How $52.7 million in federal funds being sent to Olmsted County local governments can be spent remains to be seen.
“There are probably more unknowns than knowns at this point,” Olmsted County Administrator Heidi Welsch told county commissioners Friday morning.
The county expects to receive nearly $30.7 million over two years from the federal American Rescue Plan Act approved in March.
The city of Rochester will receive $17.5 million, and other cities and townships will see a combined $4.5 million.
The funds are designed to help local governments address budget pressures related to the COVID-19 pandemic, as well as provide other responses related to economic recovery.
Wilfredo Roman-Catala, the county’s chief financial officer, said counties, cities and townships are waiting to see exactly how the funds can be used.
“Hopefully, we will receive the guidance by early May,” he said, noting the first set of payments, which are expected to be half the funds, should be sent on May 10.
Second payments are expected to be sent to local governments a year later, with the total expected to be spent by the end of 2024.
While details on how the funds can be spent continue to be in flux, Roman-Catala said one thing is clear: They cannot be used to cut taxes or offset planned tax increases.
However, they will likely be available to fill revenue gaps created by reduced tax generation.
Welsch said the funds can also be used to cover operation expenses created by the pandemic, including increased overtime costs as county staff catches up on delayed work in some departments and cover added expenses related to recovery efforts.
“We are going to have some internal expenses we’ll need to address,” she said.
County Commissioner Jim Bier said he anticipates the county will focus part of the funding to help ensure added property tax revenue isn’t needed in 2022.
“I’m not going to vote for any type of property tax increase next year,” he said.
At the same time, commissioners said the sole focus shouldn’t be on covering county revenue losses and operating expenses.
They cited a variety of additional needs, including updating infrastructure, supporting local workforce development, responding to housing needs and supporting individuals, families and businesses.
The American Rescue Plan includes funding for a variety of other programs that touch on county services and other past priorities for federal funding, including housing, schools, infrastructure and business relief.
“This just seems really difficult to not spend twice or spending money on things other (programs) could have supported,” County Board Chairwoman Stephanie Podulke said.
Welsch said that was why the commissioners gathered Friday to identify priorities and criteria for spending the funds, without specifically determining how much would be spent in specific areas until more clarity is provided from the federal government.
“There’s a lot more money coming from additional sources,” she said.
The Rochester City Council will have a similar conversation during its 3:30 p.m. study session Monday as it talks about future budget planning.
The agenda for Monday’s agenda shows city staff is suggesting the federal funds be used to repair budget imbalances caused by revenue losses and pandemic expenses, as well as investments in budget resilience.
Additionally, it cites the possibility of using funds for program investments to help people, boost economic inclusivity and recovery efforts.
The council meeting will livestream at www.rochestermn.gov/agendas and available on Spectrum cable channel 180 or 188 and Metronet channel 80.