ELY – Sometimes when you have too much money, it is worse than when you don’t have enough.
Those words, attributed to Minnesota State Sen. Tom Bakk, were repeated here Monday by Rep. Rob Ecklund when the Community Economic Development Joint Powers Board convened with Ely-area state legislators for a sneak preview of the upcoming legislative session, where a state surplus and bonding bill will be on the top of the to-do list, while redistricting will distract from the business at hand.
The local Joint Powers board, made up of elected officials from Ely, Winton, Morse Township, Fall Lake Township, and the Ely School District, uses the annual event to bend the ears of county, state and federal officials on projects and issues of interest to the individual entities and the entire region.
“This will be a big year for the state legislature,” Ecklund said in comments to about 100 area officials at the Grand Ely Lodge. “The bonding committees have been throughout the state looking at nearly $6 billion worth of requests. There are a lot of needs out there and we’ll have to whittle it down and figure out what kind of bill we can come with.”
He also noted that redistricting, while not of big importance to the Ely area because of its location smack in the middle of Bakk’s 3rd Senate District and Ecklund’s 03A State House District will also be high on the priority list when the legislature reconvenes on Jan. 31, 2022.
“I’ve never been down there for redistricting,” Ecklund said, “but I have talked to friends who have and we find out when the maps come out and we’re matched against each other, all of a sudden the friendships aren’t as deep as you thought.”
Ecklund said it will be a challenging year.
“We have a lot of money to spend, obviously, and there are some things I would like to see (in the bonding bill).”
Bakk talked of his flashbacks to 2001, the last time the state had a huge revenue surplus. “That was the last time we were going into a new session with a huge surplus like this,” he said. “And we did some pretty big stuff, like the ‘Jessie’ (Ventura tax rebate) checks. That was the year that we took the general education levy off the property taxes. That was a really big deal. I think you will see some things like that again.”
Bakk, who switched from the DFL caucus to an independent who caucuses with state Republicans, said he is crafting a bill to buy down the locally-operated levies for schools, not on cabins, but for businesses and individuals.
He explained, “We allow schools to levy $724 (per pupil) without a referendum. I have a bill drafted to shift that $724 over to the state’s general fund. It should generate serious property tax relief, close to $500 million per year. You get the property tax relief and you get more state money into the public school system from the general fund. That will be a high priority for me.”
Bakk also talked about removing the taxes on Social Security income.
“We are one of 12 states that tax that retirement income,” he said. “A whole lot of people think we shouldn’t do that. There are people who make their retirement decisions on where they are going to live based on tax policy. This is a problem that we never were able to address because we didn’t have the resources. Now we have the resources. I will be pretty surprised if that doesn’t get done this year. It costs about $600 million a year to do that.”
The unemployment trust fund is also on Bakk’s priority list.
“When that fund (what employers use to pay unemployment) runs out of money, it automatically triggers loans from the federal government,” he said. “We owe about $1.2 billion right now because the fund ran out of money.”
He added, “That was no fault of the employers. This whole (coronavirus) pandemic hit them. It seems like there is plenty of money to be able to pay off that federal loan.”
He chalked up spending about $3 billion so far of the estimated $7 billion in the state surplus.
“It does go pretty fast,” he said.
Bakk, who serves on the capital investments committee, has been studying the bonding project requests.
“Almost every request in rural Minnesota is the same as in Ely. It is wastewater, childcare, and housing. The same problems everywhere you go.”
He noted the discussion taking place on selling bonds to finance all those projects around the state while the surplus is so big.
“Why would we sell bonds if we have all this cash?” he asked.
He is in favor of bonding.
“For the last bonds we sold, last August, our interest rate was .65 percent. That’s pretty cheap money as borrowing goes. The problem with using (state surplus) cash is that today’s taxpayer will pay the entire bill for that new bridge or wastewater treatment plant. Everybody who drives over that bridge for the next 20 years will have gotten it for free. That’s why we bond.”
Bakk also talked of precedent.
“If we use cash, that will kind of become the new normal. If you use cash, there will be times when you do less because there isn’t enough cash laying around. If you save and wait to do things with cash, construction and inflation way supersedes the cost of the debt service. If you put a project off, the cost keeps going up. If you delay things because you don’t have the cash, all the things down the road get more expensive.”
Bakk didn’t anticipate new spending in the budget next year.
“The only area I do think will get some attention is in healthcare, especially in long-term care where we have serious problems. We are going to have to figure out how to help them out,” he said. “We have a serious shortage of healthcare professionals, and some of the reason you hear about shortages of ICU beds is the pandemic, no question, but a lot of beds are taken out of service because we don’t have enough staff. That will be tricky to figure out.”
As far as redistricting, Bakk said that after Feb. 15 the courts release the maps and everyone sees what their district will look like.
“Eklund’s district will have to gain about 3,000 more people, “ Bakk said. “I’m looking at losing 5,000 people in the Duluth area. So, I will need those 5,000, plus I need 6,000, that’s about 11,000. They can’t push me into Lake Superior or into Canada.”
He predicted many retirement announcements when the maps are released.
“You will see people paired against each other. You will see people who don’t live in their districts anymore. And to run for re-election, you will have to make a decision pretty quick to relocate. A lot of people will have a lot of new ground. It has historically been hard to get the legislators to stay in St. Paul and focus on the session when their districts look way different. It will create a lot of anxiety around the building.”
He added, “I think the governor’s thoughtof having a really grand (legislative) session with a lot getting done is probably not going to happen.”
Minnesota House Minority Leader Kurt Daudt also attended the Joint Powers meeting and agreed with Bakk’s assessment of the upcoming legislative session.
“There will be a lot of distraction with redistricting,” he said. “With this huge surplus, the expectations will go through the roof. When the expectations are too high, it gets very difficult to come together and to figure out how to resolve that.”
Daudt added a word of caution in reference to the $7.7 billion surplus.
“About $3 billion of that is carry forward money. That means it is one-time money. We can’t spend $7.7 billion going forward in additional money or we will end up in a deficit.”
He said he supports fixing the Social Security revenue tax.
“I hope this surplus allows us to do that,” he said.
And he said he supports replenishing the unemployment trust fund.
“At some point we have to pay that money back and the bill is coming due now,” Daudt said.
Look for more coverage of the Joint Powers Board’s discussion in the Dec. 31 issue of the Timberjay. One contentious Ely-area issue, sulfide mining, caught some members by surprise when an eleventh-hour resolution supporting the environmentally-risky proposal, was introduced.