ST. PAUL, MINN. (WCCO) –Minnesota is slated to receive billions in its share of the $1.9 trillion coronavirus relief bill the United States Congress approved Wednesday — a sweeping aid package with targeted assistance for families, vaccines, unemployment, education and more.
The American Rescue Plan, which passed with no Republican support, now moves to President Joe Biden’s desk for signature. The federal help includes stimulus checks for many Americans, extends extra $300 weekly unemployment benefit and increases the child tax credit up to $3,600 annually per child paid out monthly to millions of families.
“Help is clearly on the way,” Sen. Amy Klobuchar said of the bill. “We’re going to be able to see the light at the end of the tunnel, everyone sees it.”
The bill sends $350 billion in state and local aid to help states, counties, cities and tribal governments cover expenses and lost revenue due to the pandemic.
Minnesota’s share includes nearly $2.55 billion for the state and $2.1 billion for cities and counties. There’s also a share of money specifically for state construction projects. That’s on top of money for specific programs like renters’ assistance, more paycheck protection program loans and education funding.
The payout from the federal government to state and local governments can be used for COVID-19 response, government services affected by a shortage in revenue from the pandemic and water, sewer and infrastructure, according to an analysis by the National Conference of State Legislatures. The funds cannot be used for pensions or to offset revenue lost from tax cuts enacted in March onward.
The influx of funds is poised to impact the state’s budget, which economic forecasters recently predicted will yield a $1.6 billion surplus in the next two years, after previously estimating a budget hole. Experts said federal relief buoyed the state’s finances.
Legislative leaders welcomed the news, but cautioned that the aid represents one-time money that cannot be used to underwrite long-term priorities.
“This makes our job easier as long as people don’t have expectations to start big, ongoing new programs,” said Senate Majority Leader Paul Gazelka, R-Nisswa, in an interview Wednesday.
Republicans have been firmly against Gov. Tim Walz’s pitch for tax hikes on the wealthiest Minnesotans and corporations since he announced his budget proposal in January, but they are doubling down on their calls that Walz drop his plan.
“We started this session committed to balancing the budget without raising taxes. With every week that passes, it’s easier to stick to that commitment,” Gazelka said.
It’s unclear how this changes Walz’s budget proposal, but the governor told reporters he will update it and release it next week.
“It makes a big difference,” Walz said of the federal package. “I’m really excited. It lays the groundwork to uplift children and families.”
House Speaker Melissa Hortman, DFL-Brooklyn Park, said tax increases like those Walz proposed are still necessary to appropriately fund ongoing government obligations since the federal aid will lapse in a few years.
“Minnesota’s state budget is not currently meeting all of our needs in the areas of childcare and education and healthcare,” Hortman said. “And if we want to make the investments in those areas that are needed and then sustain them over time, they need to be backed up by progressive revenue.”
Minnesota House Democrats are still sifting through the plan and analyzing its impact, she said, but she thinks there can be agreement with Senate Republicans on using funds to provide more help to Minnesotans, similar to the relief bill approved during a December special session that extended unemployment benefits and provided grants to businesses.
“We will be partnering with our Republican colleagues in the Senate to direct assistance to those individuals and businesses who are most impacted by COVID-19,” she said.