The 2018 bonding bill: What’s in, what’s out and what trust fund got raided to pay for it

by Trevor Russell

The House and Senate passed a final state bonding bill in the last weekend of the session.

While it includes some excellent projects, the bill also calls for an unprecedented $98 million raid to the state's Environment & Natural Resources Trust Fund and provides $500,000 for regulated polluters to provide “oversight” of their own state regulators.

Here’s what is in, what got left out, and what got funded by the raid.

Clean-water infrastructure

Earlier this year, the governor requested $167 million in water infrastructure funding to fix aging drinking water and wastewater systems across the state. The original House position asked for about $120 million, while the Senate proposed about $90 million in general obligation bonds. The final bill includes just $64.350 million, plus $5 million more for metro sewer repairs.

What's in

Less than 40% of what's needed for clean water infrastructure in Minnesota made it into the final bonding bill.

  • Wastewater Infrastructure Fund ($25 million)
    Supplemental assistance grants for municipalities for high-cost drinking water infrastructure projects that address existing environmental or public health problems. Typically, they supplement either low-interest loans or are used as matching funds to secure federal grants or loans.
  • Water Infrastructure Initiative - drinking water ($14 million)
    State funds to be matched by federal funds through the clean water and drinking water revolving funds. State and federal funds are used together with loan repayments and PFA revenue bonds to provide low-interest loans to local governments for both clean water infrastructure, which includes wastewater and stormwater, and drinking water infrastructure projects. Eligible projects are prioritized based on environmental and public health criteria.
  • Public Facilities Authority (PFA) local grants ($25.35 million)
    Funding to the PFA for direct grants to political subdivisions to fund upgrades to water mains, wastewater treatment plants, stormwater retention ponds, drinking water systems and other water infrastructure.
    While the money is much needed, it violates the traditional approach of providing the money directly to the PFA. The PFA maintains the state’s Project Priority List – a ranked list of priority water infrastructure projects across the state/ Rather than let the PFA allocate funds per the list, this approach circumvents that process and gives the money directly to chosen communities.
  • Metro municipal “inflow & infiltration” grants ($5 million)
    Funds for improvements in municipal wastewater systems to reduce inflow and infiltration to the Metropolitan Council's Metropolitan sanitary sewer disposal system. Grants are for a 50% state cost share to defray costs of repairs in the most problematic communities.
What's left out

Some $98 million dollars (!) in bonding for much-needed water infrastructure across the state.

While some additional money for water infrastructure was added back in through the raid on our environmental trust fun, that raid may earn a well-deserved line-item veto from the governor (see below).

Metro river corridor projects

The competing bonding proposals include some vital investments along the Mississippi River in the metro area, with some notable exceptions.

What's in
  • Upper Harbor Terminal Redevelopment ($15 million)
    Site remediation to prepare the 48-acre city-owned Upper Harbor Terminal site for redevelopment to include residential, businesses and civic uses and a new destination park on the Mississippi River in North Minneapolis.
  • Wakan Tipi Center ($3 million)
    The Wakan Tipi Center is a visitor and interpretive center at Bruce Vento Nature Sanctuary just east of downtown St. Paul that will honor and interpret the Dakota sacred site, Wakan Tipi Cave, and the rich cultural history of this area.
  • Historic Fort Snelling Visitor Center ($15 million)
    Resources for the Minnesota Historical Society for design and construction of a much-needed revitalization and renovation of Historic Fort Snelling in time for its bicentennial in 2020.
  • StoneArch Bridge ($1 million)
    A small portion of the rough $12 million needed to repair the iconic StoneArch Bridge over the Mississippi River in Minneapolis.
What's left out
  • The Environmental Learning Center
    For the proposed environmental learning center at the current Watergate Marina site in St. Paul, $3 million is needed. This request would fund community engagement, design development, environmental review and permitting at the site. In addition to the City of St. Paul, supporting organizations include Mississippi Park Connection, Wilderness Inquiry and Capitol Region Watershed District.
  • The Falls Visitor Center
    The bill should include $1.5 million for predesign of “The Falls"— a destination visitor and interpretive center proposed for the recently closed Upper St. Anthony Falls Lock in downtown Minneapolis to draw people to discover our local national park on the Mississippi River.
  • Great Northern Greenway River Link/26th Avenue North Overlook & Pier
    $3 million is needed for Minneapolis Park & Recreation Board to extend the river biking and walking trails and construct a fishing pier and overlook at the river’s edge to provide access to the Mississippi River for North Minneapolis residents and regional trail users.
  • Full funding for Metro Parks
    The full $15 million is necessary for the Met Council for metropolitan area parks, creating exciting new investments in our shared riverfront. While $10 million could come from the trust fund raid, it's this will be vetoed (see below).  

The “MESERB” Bill

Still in

The bonding bill includes a vague line described as a “Wastewater treatment plant optimization program.” A footnote at the end of the bill notes that the money includes $500,000 for the bizarre “MESERB” bill.

This item diverts funds from infrastructure projects to pay regulated parties to provide “oversight” over their own regulators. This misspends limited resources and attempts to slip a bad idea that couldn’t pass on its own into an unrelated spending bill without justification.

Conservation programs

Two priority projects that were originally funded with state bonds in the initial House and Senate bonding bills were excluded from the general obligation bonds in the final version:

  • Funding for targeted conservation easements (RIM Reserve) 
    The Reinvest in Minnesota (RIM) program works with farmers and private landowners to restore and protect water quality through targeted conservation easements in agricultural areas. The program compensates private landowners for granting permanent conservation easements and establishing wetlands or riparian areas on their lands.
    State bond funds will leverage federal funds through a multi-year initiative aimed at protecting water through a state-federal partnership. To fully fund targeted conservation easements through Reinvest in Minnesota (and maximize our substantial federal matching funds) Minnesota needs to bond for $30 million but went with zero dollars instead.
  • Closed Landfill Cleanup and Leak Prevention
    Anoka’s Waste Disposal Engineering Landfill is home to an estimated 6,600 barrels of hazardous waste. It’s leaking and poses high risks to drinking water, groundwater, public health and adjacent Coon Creek. Funds would have helped remove the hazardous waste and contaminated soil and reconstruct the site.  

Some money for both items was later included in the ENRTF raid —$10 million for RIM & $6 million for the landfill. But, again, these funds are likely to be vetoed (see below).

The $98 million Environmental Trust Fund raid

The final bill also included an unprecedented $98 million raid of the state’s Environment & Natural Resources Trust Fund.

The raid, which ballooned from $47 million to $98 million over the legislature’s final weekend, claims future money from this voter-approved dedicated environmental funds to pay debt service on state bonds. (Learn more.)

Next steps

The bonding bill is currently before Gov. Mark Dayton. Because the Legislature passed the bill in the last three days of the session, the governor has 14 days to sign, veto or “pocket veto” the bill. He can also choose to line-item veto specific funding lines.

FMR and our allies are requesting that the governor line-item veto both the bizarre MESERB provision and any project paid for through the raid on our state's environmental trust fund.

Learn more about how Minnesota's environment and the Mississippi River fared this legislative session at our River Guardians happy hour, June 5. 

More legislative updates