Minnesota legislators face off over federal COVID-19 aid for counties, cities

Democrats and Republicans in the Legislature are squaring off over opposing plans to distribute $667 million in federal aid to counties, cities and towns struggling with COVID-19.

Hurtling toward the final days of the legislative session, Senate Republicans have proposed divvying up the money based on a formula in which counties would get $174 per resident, partly shared among cities and towns within the counties. Democrats and some large metro county leaders oppose that plan, saying it disregards the virus' uneven impact on Minnesota communities.

"The result is that counties with zero cases would receive substantially more per capita than counties that are on the front lines of this struggle," Hennepin County Commissioner Jan Callison said.

The DFL majority in the House is rolling out its own proposal Wednesday. It would enable Hennepin and Ramsey counties, the state's main population centers, to hang on to a larger portion of federal aid. The bill's author, Rep. Paul Marquart, DFL-Dilworth, said it would also set aside $100 million for local governments to respond to emergencies later on.

The $667 million at stake is just a portion of the $1.87 billion the state received through the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The legislation to distribute money to local government on a per capita basis is sponsored by Sen. Julie Rosen, R-Vernon Center. She calls it one step in a three-step process to handle the federal dollars.

The GOP-led Senate unanimously passed the least controversial of those three measures Tuesday. It provides $333 million from the federal relief fund to cover expenses that would have come from the state's general fund. The Senate previously passed another measure that would give legislators more oversight over how the state uses federal dollars.

That has proved to be another sticking point in negotiations.

A Legislative Advisory Commission currently reviews state agencies' requests to use federal cash. Gov. Tim Walz's administration and House Democrats oppose changing that process, arguing that the existing system allows Minnesota to quickly respond to the unpredictable fallout of the coronavirus pandemic.

With this legislative session set to end May 18, oversight of federal funds and a plan to disburse the $667 million have become wrapped up in end-of-session deal-making.

House Speaker Melissa Hortman, DFL-Brooklyn Park, called Rosen's plan for the local government aid an "extreme position" that Republicans have taken to kick off negotiations on the measure.

Rosen, meanwhile, said during a hearing Monday that her bill would help all communities handle the pressure of the COVID-19 pandemic on public health systems and first responders. She said she anticipates more funding will be distributed to help with special needs and virus hot spots.

Commissioners in Hennepin and Ramsey counties, which received a combined $317 million through the CARES Act, oppose Rosen's plan. In contrast to Marquart's proposal, Rosen's plan would require the counties to distribute some of those funds to cities and towns within their borders.

"To rewrite the rules for these two counties does not seem fair or justified considering the extraordinary costs that they have encumbered on behalf of their residents and the state in general," Association of Minnesota Counties lobbyist Matt Hilgart said.

Under Rosen's plan, in counties where a large percentage of the population lives in cities or towns, the municipalities would get more money. In rural areas where counties are responsible for most of the services, the counties would see a larger portion of the federal aid.

"It's all the same amount of money per head, so there is definitely a fairness piece to this," she said.

Sen. Bobby Joe Champion, DFL-Minneapolis, challenged the Rosen formula. Two-thirds of COVID-19 deaths in Minnesota have occurred in Hennepin County, he said. But under her formula, his county would get about $88 per person. Cook County, which has not yet had a confirmed coronavirus case, would get about $148 per person.

"Can you help me understand where the fairness is in that?" he asked.

Rosen countered that they don't know which area could be hard-hit next.

Walz's revenue commissioner, Cynthia Bauerly, also opposed the Rosen bill. She supports a provision — which Marquart added to the House version — in which a portion of the money is set aside to give out in the months ahead, as unexpected challenges emerge.

While state legislators debate how to distribute the local aid, members of the U.S. House are moving forward with a $3 trillion aid package that would include help for cities and states. They could vote on the measure as soon as Friday, though it faces opposition from Senate Republicans in Washington.