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Minnesota to receive at least $3 billion from federal COVID stimulus passed in December

An unemployment benefit bump makes up the largest amount of money, though there is also funds for rental assistance, public schools, higher education, child care, COVID testing, vaccination programs, transit and highways.

Food and sales job losses aren’t necessarily surprising given the closure of bars, restaurants and other businesses ordered by the governor.
Photo by Esther Lin on Unsplash
Minnesota residents will get about $1 billion in enhanced unemployment benefits.
Minnesota will receive at least $3 billion from the federal COVID-19 relief bill that passed Congress in December. [PDF]

At least.

That total is reflected in an early analysis of the provisions of the $900 billion law that includes a $300 a week bump in unemployment as well as an extension of those benefits; a $600 stimulus check for many Americans; and a large rental assistance program.

But only $300 billion of that total is being sent directly to the states, and it is that number that was used by Minnesota Management and Budget to assess the state’s share. The figure contains the estimate that Minnesota residents will get about $1 billion in enhanced unemployment benefits. It does not, however, try to calculate the value of another round of Paycheck Protection Program loans for businesses; grants to music and entertainment venues; or the accumulated value of the $600 stimulus checks to individuals. It also does not figure in Minnesota’s share of grants going to expand broadband connectivity or to for-profit colleges.

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While the unemployment insurance enhancements make up the largest dollar amount heading to Minnesota, the MMB analysis also highlights $375 million in rental assistance, $588 million for public schools, $129 million for higher education, $137 million for child care development block grants, $325 million for COVID testing, $51 million for vaccination programs, $185 million for transit agencies and $163 million for highway block grants.

All of this is on top of the state’s allocations from the CARES Act passed by Congress in March. That $2.2 trillion law benefited Minnesota and Minnesotans by a total of $3.6 billion — plus nearly twice that amount in enhanced unemployment benefits.

Unlike the CARES Act, the COVID-19 relief package in December does not include direct allocations to state governments, though President-elect Joe Biden has proposed a third major COVID relief bill that would include state-by-state allocations equal to or larger than the CARES Act. That $1.9 trillion plan would allow states to use some of the money to bridge budget shortfalls. The $350 billion for state and local governments is well more than double the $150 billion that those governments shared in the CARES Act. 

Most of the latest round of relief money will require much less action from governors and legislatures than the money distributed under the CARES Act, and will be doled out by formula and with some strict rules: either on a per capita basis or under existing federal formulas for education, transportation and transit funding.

More rental assistance coming

On Tuesday, the Minnesota Senate Housing Committee heard a description of the new rental housing assistance that was included in the December law. Minnesota will receive $375 million in rental assistance for residents facing economic hardship due to the pandemic.

That is a large pot of money, especially compared to the $100 million in state funding that helped both renters and homeowners in the late summer and through the fall. While the income limits for recipients are similar, the new federal money cannot be used to cover mortgage payments. It can, however, pay upcoming rent rather than only past-due payments. And landlords can submit applications on behalf of tenants as long as tenants sign the application.

Also, the new money will not all stay with the state to administer. Of the $375 million, 45 percent will go directly to cities and counties with more than 200,000 residents. In Minnesota, that includes Minneapolis and St. Paul and Hennepin, Ramsey, Washington, Dakota and Anoka counties.

The state’s tribes will share in a separate pot of federal money and could get $22 million for rental assistance.

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The new money comes with strict timelines, with governments obligated to spend 65 percent of their funds by Sept. 30, 2021, or return funds to the U.S. Treasury for redistribution to other states and local governments.

“This comes with deadlines that make me wonder who in Congress has ever stood up a very large program and run it before,” said state Housing Finance Agency Commissioner Jennifer Ho, who told the Housing Committee that the new program is still being designed to coordinate the eight government entities involved. 

Commissioner Jennifer Ho
Commissioner Jennifer Ho
“We’re trying to organize some cooperative spirit around this,” she told the committee.

Jennifer Larson, the executive director of the Three Rivers Community Action, a nonprofit human services organization in southeastern Minnesota, helped administer the state’s housing grants in Rice, Goodhue, Wabasha and Olmstead counties. 

She said that even though that program has ended, her organization still receives calls from people looking for help, citing the ability of new applicants to get help with up to three months of future rent. “If they didn’t have a past-due, we couldn’t help them pay their rent. So it will be really nice to help people pay forward and not just back,” Larson said.

There are other housing-related provisions in the December law, including money for an extension of the federal eviction ban and counseling for those facing the loss of shelter. Minnesota’s own eviction moratorium offers broader protections and will remain as long as the declaration of peacetime emergency stays in place. It was extended until mid-February this week by Walz.

Housing advocates are warning of what has been termed an eviction tsunami if the moratoria end with a large number of tenants having built-up back rent. 

Cecil Smith, the CEO of the Minnesota Multi Housing Association that represents landlords and managers, told the committee its monthly survey of rent collections shows that tenants have continued to pay, which he attributed in part to the state rental assistance program.

Smith told the Housing Committee he would like Walz and the state to begin crafting what he termed an off-ramp from the eviction ban. “Historically, 94 percent of evictions are due to non-payment of rent,” Smith said. “With the $375 million in forthcoming rental assistance, there is no evidence of an upcoming eviction wave. So an off-ramp is indeed reasonable and timely.”

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DFL agenda relies on federal funding

On Wednesday, the House DFL majority outlined its legislative agenda that — without directly mentioning it — would rely on the new federal dollars. The agenda included more state support for COVID testing and vaccinations, public schools, child care, housing assistance and food support. All are in line for new federal dollars.

House Speaker Melissa Hortman
MinnPost photo by Peter Callaghan
House Speaker Melissa Hortman
“As you know, we have a short-term deficit and so the federal dollars will be critical in meeting these needs,” House Speaker Melissa Hortman said in response to a question. “Whether we help Minnesotans with housing assistance with federal dollars or state dollars, what we know is they need assistance.”

Hortman said the federal money will make it easier, especially in winning bipartisan support from Republicans who control the state Senate.

“There are a lot of moving pieces here as to where the dollars are going to come from and flow because of this very late-breaking legislation,” said Rep. Tina Liebling, DFL-Rochester. “We’re very grateful that it’s there, but it is still being analyzed.” 

She said the bills the House DFL has introduced will need adjustment once more information is available about the federal dollars and rules that come with them, and a Senate Finance Committee discussion on the federal COVID Relief law is now set for next week.