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Lawmakers look to bonding for jobs

ST. PAUL -- The problem is to find money to create jobs while the economy remains troubled. The solution remains very much a work in progress two months before Minnesota legislators convene in their 2010 session.

Task force
Reps. Larry Howes of Walker (left) and Loren Solberg of Grand Rapids study paperwork Monday during a task force hearing about how to create jobs. Photo by Don Davis Minnesota Capitol bureau chief.

ST. PAUL -- The problem is to find money to create jobs while the economy remains troubled. The solution remains very much a work in progress two months before Minnesota legislators convene in their 2010 session.

A Wednesday finance report is expected to show that finding that money will be even worse than expected as tax revenues continue to stumble.

"Our collections throughout the fall dropped considerably," Management and Budget Commissioner Tom Hanson told the House jobs task force Monday.

Predictions of the budget deficit are as high as $7 billion out of a $32 billion two-year budget that began July 1. That makes it difficult to fund new job-producing programs and leaves borrowing money to fund public works projects as the prime way the state can boost employment.

It'll take time

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House Majority Leader Tony Sertich, DFL-Chisholm, said it will take time for legislators to draw up other plans to bolster employment.

Rep. Tom Rukavina, DFL-Virginia, said that while other programs would be nice because they could help a wide variety of unemployed Minnesotans, economic problems mean the emphasis must be placed on a public works funding bill.

With the focus on public works projects -- funded by the state selling bonds -- Sertich said he and Senate leaders will work on moving a bill through the Legislature within a month after it convenes on Feb. 4. A so-called bonding bill provides money for construction projects such as new state buildings and fixing college facilities.

Dems want $1 billion

Legislative Democrats lean toward borrowing about $1 billion, saying they want to create as many jobs as possible. Republican Gov. Tim Pawlenty has yet to say how much borrowing he would support, but he traditionally wants a much smaller bill than Democrats.

"A couple hundred million doesn't have that big of an impact in a bonding bill," said Rep. Alice Hausman, DFL-St. Paul, who leads the House committee that approves public works projects.

While the House jobs task force was discussing bonding on Monday, the Senate committee dealing with the issue was preparing for its final two days of touring potential public works projects beginning today. Sen. Keith Langseth, DFL-Glyndon, chairman of the Senate Capitol Investment Committee, will begin to pare down the list of proposed projects, costing nearly $3 billion, after getting a first-hand look at projects.

In hunting money for public works projects, lawmakers are looking over $1.5 billion in previously approved bonding requests that have not been spent. Hanson's staff is looking over the list to see what projects may have fallen through, which could free up money for 2010 bonding.

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Included in the list are items like a $22 million Minneapolis planetarium and $20 million to buy land for a new state park along Lake Vermilion. Neither is in immediate danger of losing money, Hausman said, but such projects could be endangered if money already approved is not spent soon.

About $60 million on that list was approved in 2005 or sooner and much of it could disappear next year because of a four-year limit to spend bonding money.

How big a bill?

A big part of how large a bonding bill is approved is determined by the size of repayments policymakers are willing to approve.

Traditionally, Minnesota has kept its bond repayments to 3 percent of the state's revenue. Lawmakers and Pawlenty inched above that ratio this year, and any bonding bill approved next year would put it well above 3 percent.

Rukavina offered an idea to increase the number of new jobs other than via a bonding bill. He wants money from a newly enacted sales tax increase that flows to outdoors and environmental causes to be spent with job creation in mind.

The Iron Range lawmaker suggested that instead of spending $50 million to buy land, an advisory committee recommend funding programs that include building and other projects that would increase employment.

Rep. Denny McNamara, R-Hastings, said the best way to help employment is to help businesses. When companies make money, they can hire people and fund other activities, he said.

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"That's what we should be doing, encouraging them to create jobs here," McNamara said.

Close to N.D.

A Fergus Falls delegation told the jobs task force about problems they face by being close to North Dakota.

"We do not have the economic development resources to compete," Mayor Hal Leland said, adding that some companies have moved their headquarters to Fargo and other North Dakota communities because of the state's more business-friendly laws.

In nearby Perham, snack-food company Barrels of Fun and others have received state aid that helped to significantly increase business, added President Jim Pederson of the Fergus Falls Economic Improvement Commission.

Leland and Pederson urged lawmakers to keep border cities in mind when looking for ways to add jobs.

Pederson said the Job Opportunity Building Zones program to give new rural businesses tax breaks has been a big help. "Let's keep this tool viable."

Davis writes for Forum Communications Co., which owns the Herald.

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