Duluth weighs options for spending more than $58 million in federal pandemic relief money

DULUTH – A year after facing a substantial budget shortfall due to the pandemic, Duluth leaders are now grappling with how to spend a major influx of federal money.

On Monday night, the Duluth City Council gave its first thoughts on spending the $58 million the city will receive via the American Rescue Plan, the $1.9 trillion pandemic relief package approved earlier this year.

The money is directed to states and local governments and can be spent on direct aid to businesses or households, public health investments, and water, sewer and broadband infrastructure, among other categories.

"We cannot use these to replenish reserves, and ... for any projects that are not explicitly listed, we need to be able to justify how the project was caused by COVID and how using this funding is going to solve this problem that COVID caused," said Jen Carlson, the city's finance director.

Duluth received the first half of the money last month and will receive the second half in May 2022. The cash infusion is so large the city's spending will be audited by the state, Carlson said. The city's entire general fund budget for 2021 is $94.3 million.

Several council members said a major broadband investment would be welcome as the city seeks to attract additional providers and potentially lower costs for residents.

"Are there spinal networks that we can help build that will help bring other providers to town?" Council Member Arik Forsman said.

Park maintenance, community centers, housing, water and stormwater infrastructure also topped the wish list for many council members.

"Being able to reinvest in some of the areas we cut back on because of COVID will be really important," Council Member Roz Randorf said.

It appeared that federal money could shore up the street fund as well. Duluth has a half-percent sales tax dedicated to street repair, but that revenue took a hit as tourism and overall spending slowed during the pandemic last year.

Council Member Terese Tomanek said she would prioritize behavioral health and issues surrounding drug abuse, which worsened during the pandemic. Meanwhile Council Member Janet Kennedy said she was concerned her western Duluth district would get short shrift.

Mayor Emily Larson told council members she will bring specific spending recommendations to the City Council by early July.

"We're going to be able to pass something that is really going to be able to impact people across the city in positive ways," she said.

Larson on Tuesday also pitched $44.5 million in "congressionally directed spending," or earmarks, the city could seek after lawmakers formally revived the practice this year.

"I'm thrilled that they're back," Larson said. "There is no guarantee that we will see these dollars … but I love there is the ability to allow for some regionality and some specificity."

City staff compiled $260 million in requests, and administrators narrowed it down to five projects that will be sent to Minnesota's U.S. senators for consideration.

The largest request is $22 million for fire station upgrades.

"They're very difficult to remodel," Larson said, and many were built for an all-male workforce decades ago.

Other requests include $5.8 million for electric vehicle charging stations, solar power and other energy-efficiency upgrades; $4 million for a cruise ship dock; $12 million for Aerial Lift Bridge repairs; and $750,000 for public safety technology, including software that better tracks officer activity and use-of-force incidents.

Brooks Johnson • 218-491-6496