Billions in state and local aid soon begin path to Minnesota

WASHINGTON – Minnesota can begin tapping into nearly $5 billion in state and local aid from President Joe Biden's COVID relief package.

On Monday, federal officials began to roll out a key portion of the $1.9 trillion package, known as the American Rescue Plan, that was signed into law in March after it passed through Congress with no Republican votes.

Details released by the U.S. Department of the Treasury show the state and local aid portion of the plan for Minnesota is about $4.97 billion. That includes $2.83 billion slated for state government and another $2.13 billion for local governments.

"We're getting on the other side of this, and we're going to come out, we're going to be stronger because of what we've learned and the federal government's stepping in to help us do that in a big way," said Hennepin County administrator David Hough, whose county is expected to get close to $246 million.

Minneapolis will get around $271 million from the local portion of the plan. With the federal aid in mind, the Minneapolis City Council will be briefed Wednesday morning on "key areas of need in the city," including housing, homelessness, safety, wellness, and children and youth programs.

In St. Paul, more information about the funding will also be shared at a council meeting Wednesday for the city that will receive more than $166 million. Mayor Melvin Carter said last week he would consider spending some of the federal dollars on new community-based public safety programs, and council members have floated the possibility of using part of the aid to address millions of dollars in deferred maintenance to streets and parks.

The rollout of the relief money will likely be less frantic than the distribution of the money from the first stimulus package last year, the Coronavirus Aid, Relief, and Economic Security Act.

This time, governments have about 3 ½ years to spend the money, as opposed to months, and how communities can use the dollars is more clearly defined, said Gary Carlson, lobbyist for the League of Minnesota Cities.

Nonetheless, he said there will be many questions about exactly how communities can spend it, particularly when it comes to using the money to make up for lost revenue.

He recommended Minnesota Management and Budget officials create a panel to help coordinate the use of the dollars.

The state, counties, cities and other municipalities will be getting aid — and then there is money going to specific purposes, such as rent help and business assistance.

"That coordination of what each level of government is doing with the funds is going to be extremely important in making sure we maximize the benefits to Minnesota. And we may have to sacrifice some speed to try to make sure we're as coordinated as possible," Carlson said.

Under the law, key areas where the state and local governments can use the money include spending on the public health response to the pandemic, efforts to help with the "negative economic impacts" tied to the virus and covering revenue hits stemming from the emergency.

A fact sheet released by the Treasury Department showed that the money for larger local governments is expected to come in two parts, half initially and the rest later. States would also get their total in either one or two payments, depending on an unemployment metric, according to the guidance.

A Treasury spokesperson said in an e-mail that the unemployment data available as of Monday means "Minnesota would receive split payments" rather than getting its state portion all at once, but noted that could change.

In Duluth, Mayor Emily Larson said in a statement the city is "very appreciative" of the federal plan, which will send Duluth around $58 million.

"We look forward to obtaining clarification from the Treasury Department so that we can forge ahead in making allocations where they are needed the most," Larson said.

The federal dollars are arriving as Minnesota legislators try to set the next state budget, with the regular legislative session scheduled to end May 17. Lawmakers continued to clash Monday over whether tax increases are needed, given how much Minnesota is getting from the federal government.

Cities in Minnesota have waited in the weeks since the federal package was passed to get a clearer sense of what they were going to get and what they could actually do with the money. Yet for St. Cloud Mayor Dave Kleis, whose city will get around $16.5 million, there was a sense of appreciation that the money would soon head directly to his city from the federal government.

"Otherwise the wait would be even longer in our estimation if it went through the state or if it went through counties to get to cities," Kleis said.

Staff writers Liz Navratil and Katie Galioto contributed to this report.

Hunter Woodall • 612-673-4559

Jessie Van Berkel • 651-925-5044