Bring on the state bonding

Relative economic stability and low debt should prioritize key projects.

Data released last week by the Minnesota Department of Employment and Economic Development provides further evidence that the stateâÄôs economy is on the mend. The unemployment rate remains well below the national 10 percent average at 7.4 percent. While the state experienced net job losses in December, gains in some sectors including manufacturing, information and business services indicate that the economy may have finally and painfully bottomed out. The stateâÄôs relative stability and inklings of growth afford it the opportunity to partially offset ongoing job losses in construction, transportation and utilities with strategic state investment in needed infrastructure projects. However, the governorâÄôs $675 million bonding bill does not do enough to take advantage of current low interest rates and construction costs. The 10-year average capital budget in even-numbered budget years is $725 million. Spending at that level would keep debt service costs well below 4 percent of the stateâÄôs recession-shrunken revenues. Though slightly higher than traditional guidelines, such a debt load is entirely manageable with a recovering economy. Most states spend much more. As a share of personal income, Minnesota has one of the lowest debt burdens in the country, bringing up the rear in 42nd place. A larger bonding bill, particularly one focused on projects that the state will eventually have no choice but to fund, such as a major renovation of Folwell Hall and a robust list of HEAPR projects, can jointly strengthen the University and the stateâÄôs economy. Delay will only increase the cost to taxpayers and add to the very real human misery of unemployment.