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Cities Could Face Additional Barriers to State Financial Support for Capital Improvement Projects
Proposals heard in the House and Senate would require that any city receiving funding for a local infrastructure project from state bonds or general funds create an account sufficient for rehabilitation, expansion, and eventual replacement of the project.
The House and Senate both held informational hearings on legislation that creates far-reaching barriers to state financial support of local public infrastructure.
HF 3582 (Rep. Fue Lee, DFL-Minneapolis) and SF 3782 (Sen. Sandra Pappas, DFL-St. Paul) would require that a local government infrastructure project that receives any state funding must also create a capital project replacement fund to cover major rehabilitation, expansion, or replacement of that capital project.
The funds and the approval of uses of that money would be determined by the state and the account would need to be annually audited. Money could not be used from that account without state approval. An amendment that was adopted in the House includes language that more broadly applies the requirement to other state capital project grant recipients and also penalizes anyone whose fund is not kept at required levels.
Background
The House Capital Investment Committee and Senate Capital Investment Committee are reacting to a rapidly growing number of requests for state capital investment funds. Unfortunately, the proposals would effectively shut out communities with the highest need, as only those able to create an ongoing cash flow capable of building the replacement account over the life of the state bonds could receive a grant. Cities typically only request state financial assistance if the project has significant state or regional benefits or their capital improvement plan cannot manage the cost of the improvement without state partnership.
The League will continue to oppose placing exceptional financial burdens in the path of cities requesting state support for building important infrastructure to meet the public health, safety, welfare, and environmental needs of their communities. The topic will continue to be discussed in the House and Senate capital investment committees during the rest of this legislative session.