To boost struggling businesses, upgrade air filtration in government buildings and house the homeless into 2021, St. Paul is giving more than $3 million — the majority of what remains from its federal CARES Act funding — to its police, fire and EMS departments for payroll expenses.
It’s a budget maneuver to help stretch federal funds.
The strategy aims to free up general fund money down the line, allowing St. Paul to back six ongoing initiatives that would not otherwise meet strict state and federal spending deadlines for COVID-related relief dollars.
“All of us were so concerned about the looming Nov. 15 deadline,” said St. Paul City Council Member Jane Prince, addressing Laura Logsdon, the city’s budget analyst and CARES Act “guru,” during a Nov. 4 council discussion. “The creativity of staff, to be able to figure all this out, is very much appreciated.”
St. Paul isn’t the only public body that has been rushing federal CARES Act relief funding out the door to meet this weekend’s state-imposed deadline, even though steep budget needs will clearly continue into the New Year.
When the state of Minnesota received $2.18 billion in federal CARES Act money last spring, it also inherited a series of sometimes murky or even contradictory strings attached, not the least of which was a Dec. 30 spending deadline. By that time, those billions had to be spent in full or returned to the feds.
Then Gov. Tim Walz borrowed a structure proposed by lawmakers from both sides of the political aisle and added an even tighter deadline — Nov. 15 — giving the state extra weeks to spend any unused dollars rather than turn them back.
“It was ‘let’s have a couple bites at the apple before we have to return it to the feds,’” said Gary Carlson, director of Government Relations for the League of Minnesota Cities.
Minnesota cities unable to exhaust their CARES allotments by this weekend will have to turn back extra funds to their respective counties. And counties unable to quickly budget that money will have to turn it back to the state, which will then be tasked with meeting the Dec. 30 deadline or giving cash back.
Cities and counties — most of whom did not begin to receive their allotments until July, and some of whom were still filing for CARES dollars in September — have begged the state for extensions, to no avail.
And the federal government, when approached by members of Congress, has been equally unwilling to budge. That’s a harrowing reality for cities and counties, because businesses and residents will look to them for emergency aid, virus testing, contact tracing and possibly even vaccination well into 2021.
“This pandemic doesn’t respect the CARES Act spending guidelines,” said a frustrated Matthew Hilgart, government relations director with the Association of Minnesota Counties. “That’s one of the biggest disconnects. It’s pretty wild that we thought back in March, ‘we’ll get this figured out by December.’”
MN CITIES, COUNTIES HAVEN’T SPENT ALL OF THEIR SHARE
As of Sept. 30, not all that much cash had actually been exhausted, relatively speaking. Minnesota cities, townships and counties had reported spending $288 million, or 34 percent of their allocated CARES funds, according to an Oct. 27 report from Minnesota Management and Budget.
As a result, cities and counties are under the gun to get money fully spent, even though they face huge budget pressures just over the horizon in 2021.
Until just a few weeks ago, Hilgart and Carlson worried cities and counties wouldn’t meet their spending deadlines, but clarifications from the U.S. Treasury on permissible uses have helped them devote money toward public safety payroll and other expenses.
As of the start of last month, more than 45 percent of the CARES funding at the city, township and county level had been directed toward payroll for public health and public safety first responders such as police, fire, EMS and municipal hospitals, Carlson said. That accounts for $133 million of the $288 million spent.
The next biggest spending item, at $52 million, was small business assistance. Housing support accounted for $4.2 million, and food programs totaled $534,000.
“Most of the cities I was talking to said they were finding uses,” Carlson said.
ST. PAUL’S CREATIVE $4.7 MILLION BUDGET SHIFT
Ramsey County received $96 million in CARES funding in March, earlier than most cities and counties because of its size, and created three categories of giving for home and health needs, workforce and small business assistance. Those programs prioritized individuals and businesses who had not received federal assistance.
“Our plan is that we will not leave funds on the table,” said Ramsey County Board Chair Toni Carter.
In June, the governor directed $841 million from the CARES Act to 85 counties and 1,530 cities and townships, including $23.5 million to St. Paul.
On Nov. 4, the St. Paul City Council approved a $4.7 million budget maneuver aimed at getting its allotment spent by the Nov. 15 deadline, mostly by redirecting CARES money toward police, fire, EMS and other public safety payroll.
The goal is to free up some money in the city’s general fund, which could then be used in December and onward to fund six key ongoing initiatives.
The efforts to benefit from $3.5 million in budget work-arounds include COVID-related heating-ventilation-air conditioning improvements, services for the homeless and unsheltered, the city’s cache of personal protective equipment, remote work access, an e-signature and web forms technology initiative, and funding for businesses and cultural organizations.
Another $1.2 million in CARES funding was redeployed from city assistance projects that came in under budget. That money will help fund the downtown RiverCentre convention center, a third round of emergency assistance for small businesses through the city’s emergency relief Bridge Fund, and additional HVAC improvements.
BUDGET MANEUVERS ELSEWHERE
When it comes to eyebrow-raising budget maneuvers, St. Paul isn’t alone.
In October, North Dakota lawmakers voted to repurpose $221 million in federal coronavirus aid by redistributing it to state agencies, while also granting $16 million to oil companies to assist fracking operations.
Eagan, which received $5.2 million in CARES funding, spent $3 million on public safety payroll costs, as well as $1.27 million on payroll for personnel who were diverted to substantially different roles than what had been budgeted.
Another $733,000 went to business assistance grants for 59 Eagan small businesses and non-profits. City officials said they would have appreciated millions more in CARES funding.
“We had roughly $4 million in additional eligible public safety payroll and other costs over and above the $5.1 million grant,” said Eagan spokesman Joe Ellickson, in an email.
Lakeville, which received $4.8 million in CARES funding, also put the majority of the money toward public safety expenses. About $985,000 was dedicated to grants for small businesses and nonprofits. Some went toward internal government expenses such as personal protective equipment and facilitating tele-work.
“We completed all of our spending, and we won’t be returning any,” said Lakeville City Administrator Justin Miller.
NEEDS EXPECTED TO GROW IN MONTHS AHEAD
The irony of the rush to spend CARES dollars is that they’ll soon be needed, and badly so, by many cities and counties, perhaps more than ever. Walz this month responded to rising virus cases by ordering a 10-person limit on outdoor and indoor gatherings, with key exceptions for retail and varying rules for weddings, restaurants and bars, which face their own restrictions.
The bar and restaurant industry in particular is bracing for dire impacts, but it’s not alone. A nationwide ban on residential evictions ends Dec. 31.
Hilgart, of the Association of Minnesota Counties, foresees a difficult time ahead for the economy, and local residents and businesses will lean on cities and counties to help them through it. Meanwhile, they’ll likely be tasked with the potentially pricey distribution of what could be a two-shot COVID vaccine if it becomes available in 2021.
“Are we just seeing the tip of the iceberg in foreclosures? Are we just seeing the tip of the iceberg in tax forbearance?” he said. “We are really nervous about that. With unemployment not at a great place right now, what are those pressures going to do to folks already at the cusp of losing their home?”
Relief for individuals and municipal budgets alike could come in the form of federal assistance, but given Congressional wrangling, that hasn’t happened yet, said St. Paul City Council Member Chris Tolbert during the council’s Nov. 4 discussion.
“We need a second stimulus package badly,” Tolbert said.
Powered by WPeMatico