How To Spend Federal COVID Relief Hangs Over Minnesota Legislature
MINNEAPOLIS (WCCO) -- The Minnesota legislature is unlikely to finish by the regular session's end on Monday and the billions of dollars coming from the federal government's pandemic relief package is partly to blame.
Minnesota is set to receive more than $9 billion total in money to state and local governments and funds for targeted programs like education, housing and child care, according to estimates from the Minnesota Department of Management and Budget.
Legislative leaders say late guidance from the U.S. Treasury this week on how to spend a deluge of federal COVID relief money from the American Rescue Plan brought negotiations back to square one.
"We received the guidance on Monday, May 10, and that essentially reset the table," said House Speaker Melissa Hortman (DFL-Brooklyn Park). "You add that on top of the complexities of meeting in a pandemic, and the pandemic related issues, and then police reform—it became clear that it just wasn't likely in the cards."
State government alone gets $2.8 billion with half available this year and the rest available next year. There's also an additional $2.1 billion for local governments, $297 million in housing assistance and $1.9 billion for education and more.
There's broad flexibility to use those dollars so long as it falls under certain criteria like plugging revenue holes due to the pandemic, addressing COVID-19's economic impacts and even improving infrastructure like broadband, according to the Treasury Department's guidance.
The money can also be used for state tax forgiveness of Paycheck Protection Program loans and extra unemployment benefits. Minnesota is among a minority of states that have not yet conformed to federal tax law on this issue.
In light of the federal funds on top of a $1.6 billion budget surplus, Republicans are doubling down on their position to not raise taxes.
"There's plenty of money into the system that we can say there's no tax increase that we need to do," Senate Majority Leader Paul Gazelka (R-Nisswa) said.
The House DFL and Gov. Tim want higher taxes on the wealthiest Minnesotans to fund ongoing government investments and priorities. But flush with federal cash, they appear to be walking away from that wish, at least for this year.
"In the long run, we need the fifth tier [income tax.] We need ongoing revenue to make those commitments," said House Majority Leader Ryan Winkler (DFL-Golden Valley). "Federal funds in this moment could allow us to fund schools, fund health care—with the new guidance that we have—without new revenue on the table right now."
The Minnesota Senate on Friday adjourned until Saturday at 7:30 p.m. and then won't return until noon on Monday, signaling that it's all but certain that lawmakers won't finish on time.
The governor, Hortman and Gazelka met by Zoom on Friday afternoon to continue to work through a budget agreement, but still had not struck a deal by Friday afternoon.
"We're trying to wrestle through a number of issues and each time we get one little step closer," Gazelka told reporters following the meeting. "It doesn't appear that we'll get done on time but, but you need to know that we continue to work towards the things that need to get done."