As we understand it the State of Minnesota is still awaiting direction from the US Treasury Department on how it can use the American Rescue Plan Act funds. The question is how the money will be applied by the Office of Management and Budget. Can it be placed directly into the state’s General Fund, will a special fund need to be created or some combination of both?
What we do understand is the following:
The American Rescue Plan Act’s flexible fund is called the State Fiscal Recovery Fund and is $2.833 billion. The agreement allocates it as follows:
- $500 million for Governor’s spending. Within the $500 million it is understood that $75 million will go for summer learning programs (that may be announced today), $12 million will go to the Minnesota Zoo for operating costs (with much lower admissions revenue) and $7 million will be for two items in the State Government bills – loss of parking revenue and a new assessment of space needs due to remote work.
- $550 million in FY 2022-23 and $550 million in FY 2024-25 will be for general fund revenue replacement. The exact mechanism for making this work is still being discussed.
- Uses of the remaining $1.233 billion will be decided by the legislature and governor during the 2022 legislative session.
$70 million for broadband may be funded from the state’s ARPA capital projects fund. The total amount in that fund is $179 million. US Treasury has not provided guidance for that fund yet but it seems clear from the law language that broadband would be eligible. There is agreement to provide $70 million for broadband but the source still needs to be finalized.
Global Agreement and Working Group Framework – May 17, 2021
The following are agreed upon by the Governor, Speaker of the House, and Senate majority Leader:
- The Governor, Speaker of the House and Majority Leader agree to global targets for budget and tax bills as outlined in the May 16 11:58 pm signed spreadsheet.
- The COVID Flexible Fund will fund the following proposals:
- $75 million for Summer Learning:
- $7 million for state government for operating deficiency and remote work; and
- $12 million for continued operations of the Minnesota Zoo.
- Housing target includes debt service $100 million for Housing Infrastructure Bonds. If Congress passes a federal infrastructure bill in 2021 that includes funding for the same purpose these bonds will not be sold.
- $70 million for broadband funding source and bill to be determined.
- The remaining ARPA SFRF of $1,233 billion will be jointly agreed to in the 20222 Legislative Session.
- The Governor, Speaker of the House and the Senate Majority Leader agree to increase the budget reserve level in M>S. 16A.152, subdivision2, paragraph (a) from $1,596,522.000 to $2,377, 319,000. This change will be included in the taxes omnibus bill.
- Any policy and finance provisions included in a final omnibus finance bills must be agreed upon by the Governor, Speaker of the House, and the Senate Majority Leader.
- The Governor, Speaker of the House and the Senate Majority Leader agree the appropriate commissioners and committee chairs shall work cooperatively to reach agreement within the target for conference committee reports.
- To ensure timely conclusion working group members and commissioners must complete their finance spreadsheets by 5:00 pm on Friday, May 28, 2021. Language agreed to by June 4th.
- The global budget target agreement reached by the Governor, Speaker of the House and the Senate Majority Leader does not ensure approval of any omnibus bills.
Signed by all three leaders.
$ in millions House/ Senate / Gov Agreement__
- February Forecast Balance* 1,664 707 2,833
- ARPA SFRF
- Net Targets __21-23 24-24 FY 21-23
- E-12 Education 525 675
- Higher Education 100 100 0
- HHS 100 100 0
- Environment 30 10
- Ag/Broadband 10 10 0
- Housing 10 12 0
- Transportation 200 15 0
- Public Safety 105 110 0
- Labor/Workforce** 125 17 0
- Energy/Commerce 16 8 0
- State Gov 67 63
- Capital TBD TBD 0
- COVID Flexible Fund 0 0 500
Other Bills 9.6 6.9
- Net Spending in Targets 1,298 1,127 500
- SFRF Revenue Replacement 550 550 1,100
- Net Tax Bill Target __ (754)___ (180)
- Balance in each Biennium 162 (50)
- Budgetary Balance 112
- Total ARPA SFRF Spend 1,050 550
- Total ARPA SFRF Spend FY 21-25 1,600
- ARPA SFRF Remaining 1,233
*Adjusted for $7.8 million appropriations in Ch. 13
**Assumes $44 million cancellation in this budget area