Constitutional limit on passenger/freight rail bonds

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mulad
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Constitutional limit on passenger/freight rail bonds

Postby mulad » September 10th, 2012, 6:42 pm

Here's a weird one, mentioned in recent Passenger Rail Forum meetings:

The Minnesota State Constitution limits the level of bonding money that can be allocated to railroad projects to $200 million. It's right there: Article 11, section 5(i).
Public debt may be contracted and works of internal improvements carried on for the following purposes:
...
(i) to improve and rehabilitate railroad rights-of-way and other rail facilities whether public or private, provided that bonds issued and unpaid shall not at any time exceed $200,000,000 par value ...
The constitution was amended to include that value in 1982. Using the Bureau of Labor Statistics' inflation calculator, that works out to $475 million in 2012 dollars. Or well, it would, if the dollar amount had been indexed to inflation or some other economic indicator. It was $200 million then and is still $200 million now, even though the money is now worth nearly 60% less.

Anyway, since this is a constitutional issue, it will probably take years to fix. The cap should probably be taken out entirely, with other legislation used to set the value (preferably indexed against something).

The state will probably be able to move forward with some rail projects without hitting the current ceiling, but after one or two come online, there probably won't be any bonding capacity left for big things like the 110-mph Twin Cities to Chicago service (estimated to cost $2.4 billion total, being split half and half between Minnesota and Wisconsin, and again split between the states and the federal government, but still likely to require at least $200 million in state funding).

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