We had just read a powerful editorial by the ECM Editorial Board that was published in the Morrison County Record on February 1, Legislators must correct the trust fund raid, when we stumbled across a special Steve Drazkowski moment in the Minnesota House Ways and Means Committee on Monday, February 11.
The committee was hearing Hermantown DFL Mary Murphy's HF80, which would fix the trust fund raid. The Leader of the New House Republican Caucus, Drazkowski spoke out against the fix, essentially saying that DFLers who want to follow the Minnesota Constitution, state laws and fiscal sanity just want to cost Minnesota taxpayers more money.
And they're in cahoots with radical environmental groups.The renegade caucus thought so much of this moment, it posted a clip of it on the group's Facebook page. (Full video here).
Here's the moment, along with responses from bill co-author Rick Hansen, DFL-S. St. Paul and Jean Wagenius, who supplies the legislative history of the trust fund and a defense of Minnesota voters, who knew what they were doing when they approved the amendment creating it.
Draz pooh-poohs all that legislative intent and history, since that was a long time ago and why not use this pot o' money. Readers can listen to Hansen and Wagenius's remarks. We also suggest checking out the arguments in the editorial printed in the Little Falls paper:
Now that Gov. Tim Walz and the 2019 Legislature have begun work, we believe their agenda must include correcting a serious breach of constitutional authority that includes an ill-conceived financial scheme. This 2018 legislation thwarts the will of Minnesota voters and compounds the costs of certain capital improvements over the next two decades.
Our constitution directs 40 percent of state lottery net proceeds to the Environment and Natural Resources Trust Fund. That fund may only be spent as authorized by the Legislature for “protection, conservation, preservation and enhancement of the state’s ... natural resources.” Minnesota law provides, “The trust fund may not be used as a substitute for traditional sources of funding environmental and natural resources activities...” By law, the Legislative-Citizen Commission on Minnesota Resources (LCCMR) must review proposals and make recommendations to the Legislature for expenditures from the trust. This process worked well since 1988, when the trust fund and lottery were approved by voters as amendments to the state constitution – until the 2018 session, that is.
The final bill enacted during the contentious 2018 session was the biennial capital investment bill, commonly called the bonding bill. It also included appropriations from the Environment and Natural Resources Trust Fund that had been recommended after LCCMR review. A surprise was revealed late in the afternoon of the last day when a committee unveiled a $98 million raid on the Trust Fund. There was no opportunity for public testimony. It was just tucked into this voluminous bill. Given the crunch of business that last day, quite likely most legislators had no idea this provision even existed.
Foolishly, the irresponsible legislators concocted a scheme using “appropriation” bonds to be paid from the Trust Fund over the next 20 years, rather than using standard general obligation bonds. Apparently, this was an attempt to appear to be spending less by not counting these bond authorizations against self-imposed limits. But, because bondholders have less security, the market requires higher interest rates, and consequently greater debt service costs. Minnesota Management and Budget has estimated the “appropriation” bonds to incur $66 million in interest. This compares to $31 million estimated interest for traditional general obligation bonds.
The $98 million funds many municipal sewer and water projects, which the governor recommended be included among the authorized state general obligation bonds. For decades, the state has authorized similar projects among those traditional bonds in the biennial bonding bill.
For unknown reasons, Gov. Mark Dayton signed this bill into law without a line-item veto of the $98 million Trust Fund raid. Dayton did, however, send a strongly worded message to legislators upon returning the signed bill, saying they “shamefully subverted” the prescribed LCCMR process. Dayton said, “Even worse, legislators invaded the Trust Fund to pay for another $98 million of projects through issuing Appropriation Bonds. I strongly urge future legislatures to immediately correct this travesty and restore the integrity of this 30-year-old fund for future generations.”
Over three decades, with the overwhelming passage of three separate constitutional amendments relating to the Environment and Natural Resources Trust Fund, Minnesotans have made clear their support. Legislators need to heed that message.
A lawsuit challenging the constitutionality of this Trust Fund raid has been filed, and with this cloud of uncertainty the “appropriation” bonds authorized last May have not been issued. Moreover, they likely will not be issued for months or maybe years, if ever. This is unfortunate for those needing funds for the affected projects.
We wholeheartedly agree with Dayton’s statement urging quick legislative action to fix the problem and not wait for resolution of the litigation. The simplest, quickest solution is to authorize $98 million of general obligation bonds to replace those authorized by the Trust Fund raid. Furthermore, we implore legislators to cease these smoke and mirrors tactics that create suspicion and mistrust with the citizenry.
More recently, Morrison County staff writer Tyler Jensen reports in LF hopes for speedy solution to wastewater fund battle:
. . .Bills are underway at the Legislature to solve the issue, Radermacher said.
In the House, a bill moving the funding from the trust fund to general bonds has support and is likely to pass, he said.
In the Senate however, where a super-majority of 41 votes would be needed, there is a bipartisan group of senators who would like to see the issue answered in court, Radermacher said.
Senate Majority Leader Paul Gazelka, R-Nisswa, said he is in support of getting the funding to Little Falls and other communities this session.
Multiple ways to get the funding are being explored, he said.
When the Legislature passed the bill in 2018, Gazelka said the trust fund money had been used with the goal of getting additional projects funded that year.
In the lawsuit it filed, the Minnesota Center for Environmental Advocacy said the trust fund is not meant to be used for bond payments under state statute and these appropriations bonds are more expensive than regular ones due to their risk.
In a press conference Wednesday, Senate Majority Leader Paul Gazelka, R-Nisswa, announced that ‘Taking Care of People’ and ‘Protecting Taxpayers’ will guide budget-setting process for Senate Republicans.
Given those priorities, Bluestem recommends that the Senate find a sponsor to introduce a companion bill to Murphy's correction, pass it, provide for projects like that in Little Falls and save taxpayers a bundle of money by using general revenue bonds. Sure, there's curiosity about raiding a pot of money, but if it trashes the state constitution while costing taxpayers a lot more money, just why the heck would they want that?
Photo: The little falls in Little Falls MN in 1920.
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