Mayor wants to pay struggling St. Paul families $500 a month

By Jane McClure

The Saint Paul City Council voted 6-1 on September 9 to lay over Mayor Melvin Carter’s pilot program to provide 150 struggling families in the city with a guaranteed $500 monthly income for 18 months. The council hopes to bring the issue back for a vote on September 16 if questions raised by U.S. Congresswoman Betty McCollum can be answered by then.

McCollum’s letter outlining her concerns about the program arrived just before the council’s meeting. She asked whether the program met the legal requirements for CARES (Coronavirus Aid, Relief and Economic Security) Act funding and speculated that it could prompt a legal challenge. She also asked if giving people $500 a month could jeopardize their receiving other forms of public assistance.

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The People’s Prosperity Guaranteed Income Pilot Program would use up to $1.5 million in CARES and foundation funding to assist randomly selected families from racially diverse and low-income neighborhoods who have been adversely affected by the pandemic. The households would be chosen from four ZIP codes: 55104 (Midway, Frogtown, Union Park), 55106 (Dayton’s Bluff, Payne-Phalen), 55117 (North End, Thomas-Dale) and 55119 (Battle Creek-Highwood).

The families were to be picked from those already enrolled in CollegeBound Saint Paul, a new city program that provides a $50 college savings account for each child who lives in Saint Paul and is born in 2020 or later. Carter said at a news conference that he is interested in seeing how the two programs will work in concert.

“More than ever before, this economic crisis has pushed families into crisis, struggling to maintain basic necessities for their children,” Carter said. “This demonstration pilot is an exciting new approach to support our most vulnerable families, while helping build the case for permanent guaranteed income programs at state and federal levels.”

However, council members pushed back, with only Ward 4’s Mitra Jalali voting against the layover. Jalali said the program needs to get started. The first cash payments were expected to start this fall.

Mayor Melvin Carter
Mayor Melvin Carter explained the benefits of the city’s CollegeBound Saint Paul program to new parents at Regions Hospital on New Year's Day 2020. Photo by Brad Stauffer

“This demonstration pilot is an exciting new approach to support our most vulnerable families,” Carter said.

Other council members echoed the concerns of McCollum. Ward 3’s Chris Tolbert asked why the program could not have a citywide lottery for people in need. Ward 1’s Dai Thao asked why it only targets families, saying there are single older people and people with disabilities who also are struggling financially as a result of the pandemic.

Tolbert questioned whether the city is the right unit of government to provide such assistance.

Carter is among a growing number of mayors around the country who are supporting the notion of a guaranteed income as a way to help families out of poverty. While he has the authority to set up the program under his emergency powers, the City Council had to authorize the expenditure of the federal pandemic funds.

John McCarthy, director of the city’s Office of Financial Management, reminded council members that they do not have a lot of time to spend the CARES Act dollars. The deadline is November 15, although the city can ask for an extension. The money is for expenses incurred between March 1 and the November deadline.

“We have a very narrow window” in which to spend the funds, said McCarthy. The League of Minnesota Cities is seeking an extension beyond November 15 on behalf of the state’s cities.

In contrast, counties can make expenditures of their federal pandemic funds until the end of the year. Counties get direct federal allocations. Ramsey County received $96 million.

Saint Paul city officials have identified about $45 million in COVID-19 pandemic-related expenditures, but only $23.5 million is available in federal aid.

McCarthy emphasized that the funds cannot be used to replace local government revenue lost during the pandemic, such as sales taxes or fees. The city estimates its pandemic-related loss of revenue could top $30 million.

A team of city staff members are now screening proposals for the CARES Act funding based on eligibility, feasibility and level of public benefit. Proposals include costs of direct response, support for people needing shelter, economic recovery, and transformation of local government services during the pandemic.

The city has already spent $3.25 million on a Bridge Fund to help low-income renters and small businesses. Other examples of pandemic-related costs include payroll for ambulance runs on pandemic responses, payroll for staff disinfecting and cleaning facilities, and payroll for staff moved to different duties.

Governor Tim Walz has allocated $841 million to cities and townships around Minnesota out of a total statewide allocation of $2.18 billion from the CARES Act. The funds are to be used for expenses incurred due to COVID-19.

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