It's time to bond and build
Every-other year, the legislature takes the opportunity to issue very low-interest bonds to help stimulate new public infrastructure projects around the state.
Join the discussion below, or Read more at The Austin Daily Herald.
#2 Feb 15, 2010
Let’s revisit both the reasons why a debt-financed bill isn’t a good idea and the specific pork larded into the DFL versions of their respective bills.
First, the DFL makes the incredible claim that the bonding bill will “stimulate” the economy and put people to work. Please.
How has the Democrat stimulus bill out of the federal government worked out?
We remember when it was claimed that the stimulus bill would keep unemployment below 8%. The White House celebrated this week when unemployment dropped to 9.7%. Wow.
The DFL doesn’t understand that government spending doesn’t create jobs. The government merely takes money out of the private economy and re-circulates it far more inefficiently than the markets ever would. Government money can temporarily put one man to work digging a hole and another to fill it, but it can’t create a sustainable job.
Moreover, the DFL keeps braying on about low interest rates as a justification to enact a monstrous,$1 billion bonding bill. Cheap money isn’t free money.
The state is facing an immediate $1.2 billion deficit and a $5 billion deficit in the
next fiscal biennium. When you’re flat broke, even cheap money is out of reach.
Third, the bonding bill is financed by debt. It’s financed by the state
selling debt on the open market just like Washington does. Haven’t we had enough of
this credit-card mentality? Our children and grand children are handcuffed to a
mountain of Chinese financed debt and we just keep digging and digging. Enough is
Finally, this may be a technical point but it has significant bearing on the
question of “shovel ready” projects. The DFL crows about the need for an early
bonding bill to put people to work. Putting aside all other arguments for a moment, it is
impossible to get projects out the door that quickly.
Remember that a bonding bill doesn’t mean the state loads up a bag of money
and walks out the door to hand it out. Bonds are financial instruments that are
sold in the financial marketplace. They contracts, they are legal documents, and
they are complex. In order to protect the state and ensure a smooth sale, a
complex “due diligence” process is required to satisfy both the state and the marketplace that the bonds are what they purport to be. That process takes many weeks and means that even a bonding bill passed in February or March wouldn’t be ready for market until early summer.
So what kind of “critical” projects are included in the DFL proposals?---
American Indian Learning Resource Center ($6.7 million)
· Bike and hiking trails ($39 million)
· Minnesota Zoo ($32.5 million)
· Rochester volleyball center ($4 million)
· Springbrook Nature Center ($2 million)
· Wirth Park Winter Recreation ($1 million)
· Minneapolis Sculpture Garden ($2 million)
· Dakota County bicycle tunnel ($344,000)
· Old Cedar Avenue bicycle bridge ($2 million)
· Rock Island Park trail development ($1 million)
· Potter Center for the Arts ($7 million)
· African-American Cultural Center ($840,000)
· Mankato Civic Center ($14 million)
· Orchestra Hall ($17 million)
· Rochester Civic Center ($28 million)
· Saint Cloud Civic Center ($15 million)
· Ordway Center ($16 million)
· Asian-Pacific Cultural Center ($7 million)
· Oliver Kelly historic farm ($10 million)
· Moorehead sports complex ($4 million)
· Ice arenas ($2 million)
· Midtown Famers’ Market ($500,000)
· Como Zoo ($11 million)
· Chatfield Arts Center ($2.2 million)
· Arrowhead Sports Complex ($3 million)
· Saint Paul Saints stadium design ($250,000)
The DFL claims they understand the seriousness of the budget crisis. They’re actions suggest otherwise.
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