Walz to release $841 million in COVID-19 aid to local governments

Gov. Tim Walz is moving to send out $841 million in federal aid to counties, cities and townships hit hard by COVID-19 after legislators failed to strike a deal to distribute the funds during a recent special session.

Walz announced the plan Thursday, nearly a week after lawmakers adjourned the session while at a partisan impasse over police accountability measures, a bonding bill and the federal aid. Without action, local governments were unable to tap into the funding to boost services during the coronavirus pandemic.

"This funding will bring much-needed relief to communities across the state as we continue to battle this pandemic together," Walz said in a statement announcing his decision.

Under the plan, local governments will get a direct portion of the funding based on population. The plan must get a stamp of approval by a legislative commission before the aid is distributed, but the Department of Revenue expects to start sending out the funding to local governments by the end of June.

In March, Congress passed the CARES Act — short for Coronavirus Aid, Relief, and Economic Security — sending direct aid to states and municipalities with populations of more than 500,000. Most of that money, $1.87 billion, went directly to the state, with Hennepin County getting $212 million and Ramsey County $96 million. But the state's other cities, counties and townships didn't receive a direct allocation and have been waiting on a plan to distribute the money from state lawmakers.

Willmar City Council Member Audrey Nelsen said that after 90 days of waiting, she was "happy and relieved" to see the money distributed.

"COVID-19 has had a major impact on every corner of the state — even the areas that have not been hit by a wave of cases," she said. "This funding will help local governments continue to deal with the public health crisis and start to revive their local economies."

Local governments have faced plummeting revenue and rising costs during the pandemic, including first responder expenses, staff overtime, public health costs and economic assistance to small businesses. The funding can be used on government services, as well as grants to local businesses, hospitals and others impacted by the virus, but they cannot be used to make up for lost tax revenue.

League of Minnesota Cities Executive Director David Unmacht said cities set their budgets for 2020 last fall, long before the pandemic hit Minnesota.

"Since that time, cities have been forced to alter and modify their operations, purchase equipment and redeploy staff to address the challenges of maintaining essential services to residents," said Unmacht, whose organization represents more than 800 cities across the state. "Although the federal funding cannot be used to replace lost revenue, the erosion of city revenue over the past several months have challenged cities even further as they continue to respond to the pandemic."

The state has a process in place to distribute the aid through the Legislative Advisory Commission, a small panel of lawmakers who sign off on distributing federal funds when legislators are not in session. But Republican lawmakers wanted more input over the unprecedented amount of federal dollars flowing into the state through the CARES Act.

Legislators struggled during the regular session to strike a deal on how to distribute the money to communities. They said they were close to an agreement during the special session that would have included some additional spending, but the deal fell apart in the early hours of the morning Saturday, along with proposed policing changes and a more than $1 billion package of construction projects in a bonding bill.

On Thursday, legislators were supportive of Walz's move to send the money out, in part because he used the framework they debated during session.

"It is important that our local communities get that," said Senate Majority Leader Paul Gazelka, R-East Gull Lake. "As a result of shutting everything down and businesses not being able to pay taxes and do all of the things they do, all of our local governments are hurting right now."

Local governments are facing a deadline to spend the money by early December and must return any unspent money to the state. The federal government could be sending another round of aid to help states and municipalities to respond to the virus.

Walz also announced $12 million in emergency support to food shelves across the state, which are facing a 30% increase in visitors during the pandemic.

Briana Bierschbach • 651-925-5042

Twitter: @bbierschbach