CHICAGO – Minnesota’s current fiscal chief, Myron Frans, will continue to shepherd state finances while a former state lawmaker will take the helm of the transportation department as the state hunts for an infusion of new revenue under the incoming administration of Tim Walz.
Gov. Mark Dayton, who did not seek a third term, tapped Frans as commissioner of Minnesota Management and Budget in January 2015. The position is considered the chief financial officer, chief accounting officer, and controller of the state.
The office also leads collective bargaining on behalf of the state and manages state debt issuance. Frans, who worked as a tax attorney before joining the administration, previously served as commissioner of revenue for four years.
During his tenure, the state has won bond rating upgrades recognizing its structurally balanced budget and, after several attempts, won legislative approval for a pension reform package that makes gains in funding, although long-term challenges persist.
The selection creates continuity as Walz works on his first biennial budget package, which is scheduled to be unveiled in February.
Walz, who like Dayton is a member of the state’s Democratic-Farmer-Labor Party, tapped former House Speaker Margaret Anderson Kelliher to serve as commissioner of the Department of Transportation.
Maplewood Mayor Nora Slawik will serve as chair of the Metropolitan Council, a Twin Cities regional planning agency. Former U.S. Department of Housing and Urban Department advisor Jennifer Leimaile Ho will lead the Minnesota Housing Finance Agency. Both agencies are bond issuers.
“We chose these folks who are standing up here based on their dedication to the idea of servant leadership,” Walz said at a news conference. The posts are among more than 20 leadership positions Walz is slated to fill as he prepares to take office on Jan. 7. They require Senate confirmation.
Anderson Kelliher brings with her longstanding legislative relationships as she served in the state house for 12 years. She held the House speakership from 2007 to 2011, during which she successfully won an override of then Gov. Tim Pawlenty’s veto of the last gas tax hike. While a new budget is a top priority, debate over how to raise transportation spending is expected.
Walz has said a gas tax hike is an option along with other fees the state should consider and Anderson Kelliher agrees, although she acknowledged consensus on funding is needed. “The gas tax is an important part of the tools in the toolbox,” Anderson Kelliher said.
Republicans oppose a tax hike, arguing there’s no need with the latest revenue surplus announcement. Walz has countered that budget surpluses can’t be counted on over the long term.
While Walz will enjoy a DFL majority in the House, Republicans hold a majority in the Senate and the two sides have frequently clashed during times of divided leadership.
The transportation department forecasts $39 billion is needed over the next two decades for road work, while current revenue sources will cover just $21 billion. Hundreds of bridges are ranked in “poor” condition, with $5 billion of work needed over the next two decades and just $3 billion of revenue available.
The American Society of Civil Engineers’ 2018 report card put roads in the state at a D-plus grade and bridges at a C.
The state’s current gasoline tax is 28.6 cents per gallon. Every one-cent increase would generate about $30 million annually.
Minnesota traditionally issues general obligation bonds for highway and bridge projects, although some debt is issued as GO-backed trunk highway bonds, which are repaid with transportation related user fees like the gas tax and license fees.
The state’s annual November revenue forecast projected a $1.5 billion surplus headed into the fiscal 2020-21 budget cycle, with about $500 million going into reserves under state statute. Another formal forecast that’s used to finalize the new budget will be released in early March.
Fitch Ratings and S&P Global Ratings rate the state’s GO AAA and Moody’s Investors Service rates the state Aa1.
