“Operating budget,” "capital budget," "bonding bill." What do those phrases mean and how do they fit into the overall state budget process?
In January of the first year of a biennial legislative session, the governor is required to submit a budget message and a proposed budget to the Legislature (Minnesota Statutes 16A.11). Much of the work in the first year of a session revolves around creating an "operating budget" that will fund state government for the next two fiscal years. But that statute also requires the governor to submit a "capital" budget in January of the second year of the biennial session. However, a bonding bill was not passed during the 2024 legislation session and Governor Walz has proposed a $887 million "infrastructure plan" for the 2025 legislative session, in addition to the FY 2024-25 Operating Budget.
Minnesota's capital budget finances the acquisition, construction, and maintenance of public lands, state buildings, and infrastructure such as highways. Minnesota’s Constitution (Article 11, section 5) details the specific types of projects that may be considered. The projects can be financed with direct appropriations or through borrowing mechanisms such as state bonds. A recent House Research Information Brief, Capital Investment and State Bonding, sheds light on this somewhat complex issue.
The Legislative Library has many original budget documents as well as information and data about the state's current and historical budgets. Our State Budget guide highlights some of those materials, including: