Pawlenty's bonding vetoes bring mixed bag for Northern Minnesota

Minnesota Gov. Tim Pawlenty announced line-item vetoes on several items in the bonding bill Monday. This was a modest surprise for some in state political circles because it was believed that Pawlenty might veto the whole thing to force legislators to make the unpopular choices about which projects to cut. Instead, Pawlenty did the dirty work himself, but cut the bill down to $718 million -- well below the $825 he originally proposed (the legislature passed a $925 million bill). The Star Tribune has a write-up that lists some of the projects.

In northern Minnesota, bonding priorities enjoyed mixed results. Pawlenty is allowing the $28 million for Essar's Minnesota Steel infrastructure near Nashwauk. He also OK'd the funds to mitigate the flood threat at the Canisteo Pit near Bovey, two of DFL freshman Rep. Tom Anzelc's top 2008 goals. But the science classrooms at Mesabi Range Community and Technical College (indeed, upgrades at MNSCU colleges across the state) got the ax, as did improvements to the Hibbing Memorial Building and other smaller Range projects.

Duluth can finally rest easy as Pawlenty allowed the bonding funds for the DECC expansion. But proponents of light rail are outraged over the veto of a $70 million project to improve passenger rail in the metro area. St. Paul in particular took a big hit in its requested projects, something that some folks consider political retribution for the legislature's rebuke of Pawlenty's pet projects.

In any event local pols may have fodder for the upcoming election but by and large this seems to be a mixed bag for northern Minnesota. It could have been a lot better but it could have easily been much worse.

Minnesota bonding bill: "Deal or No Deal?"

The Minnesota House and Senate conference committee released its bonding bill list today and there's some good news for northern Minnesota.

Among other smaller projects across the Iron Range, Itasca County would receive $28 million for infrastructure for Essar's proposed Minnesota Steel plant near Nashwauk. That's not nearly the amount required to build the pipeline, roads and railways needed, but it's something and probably keeps the project going after Iron Range Resources makes up the difference.

(By the way, the position of this blog is "Minnesota Steel good, Mesaba Energy Project bad." You know that's an honestly held position because one part of it or the other angers 95 percent of my readers).

It's aggravating that the governor has insisted that IRR use its funds from one-time mineral taxes to build basic infrastructure, but at least it didn't take us half a decade to get anything at all. (I'm talking about you, DECC expansion in Duluth).

The bill rolls in at $925 billion. Gov. Tim Pawlenty says he wants it to stay at $825. He has the option of line item vetoing projects on the list or he can veto the whole bill and make the legislature do the trimming. I think it's more likely he'll veto the whole thing or just sign it. He's can try to blame the DFL for everything by vetoing it. He can also show bipartisan election year appeal by signing it. Based on how things have progressed in the session so far, I'd prepare for the prior. The Minnesota Republican strategy so far has been "no deals, take it to the election." In truth that's not a bad plan for them since they're safely entrenched in most of the seats that are up this year. But boy, a deal made this year would sure go a long way to helping smooth things over in the state.

So, T-Paw. What will it be. Deal? Or no deal?

(Let's hope this one doesn't end with a sad family looking at a briefcase full of $100 and a long plane ride back to Appalachia).

House bonding bill includes partial funds for key Range projects

The Minnesota House of Representatives' proposed bonding bill includes money for the Essar Minnesota Steel plant near Nashwauk and to abate the flood risk at the Canisteo Pit near Bovey. I hear that the governor is sticking to his guns about the creation of the Vermilion State Park I mentioned yesterday, however, which means that the funding that would be going to northern Minnesota will be spread thin.

One encouraging sign is that the House, Senate and Governor all recognize the need to fund the steel mill and Canisteo. Discouraging is the fact that none of them seem to fully fund the needs for these projects and that Iron Range leaders will have to track down other funding sources to get them done this year, probably from the rainy day fund at Iron Range Resources. Yes, that money is there for a reason, but it's one time regional money for a longrange project that will give a lot to the state as a whole. The steel mill alone will need another $30 million plus to make sure that the necessary infrastructure is in place for the company to being construction this spring.

Session battles cast eerie light

Gov. Tim Pawlenty (R-Minn.) lashed out harshly after the legislature overrode his veto of the transportation bill. Today, the Senate is expected to oust Lt. Gov. Carol Molnau from her dual role as Transportation Secretary by denying her long-delayed confirmation. The Senate's bonding bill does not match the governor's (the House's bonding bill is expected soon).

It's not being said yet, but I wonder if this contentious environment, coupled with Pawlenty's possible national ambitions and the DFL legislature's hopes to win a veto-proof majority in the House next fall, could lead to a complete meltdown with no bonding bill and little else of note.

That's important because there are two vital Iron Range projects counting on bonding money -- the Essar Minnesota Steel plant near Nashwauk, which is permitted and waiting for the infrastructure money, and the dewatering of the Canisteo Pit, a flood risk located above Bovey.

The larger impasse might threaten these two generally agreed-upon items during this session.

Bonding bill nothing to snooze over

The chatter I keep hearing from folks who attend lots of under-reported public meetings is that the $67 million bonding request to fund infrastructure for the Minnesota Steel plant near Nashwauk is vital to the project's viability. In quiet rail authority and city meetings, company representatives and city officials communicating with them say that the costs of things like rails, pipelines and access roads keep going up and that Essar Global, the company that bought the Minnesota Steel project, is relying on that infrastructure to get started quickly.

Now, I have no doubt that the bonding bill will include money for the steel plant infrastructure (unless the bonding bill flames out entirely). The question is how much and where is it coming from? Gov. Tim Pawlenty would prefer that most of the money come from a one-time Iron Range Resources fund built up from mining taxes. Rangers would prefer that money come from the bonding bill because of the unique nature of the project and its long-term benefit for the whole state (not all that mining money stays on the Range, folks). If this argument can't be resolved then we could see major delays on this important project. The morale hit on the Iron Range would be great. This is the one "potential" project for which almost everyone holds the most genuine hope.

I put "potential" in quotes because we have had the good news that U.S. Steel will expand production at Keewatin Taconite, creating about 75 permenant jobs and a brief contstruction boom later this year. It's interesting to me that the KeeTac project happened so quickly it was never discussed as a "potential" project, just as one that happened. What does that tell us about our Iron Range habit of throwing all our money and hopes at proposals rather than economic realities? After all, the steel plant is only at the top of the list because the price of steel is currently very high. Ah, but that's a story for another day.

Floods are bad, mmm-kay

I promise: Last bonding bill post for the week.

I forgot to mention an item yesterday. The Canisteo Mine Pit is still perched like a big, wet mountain lion over the town of Bovey on the Western Mesabi Range. However, Gov. Pawlenty did not include mitigating the problem in the bonding bill. I spoke with Tom Anzelc and he believes they'll need $4 million to drain the water elsewhere. There is $15 million for flood mitigation in Pawlenty's bonding bill, so Range can hope to get some of that along with other funding to fix the problem. Between the DNR, Mineland Reclamation and bonding, this must get done this year. I don't know that an Iron Range town has ever been destroyed by a flood and 2008 seems a rather stupid time to break that streak.

Steel plant bonding bill update

If you don't like reading about steel or bonding bills, sorry, today's not your day.

As expected, Range leaders came out today stating that Pawlenty's amount proposed for the proposed Nashwauk steel mill was too low. What I didn't realize earlier was that more than 2/3 of his proposal involves money from the 21st Century Minerals Fund or other permanent mining funds, not actual bonding. This project is about mining, but also about value added mining with the addition of a steelmaking operation. I think there's a good argument that such a transition in the steel industry would be worth a more substantial bonding investment by the state. There is going to be heavy negotiations on this issue before the final bill comes out, but it seems something will come together ... so long as the company is fully with the program (as of now, this is unknown).




From today's Duluth News-Tribune:

Lawmakers: Earmark for infrastructure near Nashwauk steel mill falls short
Duluth News Tribune

Gov. Tim Pawlenty’s bonding proposal released today includes $30 million for a planned Iron Range steel mill near Nashwauk.

The money would help develop infrastructure for Minnesota Steel’s proposed $1.6 billion taconite, direct reduced iron, and steel mill.

However, the money is less than half of the $67 million requested by Itasca County for the project.

DFL lawmakers from the region say that Pawlenty’s earmark is a start.

“At least he didn’t shut us out completely,’’ said Sen. Tom Saxhaug, DFL-Grand Rapids. “The good news is that we’re included. The bad news is that we have to go get more money.’’

The 2.5 million ton–per–year steel mill would be the first of its kind, producing taconite, reduce iron and steel slabs at a single site.

If built, it would be the largest industrial project in the state, requiring 2,000 construction workers and 700 permanent employees.

Essar Steel, an Indian steelmarker, last year bought control of the project from Minnesota Steel, a group head by the Longyear and Bennett families of Iron Range mining fame.

Rep. Tom Anzelc, DFL-Balsam Township, said Monday that Pawlenty’s inclusion of the project is the beginning of further discussions.

“It’s to be negotiated,’’ said Anzelc. “It does not appear to do the job, but it’s the first step in a complicated negotiation process. It’s likely that once we get a sit-down with the people of Essar, perhaps some of this will clarify.’’

Iron Range legislators in January hope to meet with Essar Steel officials, Anzelc said.

Not all of the $30 million would come from state bonding, Saxhaug said.

Pawlenty plans to take $15 million from the Minnesota Minerals 21st Century Fund, $9 million from Iron Range Resources funds, and $6 million from general obligation bonding, Saxhaug said.

Of Itasca County’s $67 million request, Pawlenty trimmed $9.2 million from a $23 million natural gas pipeline, reducing it in physical size from a 24-inch diameter pipe to 16 inches. He also cut a $15.7 million roadway request to $3 million and recommends that a $16 million substation line be privately funded. Pawlenty increased an administration and contingency fund to $3 million from $2.4 million.

Pawlenty releases 2008 bonding bill

Gov. Tim Pawlenty released his proposal for the 2008 bonding bill in the Minnesota State Legislature. (See MPR's coverage). This is the plan he would like to see pass, though he will be working with a DFL House and Senate that will have different priorities for borrowing and spending.

Two encouraging things for northern Minnesota: 1) He includes $30 infrastructure for the proposed Essar Global/Minnesota Steel mill near Nashwauk, and 2) there is money for Duluth's DECC expansion. I don't normally get involved in Duluth's DECC issues, but they've been trying so long I kind of feel like they should get some sympathy. Ru-dy! Ru-dy!

Itasca County and the DFL Iron Range delegation want more than twice as much money as Pawlenty proposes for the steel mill infrastructure, so there will be some bartering on that issue. I need to see exactly how the money is going to be applied to roads, rails and sewers before I say who has the more accurate proposal. The fact that there is any money at all from this governor is encouraging.

Meantime, lots of haggling will occur over the transportation funding for bridge and road repairs and mass transit in the metro area. That's an area that could absorb most of the bonding bill if legislators vote on regional lines.

Stay tuned ...