Here's How Much MN Cities, Counties Could Get From COVID-19 Relief Bill

By Rilyn Eischens, Minnesota Reformer

Minnesota counties, cities and state agencies could get a $4.6 billion boost this spring under another COVID-19 relief package making its way through Congress.

The proposal would direct $350 billion to state and local governments as part of President Joe Biden’s $1.9 trillion aid bill, which was passed by the House along party lines Friday.

Republicans have balked at the price tag for local aid, even as local officials in both parties across the country are urging lawmakers to support the provision. Minnesota elected officials say the money would be a lifeline for cash-strapped governments facing another year of financial uncertainty.

“The sooner we can get this federal aid package, the sooner we can distribute it to our businesses and our homeowners and people who are impacted (by the pandemic),” said Trista MatasCastillo, a Ramsey County commissioner. “We are feeling the urgency.”

State and local governments nationwide are contending with dwindling tax revenues and increasing costs as the COVID-19 pandemic drags on. The federal aid package would send about $220 billion to states, $130 billion to counties and cities, and $20 billion to tribes.

In Minnesota, nearly $2.6 billion would go to state government. Local governments would receive $2 billion; of that, $1.1 billion would go to counties, and $546.6 million would go to 11 cities under a formula that directs funding to cities with populations of at least 50,000.

The package also includes a formula to allocate funding for smaller cities based on population; those totals haven’t been finalized.

Minnesota’s state budget is faring better than officials feared last spring, with a projected shortfall flipping to a $1.6 billion surplus under the forecast released Friday, but local governments are still struggling.

The Coalition of Greater Minnesota Cities surveyed 58 cities about their 2021 budgets and found that more than 40% are putting off capital projects, nearly 30% are delaying street maintenance and more than a quarter are cutting staff.

In Ramsey County, a budget squeeze could force the county to curtail its shelter and food programs by summer without additional federal aid, MatasCastillo said. This year, the county opted to forego a 4.5% property tax increase that had been approved before the pandemic and reduced spending by $14.2 million to make up for the lost revenue.

In response to the Twin Cities’ growing homelessness crisis, the county established a new Office of Housing Stability and spent more than $7 million in federal COVID-19 relief funding to lease hotel rooms for people without shelter last year. At one point last summer, more than 400 people were living outside in Ramsey County, MatasCastillo said.

“We have those programs now funded and in place until June, but we have a funding cliff at that point,” MatasCastillo said.

In early February, elected officials from across the country sent a letter to members of Congress imploring them to pass the relief bill. The list of signatures is more than 14 pages long, including MatasCastillo and 14 other Minnesotans from St. Paul to Chisholm. A bipartisan group of mayors and the Fraternal Order of Police — which typically endorses Republicans — have also called for quick action on the bill.

After passing the House, the bill will likely encounter resistance in the Senate. Republican representatives and moderate Senate Democrats have objected to the aid for states and local governments, calling it excessive. They cite unspent money from the 2020 CARES Act as evidence the money wasn’t really needed.

Minnesota distributed $837 million in CARES funds to local governments last year, and 99.6% of the money was spent, according to a report from Minnesota Management and Budget. Most of the funding went to payroll for health and safety employees, aid for small businesses and adjusting existing programs to cope with the pandemic.

The current text of the bill would give local governments more flexibility than the CARES Act, said Daniel Lightfoot, a lobbyist with the League of Minnesota Cities, which supports the proposal. Governments could use CARES money for unbudgeted COVID-19 costs and costs related to public health and the economic fallout. CARES Act money couldn’t be used, however, to make up for lost revenue, whereas the new bill doesn’t include those restrictions, he said.

This bill also gives better direction for how the money should be allocated to local governments, said Bradley Peterson, executive director of the Coalition of Greater Minnesota Cities. States received little information about how to distribute CARES funds, resulting in delayed distribution to cities and counties, he said.

Another round of funding would be “incredibly positive” for struggling governments and residents, Peterson said. He said he still hears “a lot of anxiety” from city officials about whether shuttered businesses will bounce back and fears about the ripple effects of closures on local economies.

“Cities have been on the frontline of responding to the pandemic in so many ways. The services the cities provide, especially in greater Minnesota, are going to need to be the foundation for economic recovery,” Peterson said.

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