonderful. It is a fine city, a growing city and we're proud to be part of what's happening here."