MMB outlines $12.3 billion federal funds tracked, urges use of direct-pay tax credits and state match to unlock grants

Minnesota Management and Budget enterprise staff told the Senate Capital Investment Committee on Jan. 21 that the state is coordinating federal Infrastructure Investment and Jobs Act, Inflation Reduction Act and CHIPS Act funds and has identified roughly $12.3 billion in formula and competitive grant awards and allocations that will support about 1,800 projects across Minnesota.

The update is intended to give senators and local project sponsors a clearer picture of what federal money is available and how state match and new financing tools can be used to capture it, MMB enterprise director Leah Kory said.

Kory said the $12.3 billion figure combines funds already awarded and obligated plus federal formula allocation estimates through 2026 and excludes loans and tax credits. “For every state dollar we’ve invested, there’s a return of $7 in federal and private funds,” Kory said.

MMB officials outlined four staff work streams: strategy development, opportunity promotion and coordinated pursuit, tools and technical assistance, and monitoring and evaluation. Anna Ming, assistant commissioner and state budget director at MMB, joined Kory in answering questions from committee members about remaining match balances and the implications of a recent federal executive order that pauses some non-awarded payments.

Kory described several concrete program totals and examples. She said the largest portion of tracked federal funding is for roads and bridges and other major transportation projects (including nationally- or regionally-significant projects), and she cited a nearly $800 million bucket for those projects. MMB also listed a $38 million weatherization assistance award, a $200 million climate pollution reduction grant for statewide work on climate-safe food systems and other grants and formula allocations on an interactive dashboard the agency maintains.

On state match funds, Kory described three 2023 appropriations that MMB uses to make Minnesota competitive for federal grants: the IIJA discretionary match administered by MnDOT (she said $180 million in state match unlocked roughly $1 billion in federal investments in several projects), the state competitiveness match fund run by Commerce (about $17 million in state investment that has unlocked roughly $90 million in federal funding), and the forward fund at DEED (roughly $124 million in state commitments that have leveraged about $1 billion in federal and private investment, including CHIPS-related manufacturing projects).

Kory emphasized that many federal grants require state or local match, and that remaining match balances (for example in the MnDOT IIJA discretionary match fund) are expected to be drawn down in coming months.

The presentation also focused on “direct pay,” a new IRA provision that allows tax‑exempt entities (state and local governments, school districts, tribal nations and nonprofits) to receive refundable payments tied to tax credits for eligible clean energy and related projects. Kory summarized the process: an entity develops and completes a project, files the required IRS pre‑filing and claim paperwork, and if eligible receives a payment. She said direct pay can cover a substantial portion of a project — with bonus credits and prevailing wage/apprenticeship adjustments the effective payment can reach roughly 60–70% of project cost in some cases — and can be paired with grants but cannot exceed the value of the project.

Because direct pay requires projects to be placed in service and paid for before the check arrives, Kory highlighted the role of Minnesota’s Green Bank (Minnesota Climate Innovation Finance Authority, Muncifa) to provide bridge and other loans to entities that lack upfront capital. She noted that Muncifa has begun issuing loans and cited examples the authority has funded or underwrote: renewable/energy projects for Heights Community Energy (affordable housing and light industrial), Avenues for Youth (geothermal system for a youth services facility), and a developer working with Minneapolis Public Schools to install solar and batteries on several buildings.

Committee members asked several operational questions. Senator Carla Nelson asked whether loan mechanics varied (forgivable, interest, terms); Kory deferred to Muncifa and said Muncifa’s strategic plan and loan program documents are available. Senator Susan Pah and Senator Anne Johnson Stewart asked about the federal executive order pausing some payments; Ming said MMB is tracking the orders closely and that “secured” funds are those with federal assistance agreements or obligations in place, but the exact implications of the order were still being clarified.

MMB said it has been offering education sessions and will provide a tax expert scope of work to help local entities and nonprofits prepare direct-pay filings; DEED hosted a convening last October on the topic. Ming said the Department of Administration has filed for direct pay on several state projects (Kory said the state filed claims for five solar installations, two ground-source heat pumps and 110 electric vehicles) and is awaiting federal payment determinations.

MMB made its project list and an interactive federal funds dashboard available online and asked senators and local project sponsors to use the materials and the agency’s technical-assistance offerings to pursue federal opportunities.

The committee discussion closed with MMB offering to supply additional details about loan mechanics, remaining match balances and a comparative state-by-state tally of federal funds drawn down. Committee members requested updates as federal guidance and the executive order situation evolve.