Three months after $150 billion in federal coronavirus relief funds were allocated to state and local governments, Minnesota cities are finally getting the cash in hand. The funding is part of the larger $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law March 27.
In Minnesota, only Hennepin and Ramsey counties, as jurisdictions of more than 500,000, received direct payments through the CARES Act, which funneled just over $2 billion in local government relief to Minnesota. Other counties in Minnesota, as well as all Minnesota cities and townships, were left in the lurch until June 25 when Gov. Tim Walz announced the population-based methodology for distributing the remaining $841 million in local government relief.
Gary Carlson, intergovernmental relations director for the League of Minnesota Cities (LMC), said that already that first day 65 cities had submitted certification forms for the aid. Within two weeks, more than 70 percent of the available funds had been disbursed, according to a report by the Minnesota Department of Revenue made July 9, the most recent report available.
The cities of Minnetrista, Waconia and Watertown, as well as Carver County, are among those jurisdictions that have already received their shares, according to the report. Maple Plain has also initiated its application for funding.
“It is not like Local Government Aid. It is not a general revenue source; it is a source of revenue that has to be used for very specific COVID-related or pandemic-related purposes,” said Carlson during a July 1 LMC webinar for local governments.
Coronavirus Relief Funds (CRF) can be used to help cover medical supplies and public health costs, including COVID-19 testing, sanitation supplies and personal protective equipment (PPE). Also covered are certain payroll expenses like increases in worker’s comp or wages for public employees whose jobs were repurposed in response to the virus. Costs for medical leave, sick time and work-from-home solutions are also eligible for reimbursement.
According to the LMC webinar, individual “governments are responsible for making determinations as to what expenditures are necessary due to the public health emergency with respect to COVID-19 and do not need to submit any proposed expenditures to Treasury.”
But as federal expenditures, CRF distributions of more than $750,000 are subject to an audit, either through the Office of the State Auditor or through a private CPA firm. All local governments applying for CRF are also required to submit initial, interim and final reports to the ad hoc COVID-19 Response Accountability Office, a temporary arm of Minnesota Management and Budget.
None of the costs being covered by CRF can have been budgeted for in the most recent approved budget, nor can CRF be used to fill in the gaps in lost property tax revenue, a hit that many cities will take when residents have been furloughed or laid off and businesses closed, some of them not to reopen. Counter to what had earlier been anticipated, there is no requirement that a jurisdiction have had a state of emergency in place in order to receive the relief funding.
Cities and townships can use CRF dollars to cover those costs incurred between March 1 and Nov. 15 of this year, dates outlined in the federal legislation. Counties have until Dec. 30 to use their shares. Carlson with LMC said the two coverage periods were designed to free cities’ unused funds for county use.
It remains to be seen just how large a tab local governments will run. As one example, information included at the July 13 Minnetonka Beach city council session shows that the city has documented expenses that are just a fraction of the more than $42,000 allocated to it.
Telework solutions and IT support services, as well as custodial hours and plexiglass for City Hall, account for the bulk of the approximately $3,500 the city has spent to date as a result of the coronavirus pandemic, that information shows. Additional cleaning supplies and installation of an e-payment system could also be eligible for reimbursement.
Mound city council members were scheduled to talk over their share of the money, about $704,000, at their July 14 session. Council discussion took place after Laker Pioneer went to press, but information included in the meeting packet pointed to a similar situation of a high surplus of CRF and little knowledge yet of where to go with it.
“Cities the size of Mound will struggle to find a means to equitably distribute any surplus funds to businesses, individuals and non-profits,” wrote Mound city manager Eric Hoversten in a message to council members.
The city was expected to look at utilizing existing agencies like the Small Business Administration, the Community Action Partnership and the state Department of Employment and Economic Development (DEED) to see how best to distribute the city’s surplus CRF to Mound residents and businesses. “A special appointment of a City Council task force made up of two Council Members, community volunteers, and/or staff may be a creative way to ensure the process moves as expeditiously as the timelines require,” wrote Hoversten.
Grants to small businesses to “reimburse the costs of business interruption” as result of mandated closure are eligible for funding, as are grant to programs that assist individuals with overdue rent. All levels of local government have until Sept. 15 to apply for their shares of CRF.