Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Debt Capacity topic
No spam. Unsubscribe anytime.
MMB's debt-capacity forecast: Minnesota remains within guidelines but authorized unsold debt constrains flexibility
Summary
Minnesota Management and Budget told the Capital Investment Committee that the state meets its debt guidelines: roughly 1.9% of personal income in outstanding debt and about 3.6% when including authorized but unsold debt. MMB highlighted $8.4 billion in outstanding debt and about $2.5 billion previously authorized but unissued.
Minnesota Management and Budget briefed the House Capital Investment Committee on March 18 about the state's February debt-capacity forecast and how current authorizations constrain future borrowing under long-standing capital guidelines.
Assistant Commissioner Jen Hassimer said the state's capital investment guidelines measure net tax-supported debt against personal income and require minimum paydown schedules for general obligation debt. Under Guideline 1 (outstanding debt compared with state personal income), MMB reported total outstanding debt near 1.9% of personal income. Under Guideline 2 (total authorized debt, sold and unsold, compared with personal income), MMB reported approximately 3.59%.
Hassimer said the state currently has about $8.4 billion in principal outstanding, most of it general obligation debt, and roughly $2.5 billion in previously authorized debt that has not yet been sold. Of the $8.4 billion outstanding, MMB reported approximately $1.5 billion of that are outstanding annual appropriation-supported obligations. The forecast assumes future capital budgets using a 10-year average of past enacted bonding bills, with even-year averages around $1.01 billion and odd-year averages near $165 million; MMB reported a revised 2025 assumption of $700 million in light of recent developments.
MMB also reported on the state's repayment schedule: 42% of the state's outstanding general obligation bonds are scheduled to be retired within five years and 73% within 10 years, which meets the guideline thresholds of no less than 40% and 70%, respectively. Hassimer said these repayment profiles and Minnesota's AAA credit ratings help mitigate borrowing costs amid an environment of higher municipal interest rates.
House fiscal staff member Andrew Lee provided context on trunk-highway authorizations, noting many trunk-highway authorizations are issued in multi-year tranches and a substantial share of recent trunk-highway authorization remains unsold and pushed into future sale windows. That unsold authorization affects MMB's guideline calculations, because authorized but unsold debt is counted under Guideline 2 until sold.
Hassimer described the tables MMB publishes with each forecast showing the maximum amount of debt that could be authorized while remaining in compliance with the guidelines and cautioned that those maximums are not recommendations; they illustrate tradeoffs and potential budget impacts. MMB's materials note that higher authorization levels would increase annual debt-service costs and that the analysis is sensitive to interest-rate assumptions and agencies' cash-flow timing for projects.
