League staff testified on the city uses and challenges of the 2020 federal assistance program.
At the first 2021 hearing of the House Property Tax Division, members received presentations from cities and counties on the uses and challenges of the recent federal Coronavirus Relief Fund (CRF) program, provided by the Coronavirus Aid, Relief, & Economic Security (CARES) Act.
Cities with populations over 200 were eligible to receive $75.34 per capita directly from the state for pandemic-related costs. Of the 657 eligible cities, 645 cities completed the certification process and received funds, while only 12 cities did not certify.
Cities with populations under 200 could request distributions from their counties. In total, cities received $350 million in funding, which had to be used on eligible expenses before Nov. 15, 2020.
Program had its challenges
Testifying on behalf of cities, LMC Intergovernmental Relations Director Gary Carlson and LMC Assistant Finance Director Lisa Sova reviewed the broad types of uses of CRF money by cities, and then offered more specific details about some of the uses cities employed.
They also highlighted the challenges of the CRF program, with the ever-changing U.S. Treasury guidance. The guidance was updated eight times, with the last update coming less than a month before cities were required to use the funds. Although a broad range of uses were allowed, revenue replacement was not a permissible use of CRF payments.
Although there were challenges, the CRF successfully provided much needed assistance to local governments to aid with COVID-19 relief efforts. By allocating these resources, it has been possible for cities to continue to provide services and governance during the pandemic.
Major uses of CRF money by cities and towns
Minnesota cities and townships used the CRF payments in the following ways:
- Payroll for public health and safety employees: $150.75 million (42.13%)
- Small business assistance $56.3 million (15.74%)
- Budgeted personnel and services diverted to substantially different use: $41.67 million (11.65%)
- Public health expenses: $30. 7 million (8.59%)
- Improve telework capabilities of public employees: $22.25 million (6.22%)
- Other eligible costs: $17.89 million (5%)
- Personal Protective equipment: $14.9 million (4.18%)
- Economic support (other than small business, housing, and food assistance): $5 million (1.41%)
Wise use of aid
Rep. Paul Marquart (DFL-Dilworth), one of the architects of the state system to distribute the funds, praised cities and counties for their use of the funds. One provision that he initially supported would have required that 18% of the funds be used for economic assistance.
Although that provision was not included in the final distribution system used by Gov. Walz, cities and counties collectively dedicated over 26%, or $181.9 million, to economic assistance to businesses throughout the state and an additional $37.7 million for housing, food assistance, and other economic support for individuals.
The Senate Finance Committee also spent some time last week discussing the state and local uses of the CRF money. That discussion will continue this week when the committee reconvenes on Jan. 21.