Minnesota cities scramble as Trump cuts threaten infrastructure projects

The city of Spring Grove at the southeastern edge of Minnesota has been trying to rebuild since a devastating downtown fire three years ago.

The city had been counting on $1.2 million in federal funding to build a new fire station at the east end of town and move its current station out of a congested area.

Jana Elton, the Spring Grove clerk and administrator, said the city was a finalist for the money and all but certain it would get the aid through a community project funding (CPF) request she submitted through U.S. Rep. Brad Finstad's office.

"We are relying on it because we're a smaller community, and we don't have the tax base to build this kind of a building," Elton said.

CPFs are usually included in congressional spending bills, which typically pass with bipartisan support. But to cut money, they were not included in the Republican-backed continuing resolution passed in March. Minnesota's six Democrats joined the vast majority of their party in voting against it, saying Republicans did not work with them on the measure.

However, removing the funding will impact dozens of projects in communities across Minnesota — represented by Republicans and Democrats alike — that won't get millions in the federal money.

Elton learned Spring Grove wasn't getting the aid in an email from Finstad's office after the continuing resolution was passed with the support of the congressman and his three fellow Minnesotan Republicans.

"Republicans wanted to show cuts in spending, the community projects came out as part of their way of saying, 'Look, we trimmed the budget,'" said Democratic Rep. Betty McCollum, Minnesota's only member on the House Appropriations Committee, which evaluates CPF requests. "It's very unfortunate it was done that way."

CPFs are key for states like Minnesota, a "net giver" that sends more in taxes to Washington than it receives. They make sure federal money is flowing back to the states' local governments, nonprofits and other groups to spend on infrastructure projects and other programs.

The lack of CPFs is not the only hit communities are facing.

President Donald Trump's memo freezing federal funding has caused confusion. Then came a slew of executive orders, including one directing agencies to "immediately pause" disbursement of money from the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA). The former funds roads, bridges and other infrastructure projects; the latter pays for clean energy programs.

In a joint address to Congress, Trump also urged lawmakers to get rid of the CHIPS and Science Act, which funds semiconductor research and development.

Elton plans to apply for a CPF again. Finstad's office encouraged Spring Grove to do so for 2026. But it's unclear if CPF requests will be included in any upcoming continuing resolution.

Either way, Elton anticipates the city will have to increase its request. With other competing priorities since the fire, Spring Grove can't pull from other sources to build another firehouse. Until then, the city must use its current station, which Elton said is out of compliance.

Seeking solutions

Other towns that won't get CPF money say raising taxes may be the only option they have to fill funding gaps.

Lakeville Mayor Luke Hellier was counting on a $7 million request to help pay for the FiRST Center, a regional public safety training facility. That was until Democratic Rep. Angie Craig broke the news to him that the money was no longer coming — just as ground was about to broken.

Now taxpayers may have to foot that portion of the bill for the facility if the city can't get the funding, he said.

Hastings and Stillwater were also counting on millions in CPFs to fund water treatment facilities to remove PFAS from their water. Without the funding, both cities are in a similar predicament as Lakeville.

"Everybody wants safe drinking water, and we want that as well, but at whose cost?" Hastings Mayor Mary Fasbender said.

The city already raised its water rates in January and without the CPF funding, may have to raise rates again. "It's very hard for a municipality like our City of Hastings to have to pay for it all," Fasbender said.

Outside of CPFs, Minnesota has secured about $12.3 billion from IIJA, IRA and CHIPs that goes toward funding some 1,800 projects.

Scrambling to understand

The White House's directions have left some of the state agencies that oversee these funding streams, and the cities that receive them, asking if the money is still coming.

"The executive orders came out, and almost all of our federal funding was paused here at the Department of Commerce," said Peter Wyckoff, the deputy commissioner of energy at the Minnesota Department of Commerce.

His agency oversees energy infrastructure projects that received money tied to IIJA and IRA, including about $224.6 million in IRA funding.

Wyckoff said the Commerce Department has since received guarantees that most of the expected federal money is coming. But it recently learned a $1 million grant for environmental justice work was terminated.

A spokesperson for the Department of Transportation, which received $4.8 billion in IIJA funding for highways and bridges said "delays in federal funding could impact existing road and bridge projects and timelines" and is monitoring what impact each announcement may have on projects across Minnesota.

Some of Minnesota's biggest cities are also trying to piece together which projects may lose funding from IIJA grants for a number of infrastructure projects, including:

• In St. Paul, state Rep. María Isa Pérez-Vega said she was told a $25 million federal grant to replace a 100-year-old viaduct on the West Side may be canceled.
• In Rochester, the city told the Minnesota Star Tribune that a $2.5 million grant to conduct planning on a street on South Broadway is now being paused.
• In Duluth, an $11 million grant to help fund a nearly $20 million aerial lift bridge project is in question.
• In Bemidji, $18 million for the Hwy. 197 project is in limbo, the Bemidji Pioneer reports.

"As we reach out to our local units of government, they haven't really heard much from the feds," said state Rep. Fue Lee, who co-chairs the Capital Investment Committee.

"They still are hopeful that they can get the funding that they were awarded. But as of right now, there's not a concrete yes."

McCollum's office said money that has not been drawn down from the $146 million for projects she secured in her district via IIJA is also at risk.

The same goes for any IRA-funded projects. McCollum's list includes the funding for the St. Paul viaduct Perez-Vega warned about, $38 million for the Amtrak Borealis route between St. Paul and Chicago, and a combined $50 million for the Lower Sioux and Red Lake Band of Chippewa tribes for road improvements.

Waiting game

"There are provisions that allow the federal government to cancel contracts, but this feels different," state Budget Director Ahna Minge said.

"The [Office of Management and Budget] memo that directed agencies to pause spending federal dollars, and then similar guidance and some of the executive orders is not something that we've really seen."

Leah Corey, the federal funds implementation director for the state Department of Management and Budget, said it is hard to know how long it will take to know whether obligated money is still coming.

Some Minnesota Democrats in Congress expressed concern about the CPFs and possible cuts to IIJA, IRA and CHIPs. None of the state's Republicans, who all have been vocal supporters Trump, responded to requests for comment for this story.

Rep. Tom Emmer, the No. 3 Republican in the House, took credit for funding a number of 2024 CPF projects as he ran through a list at a telephone town hall this past week.

"My job is to come to Washington and build influence for you, so that I can make sure that our priorities are actually getting funded," he said of the benefit of CPFs.

But he did not mention to the 32,000 people he said were listening that CPFs had been excluded from the continuing resolution that he voted for last month.

Jana Hollingsworth of the Minnesota Star Tribune contributed to this report.

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