Reader's view: It’s time to get tobacco bonds off state books
We have a lot to be proud of in terms of fiscal health and stability here in Minnesota: the first surplus in seven years, the highest budget reserve in state history and most recently the lowest unemployment numbers in the nation.
While Minnesotans have worked diligently to get us to where we are, the Legislature must not lose track of an outstanding bill that yet remains: the tobacco bond from 2011.
If allowed to run full term, the bond will cost Minnesotans more than $300 million in interest alone on this one-time spending.
Back in late June 2011 the governor and Republican leaders agreed to end the state government shutdown with a budget deal that included
$700 million in revenue from the sale of tobacco bonds. Minnesota ultimately issued $757 million in tobacco settlement revenue bonds — which netted only $640 million — helping to balance the state budget.
The following year, the bonds were replaced with higher-rated state appropriation bonds, which sold for $656,220,000 and ultimately saved the state more than
$85 million. This may seem like a good deal, but here’s the kicker: Although we aren’t paying as much for interest as originally, Minnesotans still will pay $301,973,460 in interest over 20 years.
Three hundred million dollars is no small amount in the state budget. With Minnesota in as strong a financial position as she has been in years, and with a statewide election this fall, we should all be demanding this final IOU from the fiscal fiasco of 2011 be wiped from our state’s ledgers.
Sen. Roger Reinert Duluth The writer represents District 7 in the Minnesota Senate.