City, county leaders press Gov. Tim Walz on $841M in COVID-19 aid

Leaders of Minnesota cities and counties dealing with the costs of the COVID-19 pandemic are pressing Gov. Tim Walz to release $841 million in federal aid that was held up in a partisan stalemate at the end of the legislative special session on Saturday.

Local officials across the state watched with frustration as talks broke down over how to distribute CARES Act money Minnesota received two months ago to help communities and small businesses that have borne the costs of the pandemic.

A spokesman for the governor said Monday that Walz will address the federal funding this week and wants to get the money out as soon as possible.

Walz hinted during a news conference Saturday that he could act quickly, without the Legislature, to release the money. "I can do it in the exact manner that [legislators] asked for in there, just with the authorities that we have," Walz said. A Legislative Advisory Commission needs to review the plan before aid is distributed.

The federal money is one of several issues left unfinished during the weeklong special session. Lawmakers also ended their work without agreements on police reform measures and a major infrastructure funding package.

Mower County Administrator Trish Harren said the federal money is needed quickly to "triage the bleeding." Her county is home to Hormel Foods and Quality Pork Processors, and has dealt with a coronavirus outbreak at its meat processing plants. She said they have supported mass testing, bought personal protective equipment and suffered lost tax revenue.

"There's just a lot of costs," Harren said. With the federal aid, she added, "It won't have to be borne on the backs of our local property taxpayers who are already struggling."

Mower County, like other communities, also needs the money to start a small-business support program to help prevent pandemic-related closures. Harren anticipates getting $4.8 million, about half of which she expects to go to small businesses to help them survive.

Five organizations that represent a combined 853 cities across the state sent a joint letter Monday to urge Walz to act quickly. They also asked the governor to extend a previously proposed deadline for spending the cash so cities can keep using it until Dec. 30. A trio of county organizations also sent a letter Monday calling for swift action by state leaders.

"Cities across the state have undertaken significant, often costly adjustments to local services to ensure public health and safety during this crisis," the city groups wrote.

Republican House Minority Leader Kurt Daudt and Rep. Pat Garofalo, the GOP lead on House Ways and Means, also pressed Walz in a letter Sunday saying timing is critical.

"These funds will help make our local governments whole for the tens of millions spent on COVID-19 response and testing, purchase of personal protective equipment for front-line workers, and can be used to help keep our struggling businesses that are the anchors of Main Streets throughout Minnesota," they wrote.

House DFL spokesman Ted Modrich said Democratic House Speaker Melissa Hortman also supports getting the money out to local governments as soon as possible.

State lawmakers struggled during the regular session with the formula for how much each municipality and county would get, but appeared to reach an agreement before the special session. Walz could have used his executive power to divvy up the money before last week's special session, but he said he opted to hold off to allow lawmakers to be involved.

GOP lawmakers said they thought a deal was at hand with DFL leaders before last week's special session. But the House Democratic majority subsequently included additional spending that had not been part of that agreement. The new spending included payments to tribes for opioid treatment, State Patrol and Corrections Department expenses, as well as more money for a cash assistance program for low-income families.

The Republican-led Senate, meanwhile, passed a bill with bipartisan support that would distribute the $841 million without additional spending that the Walz administration supported.

Senate Majority Leader Paul Gazelka, R-East Gull Lake, said Friday night that Republicans were open to $58 million in additional spending to reach a deal.

Democrats had proposed nearly $146 million in general fund spending, which they said would be offset with revenue increases, grants and a fund transfer. But the two sides ended their work without a compromise, leaving open how the state would allocate the CARES Act money.

Walz said Saturday that Democrats were justified in seeking the extra state spending with the federal money. "Much of that supplemental budget was working with the CARES Act, was working on the COVID thing," he said. "They work hand in hand."

But Gazelka said Monday in an interview with WCCO Radio that Democrats also had sought to link a deal on the CARES Act money to police reform, which turned into the DFL's top priority for the special session.

He said he heard from "a number of Democratic legislators" that Walz worked behind the scenes to condition support for the CARES Act plan to criminal justice reforms. Both efforts ended up failing.

Hortman told the radio station afterward that negotiations "eventually just got timed out."

Jessie Van Berkel • 651-925-5044