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MMB presents February debt-capacity forecast; trunk highway authorizations leave substantial unsold balance
Summary
Minnesota Management and Budget presented a February debt-capacity forecast showing $8.4 billion in outstanding state debt and about $2.5 billion in previously authorized but unissued debt. House fiscal staff said a large share of trunk-highway bond authorizations remain unsold and can affect the third debt guideline on repayment pacing.
Minnesota Management and Budget presented the February debt-capacity forecast to the Capital Investment Committee on March 18, showing the state had about $8.4 billion in outstanding tax-supported debt and roughly $2.5 billion in previously authorized but unissued debt at the time of the report.
Assistant Commissioner Jen Hassimer walked members through the state’s three capital-investment guidelines. Guideline 1 limits net tax-supported debt to 3.25% of state personal income; guideline 2 limits total authorized debt (sold and unsold) to 6% of personal income; guideline 3 requires that no less than 40% of general obligation debt be repaid within five years and no less than 70% within ten years.
Hassimer said the state’s February calculations showed net outstanding debt at about 1.9% of personal income under guideline 1 and total authorized debt at roughly 3.59% of personal income under guideline 2. The report estimated the state would reach the guideline-1 limit (3.25% of personal income) in fiscal 2031 under the forecast assumptions; MMB cautioned that the maximum-authority tables are illustrative, not prescriptive, and that higher authorizations would add hundreds of millions in annual debt-service costs within a few years.
House fiscal analyst Andrew Lee reviewed recent trunk-highway bond authorizations and how they interact with the debt guidelines. He said trunk-highway authorizations frequently are structured to be sold in multiple tranches and typically must be encumbered to a project within four years or risk cancellation. Lee’s summary showed a substantial portion of recent trunk-highway authorizations remained unsold: across the 2024–27 window roughly 48% of authorized trunk-highway bonds remained to be sold, compared with about one-quarter of general obligation various-purpose authorizations.
Members asked what happens to previously authorized but unsold bonds; Hassimer said the authorized but unissued column reflects commitments to projects and that without bond sales the state would run short of cash to pay invoices for those projects.
Hassimer emphasized that the debt-capacity calculations are sensitive to interest-rate forecasts, agency cash flows and the timing of bond sales; the February update reduced the assumed 2025 capital assumption compared with November due to forecast changes.
The committee discussed the guidelines and how authorizations and earmarks can affect ability to fund shovel-ready projects in the near term.
