Minnesota passes budget, record bonding bill and stadium bond payoff

Minnesota lawmakers ended their 2023 session after passing a two-year budget with new funding for schools and social services, a $2.6 billion capital package, and a tax package that raises some taxes and fees on top earners and corporations while providing rebates for others and paying off debt for the NFL Vikings’ stadium.

The budget uses much of a $ , authorizes $1.3 billion of general obligation borrowing to be repaid with general funds and $219 million of borrowing that would repaid with transportation funds. Another $225 million of general funds goes toward the package. The separate HF670 authorizes $851 million in general fund cash for more than 190 projects.

New general obligation bonding authority requires a three-fifths majority and Democrats were able to win GOP votes by agreeing to their demands to send $300 million to nursing homes.

Walz had proposed earlier this year a $3.3 billion capital package and earlier this month Democrats said they would pursue a cash-only package if they couldn’t secure needed GOP votes. The state typically taps its bonding authorization for capital spending in a sale in late summer or early fall.

Lawmakers dropped a requirement on nursing staff levels from a nursing-related bill. Minnesota-based Mayo Clinic had threatened to cancel $4 billion in planned investments if the state moved forward with the measure. Lawmakers exempted the system but that led to other pushback and ultimately the staffing rule was dropped.

The legislature didn’t pass a funding request from the University of Minnesota for aid that would pave the way for its separation from Fairview Health Services.

The university has put a $950 million price tag on the cost to acquire and operate its flagship academic health care facilities now operated under an affiliation agreement with Fairview which plans to merge with South Dakota-based Sanford Health. Walz and lawmakers suggested a special session could be held later this year to deal with the request.

Lawmakers did pass a measure that if signed by Walz would impede the merger unless it sheds the university-related assets. The bill prohibits out-of-state entities like Sanford from owning university facilities.

The legislation also gives Attorney General Keith Ellison’s additional powers in the office’s regulatory review of mergers over anti-competitive practices. Fairview said after passage it would continue to pursue the merger proposal and would comply with the law if signed by Walz.

With the stadium bond reserve expected to grow to $366 million in the current biennium and reach $678 million in the next, Walz had proposed retiring later this year the outstanding bonds issued for U.S. Bank Stadium ahead of the scheduled 2043 maturity. The move would save $200 million in interest.

The state sold $462 million of appropriation bonds in 2014 to cover most of its $350 million contribution and Minneapolis’ $150 million contribution toward the $1 billion project after establishing a new form of gambling, electronic pull tabs, to help repay the appropriation-backed bonds. Revenue has surged beyond expectations allowing for the early pay off.

The measure in HF1938 taps the current reserve account to pay off the bonds and then repeals the reserve account and transfers future funds to the general fund. It also repeals payments to the state from 2016 to 2020 from Minneapolis that covered its share of the public funding and reduces local sales taxes retained by the state.

The state carries triple-A ratings from Fitch Ratings, Moody’s Investors Service, and S&P Global Ratings after a Moody’s upgrade in July.