Gov. Tim Walz is spending Minnesota’s federal COVID-19 money his way, whether the Legislature likes it or not

Gov. Tim Walz is beginning to spend the nearly $1.9 billion sent to Minnesota by the federal government to respond to the COVID-19 pandemic. And he’s doing it on his own.

While that has rankled some Senate Republicans who think the DFL governor should be working collaboratively with them, they don’t question that current law permits him to do — as long as he seeks the advice, but not the consent, of the Legislature.

So far, Walz’s budget officials have informed what’s called the Legislative Advisory Committee that the administration will spend about $55 million of the money. Those expenditures are:

• $19.484 million for a flexible account to make purchases of critical care medical supplies including personal protective equipment and ventilators as they become available.
• $20 million for mobile COVID-19 testing units to conduct testing around the state without testing capacity and at hotspots such as food processing plants.
• $2.005 million for emergency SNAP funding, the state-federal food stamp program, for families that have lost access to free and reduced-price school meals.
• $3.668 million for delivery of 123,000 prepared meals per month for four months, to homeless shelters and encampments.
• $1.975 million for surveillance testing across the state to measure the prevalence of coronavirus infection in groups such as health care workers, grocery workers, blood banks and among a sampling of 210 households across the state.
• $8 million for a computer system to help in the state do contact tracing to track those infected and those they have come in contact with.

All of those purchases have gone through the LAC process, which entails letting 10 days pass for members to comment, but approval is not needed for the governor to act. 

State Management and Budget Commissioner Myron Frans told the Senate Finance Committee this week that the money for the supplies and equipment purchases is to buy things that are in high demand.

The formal request put it this way: “This procurement has been challenging as the federal government, 49 other states, and many other countries are also purchasing the same medical-grade gowns, gloves, masks, respirators, face shields, and ventilators. Despite the challenges, the state and hospitals have been able to procure enough PPE that, at this point in time, will support current daily usage for between one to two months for all categories except gowns.”

The state has also made additional purchases that have not yet been presented to the LAC, including $16.95 million for a senior nutrition program for those living in their own homes. That program will provide one meal a day to older adults, either for pick up at community sites or delivered to people’s homes. Another $10 million will be spent for a food program administered through community groups, churches and tribes. 

The state will also seek $6 million for food shelves and $35 million to add $50 a month in food assistance to 350,000 families. Additionally, the state wants $8 million for a public outreach campaign to communicate with residents about the virus and what they can do to prevent transmission.

Other likely expenses, not yet requested, are funds for emergency rental assistance; broadband installation for distance learning and telemedicine; and a large distribution of federal money to counties, cities and townships.

Lawmakers want a say

Senate Republicans have been pushing legislation that would require legislative approval for the spending of federal CARES Act money. Walz opposes that, and the House DFL has been prepared to block any Senate bills on the subject. That leaves the current process, which allows the governor to spend the federal dollars as he wishes, with a requirement only that he notifies the Legislature.

The Walz administration has been saying it wants to collaborate with the Legislature but also that it is ready to act on its own if lawmakers don’t agree. Given the division of power between the GOP-controlled Senate and the DFL-controlled House, that is unlikely on many issues. 

Rental assistance is one example. The Senate passed a $100 million plan to pay the rent and mortgages of the people unable to afford them due to COVID-19-related job losses. But the Senate bill’s linkage of the money to changes in state and local regulation of home building has made it unpalatable in the House.

Sen. Torey Westrom, R-Elbow Lake, asked Frans if rental assistance was the kind of thing the administration anticipated moving ahead with on its own — or something it would do “only upon legislative direction.” 

Said Frans: “Our preference would be for legislative action. Obviously these kinds of decisions and the need for such money is now. It’s incumbent upon us to move as quickly as we can and so we would hope there could be some resolution of this.” 

And if it doesn’t happen soon, Frans continued, Walz would move on his own via the advisory committee process.

Local help still an issue

Both the House and Senate considered bills to send $667 million to local governments during the 2020 regular session, though they disagreed on the formula. Walz can do it on his own should the Legislature not act in the upcoming special session.

Frans said the governor is willing to work with lawmakers on spending the federal money. But he also said the administration couldn’t wait long.

“Our goal is really quite simple, to get the money out as quickly as possible,” Frans said. Counties and cities are experiencing both higher expenditures and lower tax revenues. The CARES Act money can reimburse for expenses related to the pandemic but it cannot be used to replace lost revenue.

State’s have been struggling with the rules regarding how they can spend the various flows of money from the CARES Act, the $2.2 trillion stimulus-relief package that passed Congress in March. While the U.S. Treasury and other agencies have been providing guidance, sometimes even that has changed.

One glaring example is how states should distribute some of their grant to local governments. The act asks, but does not require, that states share 45 percent of their money with counties, cities and townships. 

The state of Minnesota received a total of $2.187 billion. But of that total, $319 million went directly to Hennepin and Ramsey counties, both of which have begun spending it on programs such as rental assistance and small business aid. So, 45 percent of the state’s $2.187 billion, minus the money already sent to the two big counties, would leave $667 million for local governments.

But now the federal government has announced that the state should instead be sharing 45 percent of its share after deducting the Hennepin and Ramsey county direct grants. That means the state should consider giving $842 million to the other counties, i.e. 45 percent of $1.87 billion.

Local governments will certainly prefer that interpretation. But the state is also facing large costs due to the COVID-19 response. And while there is a chance Congress could send additional money to state and local governments, Frans said he is acting as though this is all of the federal aid it will receive.

“We don’t know whether there will be any more money from the federal government or not,” Frans said. “We have to assume that whatever we have is all we’re going to have.” He said Walz is not in favor of using federal money to replace the $520 million in state funds that the Legislature has already spent.

“We do not know what the nature of the response is going to require and I can certainly go through a list of proposals that we are looking at that can more than spend the money that is available,” he said. “We have to remember we are still in the midst of a pandemic … and we would not want the money redirected to the general fund before we feel comfortable that we’ve seen the surge and whether or not there’s more federal money.”