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Grant recipients might not have to pay for it come tax time

The struggle to find enough employees is a common lament in many a field right now. But one area thrown into sharp relief by the pandemic was the shortage of home health aides and personal care assistants.

A strategy the state pursued to bring more workers into the field was funding workforce development grants. In June 2021, the Legislature allocated $5.6 million each in fiscal years 2023 and 2024 from the American Rescue Plan Act to attract and retain direct care workers who provide home- and community-based services to people with disabilities and older adults. It required that at least 90% of the funding be directed to workers who earn 200% or less of the most current federal poverty level.

But it turns out that for all the government was giving, it was also potentially taking away.

By recording the grants as income on their taxes, workers could become ineligible for other government assistance programs, or be unable to take advantage of education tax credits or property tax refund programs.

Rep. Peter Fischer (DFL-Maplewood) has an idea for a fix. He’s sponsoring HF1810, which would specify that the workforce development grants not be considered income or assets for the purposes of determining eligibility for economic support programs and medical assistance.

The bill would also increase the maximum income from the grants to 300% of the federal poverty guidelines, provide an income tax subtraction for grants received, and exclude the grants from counting toward income for the purposes of the education credit or property tax refund programs.

On Tuesday, the House Taxes Committee laid the bill over for possible omnibus bill inclusion.

“Home- and community-based services are for children or adults who may be living in their family homes or community-based settings like group homes,” said Kristy Graume, the Department of Human Services’ legislative director for behavioral health and disability services. “There were some unintended consequences that came about because we got guidance very late from the federal government. This was just an oversight that we didn’t exclude income. We certainly don’t want low-income people kicked off their benefits.”

Under the bill, money received as part of a workforce development grant would not count as income for determining eligibility for child care assistance, general assistance, Minnesota supplemental aid, food support, housing supports, the Minnesota Family Investment Program, Diversionary Work Program, economic assistance programs, or medical assistance.

The Department of Revenue estimates that the change would reduce the General Fund by $290,000 in fiscal year 2024 and $100,000 in fiscal year 2025.

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