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Officials from Gov. Mark Dayton’s administration and high-level Republican lawmakers met over the past week in an attempt to get closer to a deal on a disaster relief bill related to this summer’s floods in northeastern Minnesota.

Sticker shock: Dayton’s $190 million disaster bill

House Ways and Means Committee Chair Mary Liz Holberg wants a provision ensuring that if disaster relief money is taken from reserves, any budget surplus that emerges in November would go toward paying back the shift. (Staff photo: Peter Bartz-Gallagher)

Officials from Gov. Mark Dayton’s administration and high-level Republican lawmakers met over the past week in an attempt to get closer to a deal on a disaster relief bill related to this summer’s floods in northeastern Minnesota.

In July President Barack Obama issued a federal disaster declaration that puts the Federal Emergency Management Agency (FEMA) on the hook for 75 percent of the cost of replacing public infrastructure damaged by the floods and leaves the state to pick up the rest. Dayton said he would like to call lawmakers back to St. Paul to pass a bill on August 24.

But the prospects for a deal with the Republican-controlled Legislature became murkier on Tuesday when Republican members of a working group tasked with constructing a disaster relief bill balked at the administration’s $190 million price tag. Senate Finance Chair Claire Robling, R-Jordan, said the proposal raises questions because it spends much more than the 25 percent federal matching requirement dictates. (When Dayton submitted the state’s disaster request to the federal government, the damage estimate was $108 million.)
“If we were only going to match FEMA, we would only need $27 million,” Robling said. “The rest of the money [is for] things that FEMA is not paying for.”

The Dayton administration’s $190 million request was prompted in large part by the fact that FEMA denied the state’s request for financial assistance for individuals and homeowners. Dayton has appealed that decision, but the historical odds are against him: Since 1990, there have been 29 federal disaster declarations in Minnesota, but individual assistance payments were approved in only a dozen of those cases, according to a recent report by the Minnesota Legislative Auditor.

In turning their attention to the non-FEMA spending in the administration’s bill, Republican lawmakers have singled out a $20 million line item for the state Department of Employment and Economic Development to provide business assistance. There’s a similar amount for the Minnesota Housing Finance Agency, to give 10-year forgiveable loans to people who stay in their homes.

The Legislature has offered similar assistance in at least one past case — the 2007 special session that dealt with flood damage in the area around Rushford in southeastern Minnesota. But some lawmakers on the current working group, including Sen. Joe Gimse, R-Willmar, who is tasked with carrying the legislation in the Senate, are raising concerns about approving disaster-relief dollars without a better understanding of the Duluth-area flood’s costs and how the federal money will be used.

“It’s a big bill,” Gimse said. “It’s a lot of money in a lot of areas. Just to have a good idea of where those dollars are going to be spent, and how they are going to be used, is going to take some time.”

Talks have continued behind the scenes. On Thursday House Ways and Means Chair Mary Liz Holberg, R-Lakeville, held a series of closed-door meetings with state agency representatives. She met with the Department of Transportation, the Public Facilities Authority, Minnesota Housing Finance Agency, the Board of Water and Soil Resources, the Department of Natural Resources and Department of Employment and Economic Development.

“We’ve asked for additional information in some areas,” Holberg said. “I think there are going to be opportunities for phasing some of it. And then we have to have the discussion about where the money is going to come from.”

There’s $26.4 million available to spend on the state’s bottom line, Holberg said. The state’s budget reserve account is also a pot of money that can be tapped to pay for disaster relief. But she’s reticent about tapping the reserves, she says, because of the state’s outstanding debt to school districts that have seen their aid payments shifted into the future to solve budget disputes.

Holberg said she wants a provision in the special session bill ensuring that if the disaster relief money is taken from the reserves, any budget surplus that emerges in the November economic forecast would go toward paying back the shift rather than replenishing the reserves, as current law dictates.

“I’m speaking just for myself,” Holberg said, “[but] I would prefer that we fix that, so the net result of any money out of the reserve is not out of what would be otherwise entitled for the school districts.”
She added that she’s also looking for any dollars from previous disaster relief appropriations that haven’t been spent.

Holberg, who said during Tuesday’s working group meeting that the administration’s bill gave her “sticker shock,” said her talks with agency officials have focused on ways the bill can be winnowed down to projects that can be undertaken immediately. She said some of the needed infrastructure projects — such as road work that involves complex engineering, and thus forces the state to wait a long time before seeking bids — might be better addressed when the 2013 legislative session convenes in January.

“Many of us were under the impression we would do what needed to be done immediately,” Holberg said. “And as has been done sometimes in the past, we would come back in 2013 session [when] everybody has a better idea of what the exact needs are and a lot of the federal funds have been sorted out.”

But Sen. Roger Reinert, DFL-Duluth, said the extent of the damage in northeastern Minnesota warrants the funding level proposed by the administration. He said the bill’s provisions for housing assistance, and for flood mitigation money to turn destroyed homes into park land, need to be funded.

“Members [who] had been here,” said Reinert in a telephone interview from Duluth on Thursday, “I don’t think they were shocked [by the bill’s size]. Members [who] hadn’t been here, I think they were getting educated [during the work group meeting) about why it was that number and what’s going into it.”

Dayton has said he hopes lawmakers can pass a bill in special session on or around August 24. But Dayton will want to have an agreement with GOP legislative leaders on the bill before he calls the special session, because he doesn’t have the power to adjourn the session. That authority resides in the Legislature.

The questions among legislators about the size and specifics of the bill call into question whether the timeline is feasible. Robling hinted during the working group meeting that subgroups of the working group may be necessary to fully vet the proposal. So far those meetings haven’t been scheduled.

“Maybe by the end of next week, we’ll have a lot of it ironed out,” she said. “It’s hard to say how fast.”
Reinert is hopeful that lawmakers will reach an agreement in time to keep the schedule intact.

“I’m not panicked yet,” he said. “As long as we work within the construct that the administration had proposed, I think we’re just fine for August 24. If there is a push to write a completely new bill, then I think we’re not going to meet the 24th,” Reinert said.

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