MINNEAPOLIS -- In the first of four parts of the administration's highly anticipated 2020 bonding package, Minnesota's Democratic Gov. Tim Walz has proposed the state invest a historic $276 million in affordable housing projects.
At a Thursday, Jan. 9 news conference, Walz proposed the package, which more than doubles Minnesota's previous record-high housing bond. The rest of the administration's bonding package proposal, which Walz said will be in the ballpark of $2 billion, will be rolled out over the coming weeks.
Democratic Lt. Gov. Peggy Flanagan said Thursday that affordable housing is "a fundamental building block to strong people, strong communities and a strong economy."
"The governor and I believe that every man, every woman, every Minnesotan, every child, without exception, deserves a safe, affordable and dignified place to call home," she said.
Per Walz's proposal, the $276 million would fund $200 million in housing infrastructure bonds, $60 million to rehabilitate existing public housing and $15 million in veterans housing improvements.
Walz has remained coy on the exact dollar amount of his total 2020 bonding proposal, but said Thursday that the total is "somewhere around" $2 billion. He is rolling out the next three parts of his proposal in the coming weeks, which will focus on funding clean drinking water infrastructure, higher education and public safety.
Local governments and state agencies have in total requested $5.3 billion state funding for local projects, not all of which will be funded.
The Minnesota Management and Budget office announced in December that Minnesota will see a $1.3 billion surplus in the 2020-21 biennium, and the state can take advantage of low interest rates thanks to AAA bond ratings from both Fitch and S&P (Moody's ranks Minnesota Aa1). Walz said that the surplus, paired with low interest rates, means the state can afford a "robust" bonding bill.
"We can't wait on these projects," Walz said Thursday. "The needs are real. Interest rates are low. There's no reason not to act."
State Republicans saw the news differently, arguing that the state shouldn't borrow money when there's already cash on-hand.
House Minority Leader Kurt Daudt, R-Crown, in December said House Republicans would back a "reasonably sized bonding bill," but, "It's not going to start with a two, though, I can assure of that."
In a Thursday news release following Walz's news conference, Republican Senate Majority Leader Paul Gazelka, Nisswa, said he'd be more comfortable with bonding bills under $1 billion.
"Surpluses come and go, but obligations remain the same," he said. "Like a household budget, we don’t just borrow money because we can or because we can get a good deal.”
Daudt said in a Thursday news release that House Republicans want to prioritize "job-growing infrastructure" in 2020's bonding bill, like roads and bridges improvements, water projects and maintenance to state-owned facilities.
Housing Finance and Policy Division Republican Lead Rep. Tama Theis, R-St. Cloud, said that Minnesota needs "real reforms" in affordable housing, not just increased bonding.
"Bonding investment is part of the solution, but must be met with broad changes to state codes, zoning, land development rules, and other regulations that are driving up costs and making homeownership unaffordable for too many families," she said.