Part of Friday night’s Almanac roundtable discussion centered on Gov. Dayton’s line-item veto of the funding for the legislature. It was interesting that Phil Krinkie said that this fiasco actually started last year when Gov. Dayton initially agreed to cutting taxes before he reneged on that. Krinkie said Gov. Dayton’s renege caused the distrust that led to the legislature inserting the Department of Revenue provision into the bill this year. If that’s true, then Gov. Dayton created the distrust that led to him vetoing funding for the legislature.
There’s more to this than just funding the legislature. In Harold Hamilton’s weekly commentary, he wrote “Recall that DFLers in the Senate built a new office building for themselves just before they were removed from the majority in the 2016 elections. That building was financed with $90 million in bonds, which are sold in the private debt markets and are an instrument that comes with rights and obligations. The legislative budget that the governor vetoed contains the regular payments that the state makes on the bonds. Thus, unless and until funding is restored, there is no money to make scheduled bond payments. If those payments aren’t made, the state defaults on the bonds.”
Friday night’s Almanac also featured Sarah Walker and Javier Morillo-Alicea bragging about the structural surplus in the budget. They didn’t want to talk, though, about the downgrading of the state’s credit rating. It isn’t surprising why they didn’t want to talk about that.
If the state’s bond rating drops, every bonding project across the state is immediately inflicted with higher interest rates. Think of how many millions of dollars that would cost the state. Think of how much that would cost each city building a new high school or parking ramp or convention center. Think of how much an interest rate hike would cost taxpayers for state trunk highway projects.
This isn’t a tiny sum. It’s a gigantic amount, all thanks to Gov. Dayton pulling this unprecedented stunt.