If at first you don’t succeed–reapply for state construction funds

Phil Krinkie, Guest Columnist

There is a lot to be admired in that old phrase: “That if at first you don’t succeed, try, try again.” But in this case it isn’t about the recent graduate seeking employment, or the athlete reaching to improve his or her score, or even a high school student struggling to get a passing grade.

In this case I’m not referring to individuals striving to succeed or improve their performance, but rather to Minnesota cities attempting to finance their local building project with state taxpayer dollars. Why would any self-respecting community pay for its local public works projects with local tax dollars if it’s possible to get free money from the state or federal government?

In the 2012 legislative session lawmakers provided local government officials the opportunity to get a second, third or even a fourth bite of the apple; in other words another chance to fund their cities construction project with state money. Here is how the game is played: first the city determines what project it wants to build that it doesn’t have the funds to construct. Seldom is there a project too small or too large that a city can’t plead its case for state taxpayer funding. A project could range in cost from a $500,000 for a fire hall to $25 million for a civic center. The list of local projects the cities want the state to fund is virtually endless; from street improvements to sculpture gardens and athletic fields. As President Ronald Reagan said, “The most dangerous place in the world is between the hogs and the trough.” In this case the hogs are the local governments and the trough is the state treasury.

Once the size and scope of the local project has been determined, the city submits its request for funding to the state Office of Management and Budget. Each project is reviewed against a standard list of criteria. If the project meets the minimum standards set by OMB, it is placed on a list that is forwarded to the Governor.

At the beginning of each legislative session, the sitting governor forwards his bonding recommendations to the legislature. Both the House and the Senate hold hearings to consider the list of projects. If a city’s project doesn’t make the governor’s list, often the city will seek support from local legislators to include their project in the bonding bill during the legislative process. In addition to state bonding dollars, many times city officials will seek funding through other means, such as municipal state aid or public infrastructure funding. But the state’s bonding bill offers them a second chance for state dollars.

This year, state lawmakers in an effort to avoid picking winners and losers among the multitude of local government projects decided to create the “Business Through Capital Project Grants” program, (i.e. just another slush fund). This represents one more way to fund local government pork projects without a recorded vote. In addition to the more than $1 billion in state general obligation bonds, legislators also appropriated $500 million from the “Legacy Fund.” This fund is constitutionally mandated to fund arts, cultural heritage and natural resource projects from state sales tax dollars. The legislature also doled out more than $30 million from the “Environmental Trust Fund” where the proceeds of the state lottery are deposited.  Each of these funding pots represents another opportunity for cities to seek money for their special projects.

But, if your community came up empty handed in the state mega millions give away game, they were given the chance to apply for runner-up funding from the “Business Development Through Capital Project Grants” program.

Applications to access this $47.5 million slush fund closed on July 9. The Department of Employment and Economic Development received 90 project funding requests totaling more than $288 million. After looking at the list, a DEED spokesman said, “Given the size of the list, we’re looking at two months before awards are announced, probably mid-September or so.”

This would appear to be longer than necessary due to the fact the OMB has already evaluated many of these same projects more than once. After DEED has evaluated the 90 projects, they will forward their recommendations to Governor Dayton who will make the final selection of projects to receive state funding.

Phil Krinke, Guest Columnist

This new “Minnesota Taxpayer Giveaway Sweepstakes” is very different from the other bonding dollar competitions. This competition has just one judge, the governor, rather than 201 legislators from across the state. Just one person now gets to pick the winners or losers from this $47.5 million slush fund. Regardless of whether you like or dislike the projects that are chosen by Gov. Mark Dayton, this is a bad precedent. The power to appropriate state funds should remain with the legislative branch of government and not be turned over to the Executive branch. Hopefully, this will be a onetime mistake in legislative judgment rather than a permanent new slush fund that allows the spenders to reapply for state funding over and over.


Phil Krinkie, a former state lawmaker, is president of the Minnesota Taxpayers League and a business owner.