$700 million bond issue gains first round approval in House
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$700 million bond issue gains first round approval in House

Date: April 14, 2009
By: Valerie Insinna
State Capitol Bureau
Links: HJR 32

JEFFERSON CITY - The Missouri House gave first-round approval Tuesday to a $700 million bond issue that would fund construction projects in public universities and set aside $81 million for MU capital improvements.

The House preliminary approval was by a voice vote after a short presentation by the bill sponsor, Rep. Chris Kelly, D-Columbia.  No other member even spoke on the measure that is co-sponsored by the GOP House leader.

If approved by the legislature, the constitutional amendment would would require approval by Missouri voters to take effect.

Kelly said some of his House colleagues have had questions about the measure, but he said he thinks the bill will pass in the House without too much resistance.

"I'm a one step at a time kind of guy, but I'm ecstatic about it's progress," Kelly said. "You think if there was some opposition, we would have heard it."

MU would receive $31.1 million to build the Ellis Fischel Cancer Center and $47.8 million for the renovation of Laferre Hall. Both projects were originally funded by the sale of the Missouri Higher Education Loan Authority assets in an initiative backed by former Gov. Matt Blunt.

However, $51.2 million in MOHELA funding for MU projects was cut off because of insufficient funds.

Despite questions raised in committee about extending bond funding to help maintain state parks, no one sponsored an amendment that would have done so.

Co-sponsor Rep. Steven Tilley, R-Perryville, said he expects the proposal to receive more discussion in its final House debate and in the Senate, should the proposal be passed in the House.

Concerns about the issue already have been raised in the Senate.

Sen. Jason Crowell, R-Cape Giradeau, said he opposes the proposal because he thinks the state will need the the money that would have to be used to pay off the bond.

"You cannot spend yourself by issuing new credit cards and debt financing to prosperity, and that seems to be the House's strategy," he said. "At the day of reckoning you actually have to pay for those expenses and unfortunately what the House is doing is they're pushing that day of reckoning away from us today onto their children and grandchildren. And it's just not right."

Tilley said all bond funding creates debt. However, he said bond funding is a good option for the state because there will be a revenue stream created by paying off old bonds, a 2 percent interest rate on new bonds, and a need to create jobs for Missourians.

"As a small business owner, whenever I do capital improvements into my business I look at one, do I have the money to pay for it?" he said. "And two, what can I borrow the money at? At what interest rate?"

If the issue is passed by Missouri voters, the state constitution would be amended to create a fund to pay for the bonds and interest. The bonds would be issued by the State Board of Fund Commissioners and would mature after 25 years.

MU Chancellor Brady Deaton said he was pleased to hear that the resolution had won approval.

"This something so important to our university and its future," he said. "So I think it represents a sound approach to investment in higher education by the state."

Higher Education Capital Improvements*

State Cost for All Institutional Top Priorities: $590,504,968
Cost for Suspended MOHELA Projects: $107,785,140
Grand Total: $698,290,108

MU Capital Improvements*

Total Cost Appropriations from HJR 32
Ellis Fischel Cancer Center $31,182,000
Laferre Hall $59,755,000 $47,804,000
Engineering Equipment $5,172,000 $2,586,000
Total $81,572,000

*These figures are not written explicitly in HJR 32, but have been agreed upon by the bill sponsors and state higher education institutions.