2022 Minnesota Legislature Preview: Bonding Bill Factors

By Sheri Hansen | January 27, 2022

Illustration by @drawnwell.

SPOTLIGHT

The 2022 Minnesota State Legislature convenes on January 31 with a challenging task: Manage a complex set of funding sources for Minnesota, including significant funding to enhance Minnesota’s built environment using the state’s projected budget surplus. Several key factors will shape the outcomes of the session:

• A record $1.9 billion bonding package passed the legislature in late 2020. It was designed to kickstart recovery for the construction economy and protect public buildings and infrastructure.

• Federal funding in the form of CARES Act and Infrastructure Package dollars is likely to have a significant positive impact on transportation and infrastructure budgets, freeing up dollars for vertical construction projects.

• The Office of Minnesota Management and Budget is projecting a $7.7 billion surplus, allowing legislators to fund projects like deferred maintenance and bond for projects throughout the state.

• Legislators and the governor’s office have already indicated they are amenable to a very large bonding package in 2022, with Governor Walz’s starting number at $2.7 billion, the Senate suggesting they may do a bill as large as the 2020 bill, and the House signaling their package will have an even higher price tag than the governor’s.

What to Expect

While the bonding bill will be among the final pieces of legislation passed during the 2022 session, it will be a key discussion/negotiation point throughout the session. The federal funds for infrastructure are likely to impact the types of projects that will end up in the bonding bill, as they could cover some of the infrastructure projects that cities and counties would typically have to bond for. How the federal programs will roll out is still being determined, but the dollar impact will be significant and may free up significant bonding bill space for vertical construction and deferred maintenance.

Why Bonding Matters

Bonding is one of the state’s most important financial tools; it allows the state to sell bonds using its bond rating to cities, counties, universities, and other entities to preserve and enhance public spaces and infrastructure. It also supports the construction economy in Minnesota, creating and sustaining jobs and healthy local economies across the state.