A framework agreement between Republican legislative leaders and Governor Dayton calls for borrowing money from schools by delaying payments to them and borrowing money from yet-to-be-paid tobacco settlement dollars to close the state’s budget gap. The $1.4 billion in borrowing will cost much more than that to pay off.
Representative Ryan Winkler (DFL-Golden Valley) says when there is a special session, he will offer up a constitutional amendment that would not allow the state to do such borrowing. He says the amendment has the support of both DFLers and Republicans. The amendment would need approval of the voters in the 2012 general election.
“I think everyone will admit that putting our current deficit on the credit card is bad for Minnesota and we should retire this irresponsible budget practice for good,” said Representative Winkler in a press release.
State Rep. Ryan Winkler (DFL – Golden Valley) will introduce legislation during the coming special session that would create a constitutional amendment to prevent appropriation bonds from being used to balance budget deficits. This legislation would not apply to the current budget framework, which reportedly will use $1.4 billion in borrowing and shifts. However, Winkler said it would prevent this irresponsible budget practice from being used in the future.
“We are constitutionally required to balance our budget every two years – that’s the right thing to do,” said Winkler. “Borrowing from our future revenues is simply using a loophole to skirt our constitutional responsibility and we should never do it again.”
The current budget agreement will have a negative impact on Minnesota’s fiscal stability for decades to come, said Winkler. $700 million in appropriation bonds would be issued by the state and debt service payments would likely be made from the general fund. Initial non-partisan estimates about the interest on the bonds indicate the state would pay over $1 billion over 20 years to cover the debt service. However, if the state’s bond rating weakens and interest rates increase that figure could be significantly higher.
“The consequences of this risky one-time borrowing are not fully known,” said Winkler. “All we know for certain is that we will be paying for this fiscal mistake for decades to come. A constitutional amendment would guarantee this is a one-time scheme”
Due to the excessive use of borrowing and shifts, the Legislature can expect a multi-billion deficit in the coming budget cycle. Winkler said that continuing to make our ongoing budget deficit worse will only create larger problems.
“We are marching down the road to Sacramento,” said Winkler. “Dysfunctional states like California reached a fiscal crisis because they didn’t face reality and solve their budget problems. I am introducing this constitutional amendment because I don’t want to pile any more debt on top of my children.”
Winkler has heard from both Democrats and Republicans who support his bill.
“I think everyone will admit that putting our current deficit on the credit card is bad for Minnesota and we should retire this irresponsible budget practice for good,” said Winkler.