OML UPDATE AT-A-GLANCE
Here are the top five things you need to know from this past week:
· The League is surveying our members to gauge how many municipalities are applying for American Rescue Plan Act (ARPA) funds and how those municipalities plan to use those funds in their local communities. The League would like to collect as much information as possible on how these dollars are being used in our communities so we can develop examples and “best practices” that other cities and villages across the state can access. This will help ensure that this critical funding can be used in the most effective and responsible manner. If you have not already, please complete the short survey HERE.
· The Ohio Office of Budget and Management (OBM) released a flow chart this week explaining the American Rescue Plan Act (ARPA) funding flow for non-entitlement units of local government (NEUs) based on the federal law and U.S. Treasury guidelines. See the flowchart HERE. Additionally, the U.S. Treasury has released an updated FAQ on ARPA funds. You can access the updated document HERE and read more in the article below.
· Ohio ended the 2021 fiscal year with $1.5 billion more in tax revenue that original estimates projected. Initial projections had Ohio collecting $24.9 billion in tax revenue, while in fact the state closed out the fiscal year having collected a total of just under $26.5 billion. According to the Ohio Office of Budget and Management (OBM), the main source of increased tax revenues throughout the fiscal year was the sales and use tax.
· Ohio has been ranked 10th in a CNBC “Top States for Businesses in 2021” report released earlier this week. The state ranked 10th in 2019 as well, which was the last time CNBC released this report. Top nine states in the report were Virginia, North Carolina, Utah, Texas, Tennessee, Georgia, Minnesota, Colorado and Washington.
· The Ohio Environmental Protection Agency (OEPA) has announced that over two-dozen communities have been awarded a total of $9 million grants for the purpose of addressing aging water infrastructure. The grants are to be used for the replacement and repair of water, wastewater and sewage systems. $7.4 million will be allocated to 13 drinking water and wastewater projects, and $1.6 million will be allocated to 11 counties to assist with the replacement of failing treatment systems in low- and moderate-income households. You can read more about the grants and the recipient communities HERE.
GOVERNOR VETOES LEAGUE-SUPPORTED LEGISLATION PROVIDING LOCAL CONTROL OVER FIREWORK DISPLAYS
Late last Friday afternoon, Governor DeWine vetoed the recently passed Fireworks Bill, SB 113, legislation that permits local governments to restrict the dates and times that individuals may discharge consumer-grade fireworks or to impose a complete ban on the use of consumer-grade fireworks. You can read the bill analysis HERE.
The Governor stated in his veto message that the bill "would be a dramatic change in Ohio law, which would make Ohio one of the least restrictive states in regard to fireworks laws." You can read the full veto message HERE.
It is important to note that the House passed the legislation 66-27 while the Senate approved the proposal with a 24-8 vote, meaning both Chambers passed the bill with “veto-proof” margins, so the possibility that the legislature will act to over-ride the Governor’s veto is great. The legislature has recessed for the summer and are scheduled to return in the fall but would have until the end of the 134th General Assembly to act on an over-ride. We will keep our members apprised of any action the Ohio General Assembly takes regarding this legislation.
U.S. TREASURY RELEASES UPDATED FAQ ON AMERICAN RESCUE PLAN ACT (ARPA) FUNDS
The U.S. Treasury has released an updated FAQ document with additional questions and answers regarding the Coronavirus State and Local Fiscal Recovery Funds. The full updated FAQ document can be found HERE.
Treasury has been updating FAQs periodically to help clarify questions about the Interim Final Rule. League members should note that the public comment period ends this Friday, July 16. If you would like to submit comments for the record, click HERE.
The FAQ update includes clarification on several points that have been raised by stakeholders, including:
· Identifying constituent entities of government for the purpose of calculating revenue loss
· Treatment of utility revenue for the purpose of calculating revenue loss
· Use of funds to support energy or electrification infrastructure that would be used to power new water treatment plans and wastewater systems
· Use of funds for stormwater management projects, such as a culvert replacement
· Use of funds for road repairs directly related to eligible water or sewer projects
· Use of funds to build or upgrade broadband connections to schools and libraries
· Applicability of the Davis-Bacon Act to eligible infrastructure projects
· Pooling of funds for regional projects
· Funding projects with both ARP funds and other sources of funding
· Use of funds to make loans or other extensions of credit
· Use of funds for outreach to increase uptake of federal assistance like the Child Tax Credit or federal programs like SNAP
· [Update to FAQ 10.3] Interest earned on CSFRF/CLFRF funds
The new questions added to the FAQs today are the following:
· Can non-profit or private organizations receive funds? If so, how?
· What entities constitute a government for the purpose of calculating revenue loss?
· The Interim Final Rule’s definition of General Revenue excludes revenue generated by utilities. Can you please clarify the definition of utility revenue?
· May State and Local Fiscal Recovery Funds be used to support energy or electrification infrastructure that would be used to power new water treatment plants and wastewater systems?
· How should states and local governments assess whether a stormwater management project, such as a culvert replacement, is an eligible project for State and Local Fiscal Recovery Funds?
· May recipients use Funds for road repairs and upgrades that occur in connection with an eligible water or sewer project?
· May Funds be used to build or upgrade broadband connections to schools or libraries?
· Are eligible infrastructure projects subject to the Davis-Bacon Act?
· May recipients pool funds for regional projects?
· May recipients fund a project with both ARP funds and other sources of funding (e.g., blending, braiding, or other pairing funding sources), including in conjunction with financing provided through a debt issuance?
· May Coronavirus State and Local Fiscal Recovery Funds be used to make loans or other extensions of credit (“loans”), including loans to small businesses and loans to finance necessary investments in water, sewer, and broadband infrastructure?
· May funds be used for outreach to increase uptake of federal assistance like the Child Tax Credit or federal programs like SNAP?
· [Update to FAQ 10.3] Are recipients required to remit interest earned on CSFRF/CLFRF payments made by Treasury?
NATIONAL LEAGUE OF CITIES (NLC) COMMENTS SUCCESSFUL IN PREVENTING PROPOSED CHANGE TO THE DEFINITION OF METROPOLITAN STATISTICAL AREAS
This week, the federal Office of Management and Budget (OMB) issued an opinion stating that they would not be changing the definition of Metropolitan Statistical Areas (MSAs). Previously, OMB proposed changing the definition of an MSA from 50,000 people to 100,000. According to OMB, this would have resulted in 144 MSAs being dropped.
In response to the OMB proposal, the National League of Cities (NLC) submitted comments, which you can read in full HERE, strongly opposing the proposed changes to the MSA definition. Specifically, the changes would have significantly impacted Community Development Block Grant (CDBG) programs, relying on the current metropolitan statistical area definition to provide federal formula grants to cities with 50,000 or more residents. NLC argued that many cities between 50,000 and 100,000 residents would lose the budget certainty of an annual appropriation of CDBG funds, and the harm of such a loss would disproportionately fall on low-income households and distressed communities that have few other sources of funding for redevelopment and revitalization.
OMB agreed with NLC’s comments and issued the following decision:
“OMB does not accept the initial recommendation to raise the MSA core population threshold in the 2020 standards and has decided to leave the current threshold of 50,000 in place. A change to the fundamental criteria that determine whether an area is considered metropolitan would cause disruption to statistical programs and products and would be difficult for the statistical agencies to implement. OMB decided that there is insufficient justification at this time to raise the threshold to 100,000 and that further research is necessary before deciding whether to change the criteria that determine whether an area is considered metropolitan. Finally, we also note the Standard Review Committee's subsequent modification of their initial recommendation recognizing the value of additional research before modifying the threshold.”
NEW BILLS OF MUNICIPAL INTEREST
· HB 377 – Local Fiscal Recovery. Sponsored by Rep. Hall (R – Middletown) and Rep. Swearingen (R – Huron), would amend Section 220.11 of H.B. 168 of the 134th General Assembly to make an appropriation related to coronavirus local fiscal recovery. The bill would allocate the full $844 million that Ohio received in American Rescue Plan Act (ARPA) funds for non-entitlement units of local government (NEUs), and appropriates an amount equal to the unexpended, unencumbered portion of those funds to the Ohio Office of Budget and Management (OBM) at the end of FY22 for disbursement to NEUs in FY23 and again in FY24.
Please note that the legislature is currently on summer break so no legislative action will be taken on this bill in the immediate future.