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Capital Investment (Bonding)

Despite the significant differences between the House and Senate — and between Republicans and Democrats — a consistent theme throughout the 2026 session was a shared desire to pass a bonding bill. After enacting a $700 million capital investment package last year, legislators believed the state had the capacity to support another package of similar size this session. Fortunately, Minnesota’s financial outlook improved during the interim, increasing the state’s bonding capacity to as much as $1.2 billion. Capital Investment Committee leaders in both chambers embraced that opportunity.

Even with broad support for a bonding bill, lawmakers faced more obstacles than usual in getting a package across the finish line. Traditionally, the primary challenge is securing the three-fifths supermajority vote required in each chamber. This year, however, a recent change in state law also required legislators to identify and appropriate funds to cover the debt service on the bonds. Historically, debt service costs had been built into the state budget forecast. Finding approximately $180 million to support a $1.2 billion package — while competing priorities vied for limited general fund dollars — added a significant complication.

Additional political dynamics also made negotiations more challenging. Because last year’s bonding bill included few earmarks for specific local projects, there was added pressure on Capital Investment Committee leaders to include enough local priorities to secure votes, without creating a package so laden with pet projects that Republican members would reject it as excessive “pork.”

During end-of-session negotiations, the path forward became clearer as several costly general fund proposals — including monies to offset the impacts of Operation Metro Surge — ultimately fell out of the final agreement, freeing up resources for debt service. Senate Republicans also agreed to support the bonding package after negotiators included one-time tab fee reductions in the broader global agreement.

Another key compromise allocated 55% of the bonding bill to statewide programs and 45% to local projects, with each caucus given discretion over one-quarter of those funds. That framework helped build bipartisan support for the final package.


The Final Package
On the last day the Legislature could pass bills, legislators publicly released the spending in the bonding agreement during a committee hearing. However, the actual language of HF 719 was not made public until it was adopted on the House floor roughly an hour before the constitutional deadline.

Major appropriations in the final package included:

  • Drinking water and wastewater infrastructure: $409 million
  • Transportation projects: $176 million for state and local transportation improvements
  • Higher education: $144.8 million for asset preservation and campus facilities at the University of Minnesota and Minnesota State systems
  • Political subdivisions: $129 million for local projects, including convention and entertainment centers and public works facilities

 

MICA’s Priorities

Transportation
MICA’s top priorities also fared exceptionally well. This wasn’t a given considering the local road improvement and local bridge rehabilitation programs were big winners last session, and Governor Walz included no dollars for these programs in his bonding recommendations.  However, legislative Republicans strongly advocated for significant funding for both programs. Having House Transportation Co-Chair Jon Koznick (R-Lakeville) involved in final negotiations also proved beneficial.

The final package included the following statewide transportation appropriations:

  • $47 million for LRIP — $5 million more than last year
  • $25 million for local bridge rehabilitation — also $5 million more than last year
  • $4.5 million for the Local Government Road Wetland Replacement Program

 

Environment - Water
An additional $1.5 million for the Statewide Drinking Water Contamination Mitigation program was included in the general obligation (GO) bonding bill, HF719.

The cash bonding bill, HF2484, also appropriates $650,000 for the grants or projects under the Statewide Drinking Water Contamination Mitigation program established in last year’s bonding bill.

 

Solid Waste
On the solid waste side, the Minnesota Pollution Control Agency’s Capital Assistance Program also received a substantial increase. $10.514 million was allocated to the solid waste Capital Assistance Program (CAP), with the Minnesota Pollution Control Agency (MPCA) directed to spend funds on the three highest priority projects submitted in the agency’s final bonding recommendations submitted in January 2026. These include:

  • $7.3 million to Prairie Lakes Municipal Solid Waste Authority to construct a waste processing plant, recover ferrous/non-ferrous metals and build a new transfer station.
  • $1.6 million for the City of Saint Paul to improve an existing solid waste facility to accommodate a furniture recycling center and reuse room for residents.
  • $1.7 million to the Ramsey/Washington Recycling and Energy Center to rebuild 20-year-old flail mills.

The cash bonding bill, HF2484, includes $125,000 for a study on the illegal transport of infectious waste that had originally travelled in HF4017 (Johnson, W.)/SF4187 (Pappas).

MICA’s priority to fund upgrades to construction and demolition landfills was not included in the final agreement, despite the MPCA identifying a statewide need of approximately $118 million for those improvements. Although the overall amount falls short of the nearly $60 million in requests submitted to the MPCA last year, this still helps chip away at the ongoing queue of critical solid waste infrastructure projects across Minnesota.

 

Policy
On the policy front, the language in HF 2418 requiring local governments to certify that they have a maintenance and preservation plan in place before requesting state bonding assistance was included in the final bill. The provision appears in Article 2, Section 1, and takes effect January 1, 2027.