|
By Phil Krinkie
During the 2003-2004 Legislative Session, I had the privilege of Chairing the House Capital Investment Committee. The Capital Investment Committee, which is often referred to as the Bonding Committee has purview over all state land purchases and building projects. Most of the time when the State wants to build a building it issues debt (general obligation bonds) to pay for the construction and then repays the bonds over a 20 year period, similar to a mortgage when someone buys a house.
Projects considered for possible inclusion in a “Bonding Bill” range from buildings for State Colleges and Universities to local government requests for things like trails, recreational facilities and art centers.
The Legislature has a self imposed guideline to limit state debt payments to 3% of State General Fund spending or in 2008 a maximum of $965 million in state bonds. The Legislature can choose to use cash (general tax receipts) to pay for these projects, but each year they usually agree that their preference is to use the State’s credit card (general obligation bonds) instead of paying with cash.
While the state is different from the federal government because the state is required to operate on a balanced budget, Minnesota’s state debt load continues to increase because of this policy. But despite continuing to issue hundreds of millions of dollars of additional debt, the Legislature has refused to use general obligation bonds to pay for state roads and bridges.
Why this strange paradox? Simple, legislators want to pay cash for highway projects in order to use the credit card for local pork barrel projects.
The Legislature puts billions of dollars on the State’s credit card to fund everything from roof repair to hockey arenas ---- but has historically only wanted to use gas tax dollars to replace deficient bridges. The current practice is to use only the dollars generated by the gas tax, license fees and auto sales taxes to pay for roads. This is a “pay as you go” policy. As revenues increase, the dollars available for road and bridge projects increases. Therefore if there is a need for additional highway construction the cry for higher taxes goes out.
The last time the Legislature increased the gas tax was in 1988. Few if any argue that there is not a need for additional road and bridge construction. The real question is…should we pay for it with cash or credit? Should the Legislature increase taxes or use state bonds for state highway projects?
With the Legislature poised to put another billion dollars of debt on our citizens, it would seem prudent to use the State’s credit card to fund road and bridge projects rather than Polar Bear exhibits and ski jumps.
For over 20 years, legislators from every corner of the state and of all political stripes have insisted on a pay as you go policy to fund critical transportation infrastructure. This commitment to a pay as you go policy for transportation was not because of a disciplined sound fiscal management policy, but because of an unwillingness to squelch their appetite for local pork barrel spending projects, that could be paid for in a bonding bill. This approach allows legislators to have their cake and eat it too.
This year’s list of requests for local pork projects includes everything from the Faribault Paradise Center for the Arts, to the Austin Area Success Center, hockey arenas to equestrian facilities. As Chairman of this Committee, I saw a long parade of local government officials begging for everything from county jails to city trails.
It’s time for the Legislature to stop handing out the candy to local governments and use the State’s bonding authority to pay for needed road and bridge projects. The Legislature shouldn’t raise taxes to pay for bridge repair and then put Polar Bear habitat on the credit card. If the citizens of Clara City want a walking path, they can certainly opt to pay for it. Roads and bridges have long-term usage and a statewide impact, certainly appropriate projects for the State’s credit card.
This year the Legislature has a clear choice.
Option 1: Increase taxes to pay for roads, and continue to use the credit card to pay for local pork projects OR
Option 2: Avoid an unnecessary tax increase and use state bonds to pay for road projects, leaving out the local pork.
The later puts considerably more resources into our road and bridge projects now and avoids a tax increase. I urge lawmakers to use the credit card for state highways instead of raising taxes. |
