MN Senate Discusses Plan to Appropriate Federal American Rescue Plan Act Funds

April 19, 2021

The Senate’s plan includes funding for local infrastructure.

The Senate Finance Committee, at an April 16 hearing, amended SF 2387 to include an initial plan to appropriate the state’s distribution from the federal Coronavirus State and Local Fiscal Recovery Fund, which was part of the American Rescue Plan Act (ARPA).

Minnesota will receive nearly $8 billion in total funding under the ARPA, $2.577 billion of which is provided to the state to use at the state’s discretion within the parameters of the federal law. In addition to the state’s distribution, cities will receive an estimated $1.015 billion. The city distributions are defined by ARPA and are not impacted by the Senate plan.

Under the initial Senate plan, the state would appropriate $2.656 billion of the estimated $2.577 billion scheduled to be received in fiscal year 2022, which begins on July 1, 2021.

Of interest to cities are funds for water infrastructure, transportation, economic development, and employment.

Water infrastructure

The plan would allocate a total of $165 million in one-time funding for water infrastructure, which includes:

  • $70 million in water infrastructure grants.
  • $70 million for point source implementation grants.
  • $15 million to match federal funds for the clean water and drinking water revolving loan funds.
  • $10 million in funding targeted to cities under 5,000 in population for water infrastructure and point source implementation grants.

Transportation

The plan would allocate $923.6 million to the Department of Transportation for earmarked projects throughout the state but would also appropriate:

  • $80 million for the Corridors of Commerce program.
  • $101 million for grants to political subdivisions to repair and replace major bridges.
  • $20 million for additional Municipal State Aid road funding.
  • $20 million for the Small Cities Assistance Account.
  • $10 million for local bridge improvements.
  • $40 million for local road improvements.
  • $30 million for port development assistance.

Employment and economic development

The plan would also allocate $1.279 billion to programs under the purview of the Department of Employment and Economic Development, including:

  • Resort and tourism economic relief.
  • Event center relief.
  • Entertainment and community event business relief grants.
  • A transfer to the state’s unemployment insurance trust fund to cover costs related to extending unemployment insurance during the pandemic.

A word of caution

At the hearing, Minnesota Management and Budget Commissioner Jim Schowalter expressed some caution in allocating these funds before the U.S. Treasury issues more guidance on the permissible use of the funds. Initial guidance is expected later this month or in early May.

The House has not yet formulated a plan for the use of funds.

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