Kelly proposes bond to fund campus projects

The last bond of comparable size passed in the 1980s.

By Eva Dou

Published March 6, 2009

Correction appended

A $700 million bond proposal by Rep. Chris Kelly, D-Columbia, would fund construction projects at state universities and revive previously suspended building projects.

For MU, this would mean the resumption of plans for the new Ellis Fischel Cancer Center, as well as the renovation of Lafferre Hall.

Kelly said the bond would create jobs while funding construction projects at state universities, including those suspended by Gov. Jay Nixon in January. The plan is not expected to cause a tax increase.

"We need the jobs, we need the work, and we'll never get a better interest rate on the bonds," Kelly said.

The federal stimulus package contains a provision that would help states pay off bonds.

If the bipartisan proposal passes the General Assembly, it will go before Missouri voters in November 2010. It would be the fifth state building fund backed by bonds.

In an act of bipartisanship, the resolution is co-sponsored by House Majority Leader Steven Tilley, R-Perryville.

The state will soon finish repaying a $600 million construction bond from the 1980s. Kelly said by redirecting that revenue stream toward this new bond, the state could support the campus projects without increasing taxes.

Sen. Kurt Schaefer, R-Columbia, and Rep. Mary Still, D-Columbia, said they support the idea.

The resolution's opponents say increasing state debt is a wrong tack.

Sen. Jason Crowell, R-Cape Girardeau, said the state should focus on paying off existing debt instead of incurring hundreds of millions of dollars in future interest payments.

"It isn't wise to max out the state credit card just because you can," Crowell said. "We would be taking money from future generations to pay for wants and desires of today."

Crowell said he doesn't believe the measure would stimulate the state economy.

"With $4.3 billion coming in federal stimulus dollars -- if that's not going to stimulate the state's economy, another $700 million isn't going to do it," he said.

He believes the state should use federal stimulus money to pay off existing debt. He said immediately paying off the $387 million in bonds issued in 2003 would save the state $123.6 million in future interest payments.

Kelly's proposal would fund the construction of each state university's top-priority project, according to a list from the Coordinating Board of Higher Education. It would also fund suspended projects that were previously supported by the sale of Missouri Higher Education Loan Authority assets.

The MOHELA funds came up more than $100 million short, prompting Nixon to suspend 12 construction projects in January, including a new $50 million Ellis Fischel Cancer Center. The cancer center is the only hospital in the state devoted solely to the research and treatment of cancer.

Shortly after the center's suspension, Chancellor Brady Deaton said he believed the project was vital for the university and state, and that the university would consider using money from MU's fundraising campaign if state dollars were not forthcoming.

As of January 2009, the state had $600 million in outstanding general obligation bonds, and about $3.8 billion in total debt.

Previous state building bonds include a $600 million bond in 1982 and a $250 million bond in 1994.