Bill Would Distribute Federal CARES Act Funds to Local Governments

May 11, 2020

The state Senate proposal would provide $87 per capita to cities.

State lawmakers are working on ways to distribute funds from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act to local units of government. The first bill addressing this issue has been introduced in the Senate.

As the session’s adjournment date of May 18 is fast approaching, the House and Gov. Tim Walz are also expected to release their own versions of a CARES Act funding distribution system this week.

Senate bill

The Senate Finance Committee will consider SF 4564 (Sen. Julie Rosen, R-Vernon Center), a bill that would implement a system to distribute $667 million of the state’s $1.8 billion in CARES Act funding to cities, counties, and townships.

Under the bill and a posted delete-all amendment, the commissioner of Revenue would distribute funding to local units of government on a per-capita basis, similar to the distribution formulas other states across the country have developed.

Specifically, $174.49 per capita would be allocated to each county with a population under 500,000. Hennepin and Ramsey counties are excluded due to their direct distributions from the federal government under the CARES Act. The per-capita amount for counties under 500,000 reflects the per-capita distributions received directly by Hennepin and Ramsey counties.

The allocation for each city would be $87 per capita, which is roughly one-half of the county per-capita amount. The bill includes a floor of $5,000 per city, meaning any city under a population of 58 people would receive the minimum amount. Townships would receive $25 per capita, with a floor of $2,500 per township.

Although Hennepin and Ramsey counties received direct distributions under the CARES Act, the legislation would require both counties to allocate funding to cities and townships within their boundaries in a manner similar to the calculations for the counties under 500,000 population.

The amount for each city and township would be subtracted from the initial county allocation to arrive at the final county distribution. The commissioner of Revenue would distribute the amount to each local unit of government by June 15, 2020.

—See estimates of the distribution to cities under the legislation (pdf)

Requirements for use of funding

Local governments would be required to use the funds for permitted expenditures as defined by the U.S. Department of Treasury in its Coronavirus Relief Fund Guidance and FAQ documents. Any unused funds as of November 1, 2020 would be returned by the local unit of government to the Department of Revenue.

The legislation permits local governments to use the funds on collaborative arrangements with other local units of government for expenditures permitted by the U.S. Treasury guidance.