How will county spend millions in CARES Act funds?


(6/26/2020)

by CHRIS ROGERS

 

Winona County will soon get nearly $6.2 million in federal coronavirus aid. Should that be spent on the county’s own expenses, local business assistance, aid for people in need, or investments in the future of the area’s economy?

This week, the County Board began discussing how to use the money. County staff proposed a combination of all of the above, with just two percent earmarked for direct help for people in need. County Board member Marie Kovecsi said she’d like to increase that amount.

Other local governments will see similar windfalls after Minnesota Governor Tim Walz announced on Thursday that he will release $841 million in federal Coronavirus, Aid, Relief, and Economic Security (CARES) Act funds to counties, cities, and townships across the state, with payouts based on population. The city of Winona is slated to receive $2 million; Goodview, St. Charles, and Lewiston are getting $314,000, $289,000, and $115,000, respectively. Local townships are getting $7,700-$33,000 each.

How to use the the county’s allotment of CARES Act funding is ultimately up to the County Board, with some strings attached by Congress. To get that conversation started, Winona County Administrator Ken Fritz drew up a proposal. Following the lead of other counties, Fritz suggested spending half of the aid package — $3.1 million — on the county’s own expenses, in particular, payroll for public health, human services, and public safety employees. Under Fritz’s proposal, 25 percent of the money — $1.5 million — would go to economic assistance for local businesses and 17 percent — $1 million — would go toward expanding rural broadband internet service, while aid for individuals in need and support for local mental health services would get two percent each — or $124,000 each — and the remaining four percent would be held in reserve as a contingency fund.

“Those numbers — they’re nothing in stone. So, if we find we need to spend more money in area than another, we can do that,” Fritz told the Winona Post. On Tuesday, the County Board began giving Fritz feedback on his proposal and laying out their own priorities.

Highlighting the $124,000 proposed for individuals in need and the $1.5 million for business assistance, Kovecsi said in an interview, “When I looked at that, to me, it seemed a little bit out of balance. It’s like [the amount] going directly to people for rent and keeping them in their house with food … or paying their bills, that’s two percent. Four percent is contingency. Are we thinking of people or are we thinking of bureaucracy?”

Fritz acknowledged more aid for individuals may be needed. He pointed out that, so far, the local area has not seen a huge surge in hunger, poverty, and homelessness, but that could change as more generous unemployment benefits, the Paycheck Protection Program, and moratoriums on evictions come to an end. Some nonprofit and government officials have predicted a wave of evictions and, as CBS Minnesota recently reported, a major hunger crisis may be on the horizon.

After Tuesday’s discussion, Fritz suggested a phased approach, where the county could spend some of money, and then reassess where the greatest needs are and allocate more money to those areas. “We’re going to have to approach it in a really flexible manner,” he stated.

County Board member Marcia Ward raised questions about the proposal to spend half of the money on county payroll expenses. The county has already budgeted to cover those expenses with taxes and other revenues it will collect. Paying those salaries with $3 million in CARES Act funds instead would — theoretically — give the county a $3-million surplus at the end of the year. The county could then use that extra cash to plug holes in its 2021 budget and potentially avoid raising taxes next year, Fritz explained. That’s one way the county could use the funds to keep more money in taxpayers’ pockets, Fritz said.

According to the U.S. Treasury Department, CARES Act money is not supposed to be used to cover expenses for which local governments have already budgeted. However, citing the Minnesota Inter-County Association’s guidance on how CARES Act funds may be used, Fritz said that the law does allow spending on public safety, health, and human services staffing costs, despite the fact they’ve already been budgeted.

“I find this strange,” Ward said of spending CARES Act dollars on payroll expenses. “That’s their job, and they’re already being paid,” she noted.

On the other hand, Ward acknowledged the county has had some legitimate expenses caused by the pandemic. Local governments have run up costs on things like personal protective equipment (PPE) and extra cleaning supplies. Governments can get some of those expenses paid for through the Federal Emergency Management Agency (FEMA). The Minnesota Department of Revenue suggested that CARES Act funds could be used to cover the share FEMA doesn’t, and to handle worker’s compensation claims from first responders.

Rather than plow this money into next year’s budget, Ward said, “I would lean toward business assistance and broadband and things that would impact the whole county, because our expenses — that’s already been budgeted for. Yes, I would love to see us reduce the levy, but really again, that’s one-time dollars, where I’ve got a lot of constituents where their broadband is marginal and those dollars would have more of a long-term impact.”

In addition to CARES Act funds, other local governments have used their economic development authorities’ loan funds to help businesses struggling during the pandemic. The Winona County Economic Development Authority has over $1 million sitting unused in its loan fund, but so far has not created a COVID-19 relief program with that pot of money.

This $6.2 million gives the county an opportunity to not only recoup some of the costs of COVID-19, but also launch economic-development initiatives, County Board member Chris Meyer said. “I want to make sure we spend it all, and we don’t have to give any back,” she added. The CARES Act funding must be spent by the end of 2020 or local governments have to return it.

Ward also highlighted the CARES Act funding townships in Winona County are getting: a combined $280,000. Townships with their own fire departments may have direct expenses to pay for, but Ward noted that townships could also use that money to help businesses or farms in their township. However, townships may lack the staff or expertise to administer such programs; maybe the county can help them, Ward suggested.

As for the city of Winona, city manager Steve Sarvi indicated his staff were still reviewing federal guidelines for how CARES Act money may be used. “They’re pretty stringent. It’s not like there’s no strings attached,” he said. The city expects to have revenue shortfalls in areas such as park and recreation, where the city will collect far less in rental fees, activity fees, and memberships than it expected. “It would be nice if we could use it to offset revenue losses, but we can’t do that,” Sarvi said.

Aid for small businesses — including possible loans or even grants for local companies — is one likely use of the money, Sarvi stated. Stocking up on PPE for the future is another idea, along with possible assistance for people in need, he continued, adding that the city might want to partner with the county or other groups to coordinate that aid for individuals.

“We’ll come up with a list and get [City Council members’] feedback and approval,” Sarvi stated.

The County Board is also expected to continue its discussion of how to use CARES Act funds before making decisions.

Chris@winonapost.com

 

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