Governor’s Bonding Proposal, Budget Update, and More

GOVERNOR’S BONDING PROPOSAL

Gov. Tim Walz has unveiled a $982 million bonding proposal for 2024. The plan, covering a diverse range of projects, allocates nearly half of its funding to preserving existing state infrastructure, including substantial investments in water and transportation systems, public safety, housing, and environmental initiatives. Here’s a quick breakdown of the highlights:

• $440 million for preserving state infrastructure (45%)
  • $206 million for University of Minnesota and Minnesota State systems buildings
• $215 million for water and transportation infrastructure (22%)
  • $119 million for grants and low-interest loans to replace lead pipes
  • $28 million for PFAs removal (perfluoroalkyl and polyfluoroalkyl substances, known as “forever chemicals”)
• $142 million public safety infrastructure (14%)
  • $22.4 million for new Minnesota State Patrol Headquarters building
• $97 million for housing infrastructure (10%)
  • $16 million for Minneapolis Veterans Home updates
• $85 million for other infrastructure (9%)
  • Approximately $40 million is set aside for local government projects

Gov. Walz’s proposal follows last year’s historic $2.6 billion investment package. Amid economic uncertainties, the governor’s bonding proposal for 2024 is prioritizing a smaller list of projects. Requests from state agencies and local units of governments are already totaling $7.6 billion. As Minnesota lawmakers prepare to convene on February 12, debates over the capital investment bill will take center stage. Republican lawmakers have advocated for a smaller capital investment bill compared to this proposal. The DFL-controlled legislature will have to negotiate with Republicans to create a bonding bill that requires a three-fifths majority to pass. Both the House and Senate Capital Investment Committees will also release their bonding proposals.

BUDGET AND REVENUE UPDATE

Minnesota Management and Budget (MMB) found that net general fund receipts for November and December of 2023 were $70 million (1.4%) more than forecast in November. This is attributed to higher-than-anticipated net individual and corporate income tax receipts; net receipts from other tax sources, including sales tax, were below forecast. Specifically, individual income tax receipts were $37 million above the forecast, and corporate receipts were $65 million above the forecast. However, partnership and S corporation payments were $37 million below the forecast. We can expect another forecast update in February, which the Legislature and the governor will use to develop supplemental budget proposals.

LEGISLATIVE RETIREMENTS

As of this week, 13 legislators have announced that they will retire from their legislative careers at the end of the 2024 legislative session. In addition to these announcements, Rep. Kurt Daudt has announced that he will retire before the legislative session begins, effective February 11. State statute requires a special election to be held 35 days after his resignation. Rep. Ruth Richardson also retired in September 2023 and was replaced in a special election in November

Other legislators are seeking a different office this election season, including Rep. Heather Edelson, who is running for Hennepin County Commissioner, District 6, and Sen. Kelly Morrison, who is running for the Third Congressional District (Sen. Morrison is not up for re-election to her senate seat until 2026).

DATES TO REMEMBER

February 12: First day of 2024 legislative session

May 20: Adjournment of the 2024 legislative session