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As the pandemic surges, Minnesota’s emergency COVID funds are running low

Of the $200 million appropriated to a special COVID-19 fund by the Legislature, only $18.565 million remains. And of the $1.87 billion sent directly to the state under the congressional CARES Act, just $208,527 is left to be appropriated.

Gov. Tim Walz
REUTERS/Lucas Jackson
Gov. Tim Walz: “As states navigate unprecedented growth in cases, we are in desperate need of additional, flexible funding from the federal government…”
As Minnesota enters a crucial phase in its response to COVID-19, it is in the worst financial position it has been in since the pandemic began in March. That leaves Gov. Tim Walz and his budget managers with few resources to rely on as a new round of business closures begins Friday night.

Of the $200 million appropriated to the COVID-19 Minnesota Fund by the Legislature in March, only $18.565 million remains. More alarming is that according to the state Office of Management and Budget, of the $1.87 billion sent directly to the state under the congressional CARES Act, just $208,527 is left to be appropriated. [PDF]

Both the Republicans in the Congressional delegation and state Rep. Dave Baker, R-Willmar, called Wednesday for Walz to tap the state CARES Act for business relief. No money is available, though there is some in the state COVID account. Neither requires a legislative session to spend. 

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The last major appropriation from the CARES Act account came this week when the Department of Employment and Economic Development requested $10 million in small business relief grants. The money would come as Walz announces reclosure of businesses including bars, restaurants, gyms and bowling centers. 

Half of that would go to businesses that were eligible for earlier grants but did not have up-to-date registrations with the state. The other half would go in a random selection to businesses that had applied before but were not helped before money ran out. No new applicants would be able to compete for this money.

In addition to the $1.87 billion that went directly to the state, the two largest counties received direct allocations totaling $317 million.

 Just this week, Hennepin County set aside $8 million of its money for $15,000 grants to small restaurants and bars. It has spent $121 million but approved $166 million of it’s $221 million allocation.

Ramsey County has allocated $85.4 million of its $96 million appropriation.

On Wednesday, Walz sent a letter [PDF] to the four caucus leaders of the U.S. Congress asking them to pass additional aid to states, small businesses and the unemployed.

“In the spring, Congress provided critical assistance for workers, families, businesses, and states as the virus began to spread,” the governor wrote. “Now, as states navigate unprecedented growth in cases, we are in desperate need of additional, flexible funding from the federal government to keep as many people as safe and healthy as possible in the pandemic response, and to help weather budgetary impacts due to the virus.”

All state and local governments are under pressure to spend the money they have left soon because under the federal law, any money not spent on pandemic related costs before Dec. 30 must be returned to the U.S. Treasury. And under Walz’s direction of $841 million to counties, cities and townships, any money unspent by Dec. 1 must be returned to the state which would have 30 days to spend it in other ways.

The latest round of closures — termed a pause by Walz — also comes when other supports in the CARES Act have expired or long-ago been spent by Minnesotans. That includes the $1,200 per adult and $500 per child checks and the $600 per week extra unemployment insurance payments.

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The CARES Act money has been termed vital for softening the impacts of the pandemic. Under existing state law, requests to spend the money had to be presented to a bipartisan Legislature Advisory Commission. But that group had no power to block the spending.

The money has been used for rental and mortgage assistance, testing and tracing, food assistance for children, seniors and low-income residents, emergency child care grants, small business grants, help to schools for distance learning and return to school costs, grants to farmers and money to relieve crowding at homeless shelters.

The $200 million state fund was used early in the pandemic for personal protective equipment for health care workers and testing supplies but also paid for an emergency morgue that has not yet been needed, for expanded hospital space and even to help bury animals destroyed when COVID-19 outbreaks reduced meat processing capacity

There does not seem to be much chance for additional relief from Congress, at least not by the end of 2020. There is an opportunity for the state to receive some additional money by requesting disaster relief assistance from the Federal Emergency Management Agency. So far, $9.5 million has been requested for reimbursement of items and services paid for with state dollars or federal CARES Act money and more requests are expected. But that will be measured in the 10s of million, not 100s of millions.