One of the most consequential questions yet to be answered this legislative session is how Minnesota’s allocation of money from the federal CARES Act will be spent. This money was distributed to every state as Congress acted to get dollars out the door to assist state and local governments with expenses related to the COVID-19 pandemic.

In Minnesota, Hennepin and Ramsey counties were allocated a total of $317 million (as were all local governments across the country with populations greater than 500,000). Minnesota received an additional $1.8 billion with the suggestion that 45% of that money be sent to local governments across the state, including counties, cities and townships.

There is ongoing debate over who has the authority to spend the money. Can the Walz Administration make the decisions or do they need legislative approval? Setting that question aside, we at least have insight into how the Minnesota Senate would choose to distribute the money among counties, cities and townships throughout the state.

The Senate plan (SF 4564, authored by Sen. Julie Rosen, R-Vernon Center), which is scheduled to be heard in the Senate Finance Committee on May 11, creates a distribution formula that requires the money be spent on COVID-19 expenses that local governments have incurred in a way that is consistent with federal law and guidance from the Treasury Department on the use of this money.

SF 4564 creates a distribution formula that first allocates $174 per capita to every county. From that allocation, a portion is subtracted from the county share and allocated to townships and cities within that county. Cities are guaranteed $87 per capita or a minimum of $5,000, whichever is greater. For townships, there is a similar per capita share with a minimum allocation of $2,500. The amount of money left over after subtracting the townships’ and cities’ share would go to the county. Under the bill, the money is required to be distributed by June 15.

Here are runs that should how much money each county, city and township would receive under the Senate plan:

In the case of cities in Hennepin and Ramsey counties, which receive direct funding under the CARES Act, the Senate bill would require those counties to share their federal dollars with their cities based on the same formula. Whether the state can dictate how Hennepin and Ramsey counties spend the money they receive from the federal government is a big question, aside from the obviously difficult politics of the issue.  

CGMC staff has coordinated closely with the League of Minnesota Cities, Metro Cities, Municipal Legislative Commission, and the Minnesota Association of Small Cities on a unified approach to the distribution of the CARES Act funds. This letter was sent to the Senate Finance Committee outlining our shared principles for spending the money.

Today’s Senate hearing on the issue is only the first public glimpse of a discussion that has been raging behind closed doors for several days. SF 4564 is but one attempt to distribute nearly a billion dollars in an efficient and fair way. CGMC will continue to be engaged in the discussion as the debate continues at the Legislature.

If you have any questions about this issue, please contact CGMC Executive Director Bradley Peterson at bmpeterson@flaherty-hood.com.