OML UPDATE AT-A-GLANCE
Here are the top six things you need to know from this past week:
· On Wednesday, the Ohio Senate voted to pass Sub. HB 110, the $75 billion state operating budget bill. The Ohio House, in keeping with tradition, refused to concur on the bill, which sent it to Conference Committee where a final version of the bill will be reached before sending it to Governor DeWine’s desk for his signature by July 1. You can find the full Senate omnibus amendment HERE, the synopsis of the amendment HERE, the budget appropriation spreadsheet HERE and the LSC comparison document detailing the differences between the budget proposal presented by Governor DeWine, the version passed by the Ohio House and the current version offered today by the Ohio Senate. That “comp. doc.” is HERE. Read more in the article below.
· Sub. HB 110 now includes the language allowing for taxpayers to file for refunds on revenue collected through the temporary authorities granted via Sec. 29 in HB 197 and the continuation of municipal income tax withholding on non-resident workers. Although the language includes an extension of the continuation of the temporary withholding policy until December 30, 2021, the provision would also fundamentally alter the purpose of the emergency authority and retroactively mandate municipalities to comply to refund requests back to March 9, 2020, impacting revenue collections for the closed tax year. You can find the amendment language HERE. We encourage our members to communicate their opposition to this amendment with their legislators and with the DeWine Administration. You can find a sample opposition letter HERE.
· Sub. HB 110 also contains language that would effectively ban new municipal broadband projects and severely limit the ability of Ohio municipalities to operate existing broadband systems. You can find a copy of the amendment HERE. We encourage our members to communicate their opposition with members of their Ohio General Assembly delegation and Governor DeWine before the passage of the budget bill. You can access a sample opposition letter drafted by AMP Ohio HERE to use when communicating on this issue or for reference points for the content of resolutions. Read more in the article below.
· This week, the U.S. Treasury released updated an FAQ providing further information on how municipalities can and cannot spend the Coronavirus State and Local Fiscal Recovery Funds from the American Rescue Plan Act (ARPA). You can access that FAQ HERE. Treasury has also released a supplementary FAQ regarding the distribution of ARPA funds to non-entitlement units of local governments (NEUs), which you can access HERE. Read more in the article below.
· We encourage our members to refer to the series of fact sheets released by the National League of Cities (NLC) that contain critical information on how local governments can access, spend and properly report ARPA funds. These white papers also cover topics such as how ARPA funds can be used related to housing stability, education and technology needs in local communities. Find the complete list of fact sheets and their links in the article below. You can access all NLC resources for local governments regarding ARPA funds HERE.
· We want to make our members aware of two upcoming webinar opportunities. The first is a free webinar hosted by the League and the Ohio Municipal Attorneys Association (OMAA) on Wednesday, June 23 at 11 a.m., and is entitled “How the Costs of COVID Could Mess Up Your Budget.” To register, click HERE. The second is hosted by the Ohio Environmental Protection Agency (OEPA) on Thursday, June 17 at 10 a.m. The webinar will help explain basics of environmental clean-up regulations by providing an overview of liability, due care, land use restrictions, and will explain brownfield funding assistance that is available. To register, click HERE. Read more in the articles below.
BUDGET BILL CONTAINS RETROACTIVE TREATMENT TO TEMPORARY MUNICIPAL INCOME TAX WITHHOLDING PROVISION
Sub. HB 110, the $75 billion state operating budget bill, now includes the language allowing for taxpayers to file for refunds on revenue collected through the temporary authorities granted via Sec. 29 in HB 197 and the continuation of municipal income tax withholding on non-resident workers.
The Senate’s omnibus amendment to substitute HB 110 includes language that would retroactively alter the operating language in Sec. 29 of HB 197, which was adopted March 9, 2020. This provision temporarily froze the municipal income tax withholding procedures for non-resident workers and was intended to shield municipalities from the potential significant loss in municipal tax revenues due to emergency orders directing individuals to work from home.
Although the language in the omnibus amendment includes an extension of the continuation of the temporary withholding policy until December 30, 2021, the proposal would also fundamentally alter the purpose of the emergency authority and retroactively mandate municipalities to comply to refund requests back to March 9, 2020, impacting revenue collections for the closed tax year.
The League is extremely disappointed in this revisionist approach to the intent and application of legislation passed and enacted over a year ago. This language increases the potential financial loss to municipalities across the state and will have potentially devastating consequences to the ability of Ohio cities and villages to support first responder services and other critical functions of municipal government.
We encourage our local leaders to immediately communicate their opposition to this drastic change in the temporary application of the municipal income tax withholding procedure, being added to the budget bill, with their members of the Ohio House, the Ohio Senate and the Governor’s office. You can find a sample opposition letter HERE.
BUDGET BILL INCLUDES LANGUAGE PREVENTING MUNICIPAL BROADBAND SYSTEMS
The Ohio Senate amended Sub. HB 110, the state operating budget bill, with language that would effectively ban municipal broadband projects and the ability of Ohio municipalities to operate broadband systems.
This provision would effectively ban new municipal broadband projects and severely inhibit the service of existing systems. The language does the following:
· Restricts political subdivisions, from owning, operating or controlling a network, or entering a public-private partnership to address local broadband access needs.
· Prohibits schools, port authorities, and other local governments that fall under the broad definition of “political subdivision” from ongoing or future participation in the provision of broadband service.
· Prohibits intergovernmental agreements for the provision of broadband services across multiple jurisdictions, meaning existing agreements would need to be abandoned.
· Subjects any new broadband system to the same requirements as a private company and imposes limits on how municipalities can use federal funds for broadband expansion.
· Imposes requirements that are not imposed on private companies, such as preparing a formal business plan, establishing measures to protect residents from any tax or fee increase to offset any losses if the network performs poorly or demand is insufficient, and mandates municipalities to refund any profits to taxpayers if the operation of the network generates a net profit.
· Prohibits a political subdivision from using federal funds or public services revenues to provide broadband services.
This amendment would mean that existing multi-jurisdictional networks throughout Ohio that are used for public safety, remote health care and transportation would have to cease operation. Municipalities systems are non-profit entities that generally provide broadband services because private companies have not extended services to the area after determining it would not be profitable.
This language would restrict municipalities from providing this essential service, especially in rural areas, and would reduce critical internet services that make educational opportunities and economic development possible. Ohioans are more depended on broadband than ever before. We urge our members to contact their members of the Ohio legislature and the office of Governor DeWine and strongly urge that this provision be removed from the budget bill. You can access a sample opposition letter drafted by AMP Ohio HERE to use when communicating on this issue or for reference points for the content of resolutions.
BUDGET BILL SENT TO CONFERENCE COMMITTEE
This week, the full Senate voted on the latest version of the budget bill, which was adopted and voted out of the Senate Finance Committee. After the Ohio Senate passed their version of Sub. HB 110, it was returned to the Ohio House of Representatives and, in keeping with tradition, the Ohio House did not concur on the Senate’s changes This will send the budget bill to a Conference Committee in order to negotiate the differences between the versions presented by the DeWine Administration, Ohio House and Ohio Senate.
The legislature has until June 30 to send the agreed-upon budget to the Governor’s desk so that it can be signed into law by July 1. This means there is very little time remaining between now and when the bill will become law to make any changes to the budget. It is critical that our members contact their legislators and the Governor’s office to ensure the removal of the provisions that are harmful to municipalities and to advocate for the provisions that would invest in Ohio’s cities and villages.
While several of the Senate’s changes would benefit municipalities, the new budget language also includes not only issues that will create significant financial difficulties for Ohio municipalities across the state, but substantial preemptions on the constitutional Home Rule authority granted to municipalities.
In addition to the temporary municipal income tax withholding policy and the broadband preemption amendments covered in the article above, these are the provisions we oppose:
· “Bag Tax” Preemption: The bill contains language to make permanent the preemption on Ohio’s political subdivisions including municipalities to imposing a tax, fee, assessment or other charge on auxiliary containers, also called the “bag tax”, and the sale or consumption of auxiliary containers. HB 242 of the 133rd General Assembly enacted a temporary preemption on communities instituting a bag tax, but that provision was set to expire on January 15, 2022. The Senate language will make this Home Rule violation permanent.
· Elimination of Broadband Expansion Funding: The Senate version of the budget does not include the Ohio Residential Broadband Expansion Grant Program, which would have provided roughly $190 million in grant funding to expand broadband service, which the League strongly supports. This funding is needed to ensure Ohio residents across the state have access to critical internet services.
· Virtual Meetings: The Senate version of the budget bill deleted language added by the Ohio House of Representatives that extended the temporary authorization for public bodies to meet via electronic technology until December 31, 2021. The current authority will expire on July 1 without an extension by the legislature.
The following are the provisions we support:
· Force Account Limit Increase: The Senate has increased the force account limits for highway projects undertaken by an unchartered municipal corporation from $30,000 per project to $90,000 per project. This increase will help relieve municipalities of the requirement to engage in the competitive bidding process for those projects, which lowers overall cost and enables projects to be completed more quickly. Municipalities will be able to employ their own workforce for these projects, enabling local leaders to keep costs down and remain good stewards of local taxpayer dollars.
· Opportunity Zones: This provision changes the existing income tax cred for investments in federally authorized opportunity zones in Ohio by increasing the limit on the amount of credits an individual can be awarded during a fiscal biennium from $1 million to $2 million. It also expands a tax credit eligibility to all investors in Ohio opportunity zones, not just investors subject to the personal income tax. (A nontaxpayer investor that cannot claim the credit may sell or transfer the credit to a taxpayer.)
· Health Districts: While the Senate has maintained the House provisions requiring a city health district with a population of less than 50,000 to study a merger with the general health district that includes the city and contract with the general health district for the administration of city health affairs if the study indicates that the merger is advisable, the budget bill now exempts a city health district from these requirements if it is either accredited or in the process of applying for accreditation and receives it by December 31, 2025.
· Transformational Mixed-Use Development Projects (TMUD): This provision modifies an existing insurance premium tax credit for capital contributions to the construction of a transformational mixed-use development (TMUD) by extending the sunset date for certifying new TMUD projects by two years, to June 30, 2025; and setting the maximum annual credit allotment for fiscal years 2024 and 2025 at $100 million.
· Treasury Offset Program (TOP): This provision allows municipalities to participate in the Treasury Offset Program (TOP), which is a federal program whereby states can have eligible debts withheld from a taxpayer’s federal income tax return. Municipalities can participate through the Ohio Attorney General’s office and effectively recover the municipal revenues they are owed, which in turn funds local services. Taxpayers will also benefit from this, as could be saved from paying more than what they originally owe the municipalities because of penalties and interest.
· Local Law Enforcement Funding: This budget currently allocates $15 million for a one-year police training pilot program to assist law enforcement agencies with training costs and creates a 12-member Law Enforcement Training Funding Safety Commission to study possible long-term methods for providing state aid to law enforcement agencies for training police officers to help ensure local law enforcement can access to critical and timely training that will best equip them to serve and protect their communities. The bill also includes these additional critical investments for local law enforcement:
· $10 million in grants to local law enforcement agencies across the state to implement or enhance body-worn camera programs, including the body cameras themselves and other associated expenses.
· $8 million to help reduce violent crimes through state and local law enforcement agencies through flexible grant funding
· $1 million to support state and local law enforcement agencies in recruiting and hiring new peace officers.
· $6.5 million to expand the Ohio Narcotics Intelligence Center (ONIC) to further support local law enforcement and their partners.
· Multi-Agency Radio Communications System (MARCS): This provision would allocate $1.5 million each fiscal year to fund the MARCS program’s local fee offset to ensure that many of Ohio’s local first responders can remain in the program so that Ohio’s safety forces able to continue to communicate with one another.
· Local Government Fund: The budget would continue funding for the Local Government Fund (LGF) at current statutory levels. This funding is a continuation of the state and local partnership as cities and villages navigate the pandemic’s revenue impacts while continuing to provide the critical local services that Ohioan’s depend upon.
· H2Ohio Funding: The budget would currently restore the H2Ohio fund at $20 million over the biennium, which will help municipalities continue to provide safe, clean drinking water to residents and mitigate nutrient runoff within their local communities.
We urge our members to contact their representative and senator and urge their opposition to the provisions that would harm municipalities, and to express support of the provisions that invest in Ohio’s cities and villages. We will continue to keep our members apprised as the bill enters Conference Committee negotiations.
LEAGUE SIGNS LETTER OPPOSING HARMFUL AFFORDABLE HOUSING PROVISION IN THE BUDGET
The Coalition on Homelessness and Housing in Ohio (COHHIO) alerted interested parties of an amendment included in the Senate version of the state operating budget bill that would exacerbate Ohio’s affordable housing shortage by undermining the economic viability of affordable housing developments. The amendment would effectively increase property tax liability on many types of federally assisted housing developments, even though these projects generate less rental income and often cost more to operate than market-rate housing projects. This amendment would force many who operate these properties to shut down, resulting in fewer affordable housing options for Ohioans.
The League has signed a joint letter opposing this provision, which you can read in full HERE. We will continue to keep our members apprised on this issue.
TREASURY ISSUES UPDATED FAQS ON AMERICAN RESCUE PLAN ACT (ARPA) FUNDS
The U.S. Treasury has released updated an FAQ on the Coronavirus State and Local Fiscal Recovery Funds from the American Rescue Plan Act (ARPA), which you can access HERE. Treasury has also released a supplementary FAQ regarding the distribution of ARPA funds to non-entitlement units of local governments (NEUs), which you can access HERE.
Treasury has stated it intends to update its FAQs periodically to help clarify questions about the ARPA Interim Final Rule, and these updated documents do not reflect all of Treasury’s planned clarifications regarding ARPA guidelines.
The following are the new questions addressed in the updated State and Local Fiscal Recovery Funds FAQ:
· May recipients use funds to establish a public jobs program?
· In calculating revenue loss, are recipients required to use audited financials?
· In calculating revenue loss, should recipients use their own data, or Census data?
· Should recipients calculate revenue loss on a cash basis or an accrual basis?
· Do restrictions on using Coronavirus State and Local Fiscal Recovery Funds to cover costs incurred beginning on March 3, 2021 apply to costs incurred by the recipient (e.g., a State, local, territorial, or Tribal government) or to costs incurred by households, businesses, and individuals benefiting from assistance provided using Coronavirus State and Local Fiscal Recovery Funds?
· How do I know if a water, sewer, or broadband project is an eligible use of funds? Do I need pre-approval?
· May recipients use Fiscal Recovery Funds to fund Other Post-Employment Benefits (OPEB)?
· Once a recipient has identified a reduction in revenue, how will Treasury track use of funds for the provision of government services?
· What is the Assistance Listing and Catalog of Federal Domestic Assistance (CFDA) number for the program?
· May recipients use funds to cover the costs of consultants to assist with managing and administering the funds?
The following are the new questions addressed in the updated supplemental FAQ regarding non-entitlement units of local government (NEU) funding distribution:
· Can states impose requirements or conditions on the transfer of funds to NEUs?
· Can states transfer additional funds to local governments beyond amount allocated to NEUs?
· May states use funds to pay for the administrative costs of allocating and distributing money to the NEUs?
· What steps do states and territories need to undertake to receive their NEU payments?
· What are the specific deadlines for state governments in distributing funds?
· How long does a state have to wait until an NEU can be treated as “non-responsive” and the state can issue a subsequent distribution based on unclaimed funding?
· How should a state treat a local government on the list posted on the Treasury website that is no longer in operation and has been dissolved?
· How should territories allocate and distribute payments to their NEUs?
· Can states pay entities that are not included in the list of local governments provided by Treasury?
· Is a Second Tranche payment guaranteed for NEUs, provided that they comply with the terms and conditions of the funding?
· How should states check to see whether an NEU is excluded or disqualified as outlined in the guidance?
· Are states required to collect key information from the NEU as outlined in the guidance (e.g., banking information or top-line budget totals) or may states rely on existing information in their systems?
· Do states have to collect actual budget documents to calculate the “75 percent budget cap,” or can they rely on a budget total?
· Do states have to monitor NEUs for compliance with use of funds?
· Is there a requirement to distribute funds to NEUs electronically, or can funds be distributed via check?
We will continue to keep our members up to date on all ARPA guidance as it is released.
AMERICAN RESCUE PLAN ACT (ARPA) RESOURCES FROM THE NATIONAL LEAGUE OF CITIES (NLC)
We encourage our members to refer to the series of fact sheets released by the National League of Cities (NLC). These fact sheets contain critical information on how local governments can access, spend and properly report ARPA funds:
· How to Spend Coronavirus State & Local Recovery Funds (HERE)
· How to Use ARPA to Access Coronavirus State & Local Recovery Funds (HERE)
· How to Meet Reporting Requirements for Coronavirus State & Local Fiscal Recovery Funds (HERE)
· How States Can Allocate Coronavirus State & Local Fiscal Recovery Funds to Local Governments (HERE)
· How to Use Coronavirus State & Local Fiscal Recovery Funds to Ease Budget Shortfalls (HERE)
· ARPA Supporting Housing Stability Funding and Income Security (HERE)
· Supporting Education Success Through the American Rescue Plan Act (HERE)
· From the Event: ARPA Coronavirus Local Fiscal Recovery Funds Guidance Update (Call) (HERE)
· A Local Leader’s Guide to Talking About the American Rescue Plan Act (HERE)
· ARPA Local Recovery Funds: What’s in it for Connectivity and Technology? (HERE)
· Using American Rescue Plan Act Funds for Water, Wastewater and Stormwater Infrastructure Projects (HERE)
· How Non-Entitlement Units of Local Government Access Recovery Funds (HERE)
Members can also use this Revenue Loss Calculator (HERE) to measure losses in revenue due to the COVID-19 pandemic.
You can access all NLC resources for local governments regarding ARPA funds HERE.
OML/OMAA HOLDING FREE WEBINAR ON COVID-19 IMPACTS TO MUNICIPAL BUDGETS
On Wednesday, June 23 at 11 a.m., the League and the Ohio Municipal Attorneys Association (OMAA) are hosting a free webinar entitled “How the Costs of COVID Could Mess Up Your Budget.” The webinar will cover COVID-19’s budgetary impact is challenging traditional cost projections, making it difficult to plan for the future. Many factors are unknown, including the impact on medical claims and future insurance rates. Could costs be artificially low because treatment is being postponed? Will the pent-up demand cause significant increase in future budgets? The webinar will explore what is COVID going to cost your community, what to look for in your claims data, and how to interpret your data for budgeting and best/worst case scenario planning. To learn more and to register, click HERE.
OEPA ANNOUNCES JUNE WEBINARS AND FUNDING OPPORTUNITIES FOR MUNICIPAL LEADERS
The Ohio Environmental Protection Agency (OEPA) is holding a webinar next week that will be of particular interest to League members.
This webinar is also specifically geared towards community leaders and will help explain basics of environmental clean-up regulations and will provide an overview of liability, due care, land use restrictions, and will explain brownfield funding assistance that is available. The webinar will provide local leaders with greater awareness of how contaminated sites are regulated to keep residents safe and what redevelopment opportunities exist. The webinar will be held on June 17 at 10 a.m.
Find more information and registration details can be found HERE.
PUBLIC ENTITIES POOL OF OHIO (PEP) MEMBER BENEFITS
PEP members are entitled to benefits that help them better serve their communities. Some are time-sensitive, so act soon.
PEP+ Grant: Up to $1,000 for Members:
As part of PEP’s loss control and risk management initiative, PEP members may now apply for a grant of up to $1,000. Funds are allocated on a first-come, first-served basis, so it’s important to apply ASAP. Grants are awarded to help offset qualifying expenses covering safety items that help prevent or reduce liability claims or property losses. Funds are available for purchases or expenses incurred during the application period. Access the PEP+ Grant Program application by visiting www.pepohio.org or emailing firstname.lastname@example.org.
Legal Access Hotlines: Free Consultations:
When you need a lawyer’s opinion, put your PEP membership to work. Every authorized PEP member is eligible for up to 90 minutes of free legal consultation per year, covering issues associated with human resources, zoning, land use, open records/open meetings, and more. Authorized PEP member representatives seeking legal consultation services should call the PEP Legal Access Hotline at (877) 250-5545 to request up to 90 minutes of free advice, guidance or information.
PEP Police Academy: Law Enforcement Resources:
As a 2021 initiative, PEP is pleased to be able to provide its members with new law enforcement resources. PEP also is hosting bimonthly webinars in collaboration with Greg Beck and Mel Lute of the law firm Baker, Dublikar, Beck, Wiley & Mathews. In addition, the firm will provide one sample law enforcement policy per month which will be available to all agencies, regardless of whether or not those agencies attended a webinar. Members may then use the Legal Access Hotline (also provided in conjunction with Baker, Dublikar) to further customize the sample policy to their agency’s specific needs.
If you missed the PEP Police Academy “Use of Force or Search and Seizure” webinar, you can still watch them on-demand. For more information on PEP Police Academy or to watch previous webinars, visit www.pepohio.org.
Upcoming PEP Police Academy webinars:
· “Excited Delirium/ Mental Incapacity/ADA” in June 2021
· “Crisis Intervention/Mental Health” in August 2021
· “Implicit Bias and De-Escalation” in October 2021
· “Situational Training for the Right Outcome” in December 2021
COMMITTEE RECAP: BILLS OF MUNICIPAL INTEREST
· HB 201 – Natural Gas. Sponsored by Rep. Stephens (R – Kitts Hill), would prevent local governments from limiting use of natural gas. During its third hearing before the Senate Energy and Public Utilities Committee, opponents including the League testified against the bill. You can read the League’s testimony in full HERE.
· HB 155 – Land Use. Sponsored by Rep. Upchurch (D – Cleveland) and Rep. Smith (D – Fairview Park), would create the Land Reutilization Nuisance Abatement Program and make an appropriation. During its third hearing before the House Economic and Workforce Development Committee, proponents including the League offered testimony in support of this legislation. You can read the League’s testimony in full HERE.
· SB 185 – Emergency Powers. Sponsored by Sen. Schaffer (R – Lancaster), is regarding a political subdivision's emergency powers when suppressing a riot, mob, or potential riot or mob and the preservation of rights regarding firearms during an emergency. During its second hearing before the Senate Veterans and Public Safety Committee, proponents including the Buckeye Firearms Association, the National Rifle Association and the National Shooting Sports Foundation testified in support of the bill. The League is neutral on this legislation.
· SB 176 – Sports Gaming. Sponsored by Sen. Antani (R – Miamisburg) and Sen. Manning (R – N. Ridgeville), would legalize and regulate sports gaming in this state, to levy a tax on businesses that provide sports gaming, and make other changes to the Gambling Law. During its fifth hearing before the Senate Select Committee on Gaming, interested parties gave testimony on the bill. The League is neutral on this legislation.