Governor Nixon indicates there is a possibility, right now only a possibility, that he could call the legislature into special session to consider a bond package to pay for capital improvements.
A proposal to dovetail into the retirement of $600 million in capital improvement bonds issued in 1982 passed the House this past session, but failed to clear the Senate.
Governor Nixon has written the legislature about the possibility of sending a new, $700 million bonding package to voters. Nixon says he has been talking with lawmakers about the issue. He says his sense is that the proposal has been well received. The timing is important. Interest rates are low, which would allow the state to issue more bonds at less cost. The federal economic stimulus package provides incentives for states to issue bonds.
"Couple that with the fact that we’re retiring the third state building fund bonds," Nixon says, "And that I have committed, as I committed in that letter, that we find the resources such that we wouldn’t cut state services and that we would be able to fund this without affecting Missouri’s Triple A bond rating."
The bond proposal has been pushed by Rep. Chris Kelly, a Democrat from Columbia, who says the timing couldn’t be better. The legislature has appropriated between $39 and $46 million each year to pay off the current bond package. Kelly envisions using that same funding to pay off the new bond package in 20 years, though the resolution he sponsored during the legislative session actually gave the state 25 years go pay it off.
Kelly says the state should act to take advantage of the federal incentive, which could pick up as much as 35% of the interest the state would pay on the bonds. Also, the economic recession has thrown people out of work and crippled state revenue.
"That’s why I’m so enthusiastic about the bond issue, because the bond issue is a way to get people to work in Missouri, right now," says Kelly.
Nixon recently announced that he has vetoed $105 million from next year’s state budget. $82.2 million in capital improvement projects were felled by the governor’s veto pen. A drastic drop in state revenue has also forced the governor to withhold $265 million in capital improvement projects. A bonding proposal could pick up the slack, though Kelly originally proposed the bonding package as a way to pay only for college capital improvement projects at both four-year and two-year colleges. He said at the time the bonds would make up for the failure of the Lewis and Clark Initiative to pay for college capital improvements. The sale of assets from the Missouri Higher Education Loan Authority (MoHELA) has fallen far short of projections, causing many of the capital projects in the initiative to be delayed or scrapped.
The $600 million bond package was approved second administration of Governor Bond. Voters approved the package. The state issued the bonds in 1983 and 1984. If the legislature would approve the new proposal, it also would have to go to a vote of the people, likely in a special election.
The governor will only say he’s considering a special session on the bond issue. No commitment has been made yet.