OML UPDATE AT-A-GLANCE
 
Here are the top nine things you need to know from this past week:
 
·        The Ohio General Assembly has officially recessed for the summer break after the passage of the budget. The League will be switching to bi-weekly legislative bulletins over the summer, but we will continue to send special Member Alerts regarding the American Rescue Plan Act (ARPA) fund or any other issues impacting municipalities that may arise.
 
·        Governor DeWine has signed Sub. HB 110, the $74.1 billion two-year state operating budget bill. You can find all documentation on the final budget on LSC’s website HERE, which includes an appropriation spreadsheet HERE and the comparison document HERE. The League has issued a statement on the budget, which you can read HERE, and sent a letter to the Governor requesting the veto of the language regarding the income tax withholding provision and the “bag tax” preemption. You can find that letter HERE. Learn more about the municipal impacts and the overall highlights of the legislation in the article below.
 
·        On Wednesday, Governor DeWine signed HB 168, which includes the allocation of the first tranche of $422 million in America Rescue Plan Act (ARPA) funds to non-entitlement units of local government (NEUs), which have a population under 50,000. The bill also allocates $250 million in state ARPA funds to establish a water and sewer quality grant program administered by the Ohio Department of Development. Read more in the article below.
 
·        The Ohio Office of Budget and Management (OBM) will be announcing when they open the portal where NEUs can apply to receive their distribution of American Rescue Plan Act (ARPA) funds, along with guidance regarding the application process. We expect OBM to open the portal either later today or early next week. We will alert our members when that information is available.
 
·        Last week, the National League of Cities (NLC) held a detailed and informative webinar on American Rescue Plan Act (ARPA) guidance and compliance regarding reporting requirements for local governments. You can find the recording of the webinar along with the slides HERE.
 
·        On Wednesday, the U.S. Treasury has released additional guidance regarding American Rescue Plan Act (ARPA) funds to non-entitlement units of local government (NEUs), which are local governments with a population under 50,000. The updated guidance covers Treasury’s interpretation for the 75% budget cap calculation for NEUs, which you can find HERE. Treasury also issued updated FAQs on the NEU distribution process, which you can find HERE. Read more in the article below.

·        This week, Governor DeWine signed HB 201 into law. The bill, sponsored by Rep. Stephens (R – Kitts Hill), preempts a local government’s authority over natural gas use within its jurisdiction. The League opposed this bill through the legislative process as a clear violation of Home Rule authority and sent a letter last week to the Governor requesting that he veto this legislation. You can read the veto request letter in full HERE.
 
·        The Ohio Department of Taxation (ODT) has released a reminder that local governments that operated or contracted with another party to operate traffic enforcement cameras (red light cameras) during the previous fiscal year must file a report with the Department of Taxation on or before July 31, 2021. See R.C. 5747.502(B). The 2021 Traffic Enforcement Camera report is available on the Department’s website HERE. Read more in the article below.
 
·        On June 16, the Hamilton County Court of Common Pleas dismissed the Buckeye Institute’s lawsuit against City of Cincinnati, which challenged the constitutionality of Section 29 of HB 197. The court found that the Ohio General Assembly did have the authority to allow municipalities to withhold income tax at a taxpayer’s principle place of work, even if the taxpayer was working at another local jurisdiction due to the coronavirus pandemic. In April, the Franklin County Court of Common Pleas also dismissed the Buckeye Institute’s lawsuit on the same issue against the City of Columbus. The Buckeye Institute has appealed both rulings and still has cases pending in Cuyahoga and Lucas county courts.
 
 
 
GOVERNOR SIGNS $74.1 BILLION TWO-YEAR STATE OPERATING BUDGET
 
Just before the constitutional deadline, Governor DeWine signed Sub. HB 110, the $75 billion two-year state operating budget bill. Here are the provisions that are of the most importance to our members:
 
Municipal Budget Issues:
As we covered in our Member Alert earlier this week, the provisions in final version of the budget bill listed below will have a substantial impact on Ohio’s cities and villages.
 
 Provisions OML Opposes:
 
·        Retroactive Treatment of Temporary Withholding Policy: Sub. HB 110 allows for the retroactive treatment of Sec. 29 of HB 197, the temporary municipal income tax withholding provision, authorizing taxpayers to request for refunds for tax year 2021. Although this language also includes an extension of the temporary withholding policy until December 30, 2021, which the League supports, it also fundamentally alters the purpose of the emergency authority by allowing taxpayers to file refund requests for tax year 2021 for withholdings lawfully provided. This retroactive change to the intent and application of HB 197 will result in potentially devastating financial consequences to the ability of Ohio’s cities and villages to support first responder services and other critical functions of municipal government.
 
·        “Bag Tax” Preemption: Sub. HB 110 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 budget language will make this Home Rule violation permanent.
 
The League sent a letter to Governor DeWine requesting that he veto these provisions. You can find a copy of that letter HERE.
 
Eliminated Provisions OML Supported:
 
·        Virtual Meetings: The final version of the budget bill did not contain 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 this week on July 1 since the legislature chose not to extend the authority.
 
·        Removal of Force Account Limit Increase: The Conference Committee removed a provision that would have 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 would have helped relieve municipalities of the requirement to engage in the competitive bidding process for those projects, which would have lowered overall cost and enabled projects to be completed more quickly.
 
Provisions OML Supports:
 
We want to thank the Ohio General Assembly for the inclusion of the following provisions that will invest in Ohio’s cities and villages:
 
·        Removal of Municipal Broadband Systems Preemption: The Conference Committee removed the provision that would have effectively banned new municipal broadband projects and severely inhibit the service of existing systems while preventing municipalities from using federal funds for broadband expansion. This provision would have restricted municipalities from providing this essential service, especially in rural areas, and would reduce critical internet services that make educational opportunities and economic development possible. We thank the Conference Committee for removing this harmful preemption from the final version of Sub. HB 110.
 
·        Broadband Expansion Funding: Funding was restored by the Conference Committee for the Ohio Residential Broadband Expansion Grant Program, which would have provided roughly $250 million in grants to expand broadband service, an increase from the $190 allocated in the House version of the bill. This funding is needed to ensure Ohio residents across the state have access to critical internet services.
 
·        Brownfield Funding: The Conference Committee allocated $350 million in FY2022 for the creation of the Brownfield Redevelopment Program through the Ohio Department of Development. The program will reserve $1 million for each of Ohio’s 88 counties for brownfield remediation to be used within one year. The remaining funds will be available as grants from the Brownfield Remediation Fund created by the bill and will be awarded on a first-come, first-served basis and can be used to cover 75% of the project costs.
 
·        Building Demolition and Site Revitalization: The bill also creates the Building Demolition and Site Revitalization Program through an amendment by the Conference Committee. The provision allocates $150 million in FY2022 for the demolition of commercial and residential building and revitalization of surrounding properties on sites that are not brownfields. $500,000 will be reserved for each of Ohio’s 88 counties to be used within one year. As with the Brownfield Redevelopment Program. the remaining funds will also be available on a first-come, first-served basis and can also be used to cover 75% of the project costs.
 
·        Opportunity Zones: This provision changes the existing income tax credit 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. The Conference Committee amended the provision so that it no longer expands  tax credit eligibility to all investors in Ohio opportunity zones but is only eligible to investors subject to the personal income tax. The Conference Committee also removed language allowing a nontaxpayer investor that cannot claim the credit to sell or transfer the credit to a taxpayer.
 
·        Health Districts: The final version of the budget maintains 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 bill 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 will allocate $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.
·        $13 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 was amended by the Conference Committee to allocate $2.5 million each fiscal year, up from $1.5 million, 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 will 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 Ohioans depend upon.
 
·        H2Ohio Funding: The budget includes allocations for the H2Ohio fund which will help municipalities continue to provide safe, clean drinking water to residents and mitigate nutrient runoff within their local communities. The allocations are as follows:
o  $20 million to the Ohio Environmental Protection Agency (EPA) over the biennium.
o  $50 million to the Ohio Department of Natural Resources (ODNR) over the biennium.
o  $83 million to the Ohio Department of Agriculture over the biennium.
 
Additional Municipal Budget Issues
 
While our Member Alert earlier this week covered what we consider the most impactful municipal issues currently included in Sub. HB 110, the state operating budget bill, we also want to make our members aware of several other issues in the budget that are important and would have an impact on municipalities:
 
Provisions OML Supports:
 
·        Removal of Provision on Attorneys’ Costs for Inverse Condemnation Proceedings: The League thanks the Conference Committee for removing a provision that would have required courts in inverse condemnation (a variation of the eminent domain concept where the suit is initiated by the property owner) proceedings to award amounts sufficient to reimburse a property owner for reasonable expenses in the proceeding if the property owner is successful in the proceeding, or reaches a settlement. This would have potentially increased the costs to applicable state agencies or local governments related to eminent domain actions.
 
Vetoed by the Governor:
 
·        Court of Claims Procedure for Open Meetings Law Violations: The Governor vetoed a provision that would have created a procedure within the Court of Claims to hear complaints alleging a violation of the Open Meetings Law, which would Increase in Court of Claims’ operating expenses of approximately $705,000 annually, with an additional $34,000 in one-time costs. There may be potential savings for courts of common pleas and minimal annual gain in filing fee revenues for state and counties. You can find a full summary of the provision HERE.
 
Other Municipal Issues:
 
·        Liens for Unpaid Municipal Garbage Collection: This allows a municipal corporation to place as a lien on property the amount of unpaid garbage/trash collection charges, when the unpaid amount is greater than the annual charge for the services, in addition to the ability to do so when the unpaid amount is at least $250 as under current law. The amendment also specifies the limitations above do not apply to a municipal corporation that collects all garbage/trash charges (not only unpaid amounts) via the tax list.
 
·        TIF and Downtown Development Districts: This modifies the law governing tax increment financing districts (TIF) and downtown redevelopment districts (DRD) to allow subdivisions to use TIF or DRD service payments for off-street parking facilities. The amendment also allows municipalities that create certain types of TIFs the discretion to designate the beginning date of the TIF exemption, rather than the exemption automatically beginning on the effective date of the designating ordinance. (This latter discretion is already allowed to subdivisions creating other types of TIFs and DRDs.)
 
·        Joint Economic Development District (JEDD) Requirements: This will modify the notice and opt-out procedures for certain property that is located within half a mile of the JEDD or receives water or sewer services under certain agreements from a municipality that is not part of the JEDD. It also requires that the JEDD contract include certain information relating to the district's public utility infrastructure, if the proposed JEDD would include any property in which any non-JEDD party would provide water or sewer services.
 
·        Rural Business Growth Program: This provision makes changes to the existing insurance premiums tax credit for investments in rural business growth funds, including an increase in the amount of tax credits by $45 million that may be awarded by the Department of Development and modifying the eligibility criteria and investment criteria for the new credit allocation. The tax credits created in this amendment and associated revenue losses to the General Revenue Fund (GRF), the Local Government Fund (LGF), and the Public Library Fund would first occur in fiscal year 2024.You can find a full summary of the provision HERE.
 
·        State and Local Government Expenditure Database: This requires the Treasurer of State to establish and maintain the Ohio State and Local Government Expenditure Database, which is to include detailed data on expenditures of state government and those of volunteering political subdivisions and state retirement systems. The database would be made freely available to the public. Most of the provisions in the amendment codify existing practice of operating Ohio Checkbook website. You can find a full summary of the provision HERE.
 
·        Tourism Development Districts (TDD): This provision clarifies that a municipality or township may enlarge the territory of an existing Tourism Development District (TDD) after December 31, 2020, the deadline under continuing law for creating a new TDD. This allows for municipal corporations to assess fees on property owners within a TDD if the TDD is being enlarged.
 
·        Municipal Fiscal Officer Continuing Education: This requires an appointed municipal fiscal officer to complete 18 hours of continuing education during the first term of office and 12 hours in each subsequent term, thereby matching the requirements for elected municipal fiscal officers.
 
·        Serving Containers Permitted for Use in DORAs: This will require qualified liquor permit holders in designated outdoor refreshment areas (DORAs) to serve beer or intoxicating liquor in plastic bottles or other “non-glass” containers, rather than only in plastic bottles or other plastic containers.
 
Other Budget Highlights:
 
Here are some of the most notable items that were included in the final version of the state operating budget:
 
·        Cuts all tax brackets by 3% ($1.65 billion) across-the-board state income tax cut.
o  Eliminates all income taxes for people making under $25,000 a year
o  Consolidates the top tax brackets at 3.99%
 
·        Initiates the “Fair School Funding Plan” to add $367 million to K-12 education over two years.
 
·        Increase in EdChoice scholarships or vouchers to $5,500 per year for grades K-8 and $7,500 for high school.
 
·        Creates a state income-tax credit for private school tuition of $500 for individuals making less than $50,000 and $1,000 for individuals making less than $100,000.
 
·        Legalize electronic instant bingo at veterans and fraternal organizations.
 
·        Increases the amount families can earn while receiving childcare assistance to 142% of federal poverty.
 
·        Allows college athletes to benefit from their name, image and likeness (NIL).
 
·        Allows employers to discipline or fire workers who use medical marijuana in violation of workplace policy.
 
·        Prohibits Ohio’s Secretary of State and other elections officials from accepting money from private groups like Facebook.
 
·        Creates Juneteenth as a state holiday.
 
Governor Vetoes
 
Before signing Sub. HB 110, Governor DeWine vetoed fourteen items, which are listed below. You can find the full Veto Message from the Governor explaining the veto of each item HERE.
 
·        Extending Time Controlling Board Agenda
·        Medicaid Rates in Statutes
·        JCARR Review of EMIS Changes
·        Changing Community School Sponsors
·        Court of Claims Procedure for Open Meetings Law Violations (mentioned above)
·        Court Orders Awarding Money to State/General Assembly Intervention in Lawsuits
·        Vacating COVID-19 Violations and Refunding Fines to Businesses
·        College Credit Plus Program - Private Secondary School Participation
·        Changing ADAMHS Board Composition and Appointment
·        Excluding Counties from Drug Reimbursement Program
·        Reducing CAT Administration Fee Earmark
·        Nursing Facility Quality Incentive Payments
·        EdChoice Scholarship Administrative Procedures
·        Medicaid Managed Care Procurement
 
We want to thank all our members who contact their legislative delegation and the DeWine Administration to lobby for the provisions that will invest in municipalities and to oppose language preempting local control and create greater financial burdens for Ohio’s cities and villages. The voices of local leaders have an impact on Ohio’s lawmakers and we appreciate our municipal leaders for engaging with the General Assembly and the Administration on behalf of Ohio’s local communities.
 
 
 
GOVERNOR SIGNS BILL DISTRIBUTING FIRST TRANCHE OF AMERICAN RESCUE PLAN ACT (ARPA) FUNDING TO NON-ENTITLEMENT UNITS OF LOCAL GOVERNMENT (NEU)
 
On Wednesday, Governor DeWine signed legislation that includes the allocation of the first tranche of America Rescue Plan Act (ARPA) funds to non-entitlement units of local government (NEUs). The bill, HB 168, was amended last week by the legislature to include the distribution of $422 million in ARPA funds to NEUs, which have a population under 50,000.
 
The Ohio Office of Budget and Management (OBM) will be providing forthcoming information regarding how NEUs can receive their ARPA allocations. We will alert our members as soon as that information becomes available.
 
HB 168 was sponsored by Rep. Frazier (R – Newark) and Rep. Loychik (R – Cortland) and was originally drafted to provide aid to coronavirus-impacted small businesses, childcare providers, local fairs and Ohio Veterans’ Homes. Last week, the Senate eliminated those provisions and replaced it with the allocation of the ARPA funds to NEUs and with language to return over $1.5 billion in American Rescue Plan Act (ARPA) funds to the Federal government to cover revenues borrowed by Ohio for unemployment compensation payments following the coronavirus pandemic.
 
The bill was also amended to allocate $250 million in state ARPA funds to establish a water and sewer quality grant program administered by the Ohio Department of Development, which the League supports. The bill also invests $84 million in a pediatric behavioral health initiative administered by the Ohio Department of Mental Health and Addiction Services.
 
As we covered in our legislative bulletin last week, HB 168 includes the determination that townships qualify as an NEU and are now eligible to receive funding through the ARPA program where previously only cities and villages met the federal standards to be eligible. This has resulted in a reduction in the amount of federal aid previously dedicated to Ohio’s smaller municipalities.
 
Last week, we provided our members with the new projections generated by the Ohio Office of Budget and Management (OBM) for the ARPA allocations NEUs. You can find the new allocation projections for Ohio NEUs HERE .
 
The League continues to strongly urge that if the legislature includes townships in the NEU distribution of ARPA funds to the detriment of the allocations for cities and villages, then the state must make our smaller municipalities financially “whole” by providing supplemental funding to those municipalities that will experience a reduction in their originally projected ARPA allocation.
 
We will continue to keep our members apprised on any updates regarding APRA funds.
 
 
 
TREASURY ISSUES UPDATED AMERICAN RESCUE PLAN (ARPA) GUIDANCE FOR NON-ENTITLEMENT UNITS OF LOCAL GOVERNMENT (NEU)
 
The U.S. Treasury has released additional guidance regarding American Rescue Plan Act (ARPA) funds to non-entitlement units of local government (NEUs), which are local governments with a population under 50,000.
 
The updated guidance covers Treasury’s interpretation for the 75% budget cap calculation for NEUs, which you can find HERE. Treasury also issued updated FAQs on the NEU distribution process, which you can find HERE. Read more in the summaries from Treasury below:
 
Update on Interpretation for the 75 Percent Budget Cap Calculation:
 
Since the release of the Interim Final Rule and the NEU Guidance, Treasury has received a diverse set of input from state and local governments on Treasury’s interpretation of the NEU’s budget for the purposes of the 75% budget cap calculation.
 
Based on this feedback and to facilitate states’ distribution to NEUs, Treasury is updating its guidance to define an NEU’s “most recent budget” as an NEU’s total annual budget, including both operating and capital expenditure budgets, in effect as of January 27, 2020. In issuing this update, Treasury is also providing states with flexibility to provide further guidance to their NEUs consistent with Treasury’s updated framework and the state’s applicable established practices.
 
States should calculate the budget cap and issue payments under the revised definition, including providing an option for NEUs that have already submitted budget information to submit new budget information reflecting the revised definition, and if applicable, receive an additional “top-up” payment. Since Treasury understands that some states have taken significant steps to implement the budget cap by the time of this revision, Treasury allows states to choose to issue top-up payments at a later date, including as part of the subsequent distribution or the Second Tranche distributions.
 
Please consult the full guidance for further details.
 
New Set of Operational FAQs on NEU Distribution Process
 
Treasury is releasing answers to a number of new operational FAQs on the NEU distribution process. These FAQs are high-priority questions that have been asked by many state and local governments. They include:
 
·        When does the states’ statutory 30-day period begin for purposes of distribution of funds to NEUs? How do states request an extension?
 
·        The guidance outlines a process where states may issue a subsequent distribution of funds. Which NEUs should receive a subsequent distribution?
 
·        Some NEUs have declined their funding without requesting a transfer to the state under Section 603(c)(4). Can the state still retain these funds for its own use?
 
·        If an NEU is non-responsive for its First Tranche payment, is it eligible for a Second Tranche payment?
 
·        For weak-MCD states, does the facts-and-circumstances test apply to entities’ existing capacity or their potential capacity to undertake specific activities in the future?
 
·        What is the assistance listing number for the Coronavirus State and Local Fiscal Recovery Funds?
 
·        Who needs to sign the Award Terms and Conditions for NEUs?
 
·        By when do NEUs have to register with SAM?
 
Please refer to the full FAQ for complete information.
 
All additional information on ARPA funds for non-entitlement units of local government can be found on the U.S. Treasury website HERE. We will continue to keep our members up to date on all ARPA guidance as it is released.
 

 
NATIONAL LEAGUE OF CITIES (NLC) SUBMITS RECOMMENDATIONS ON AMERICAN RESCUE PLAN ACT (ARPA) GUIDANCE

The National League of Cities (NLC) has submitted comments on the U.S. Treasury Interim Final Rule to implement the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund established under the American Rescue Plan Act. Anyone, including localities and community stakeholders, may submit their own comments on the rule through the Regulations.gov website. The deadline for submitting comments is July 16. 
 
NLC’s comments offer more than 30 specific recommendations for Treasury action related to the Final Rule over municipal grants from the American Rescue Plan Act. NLC’s comments generally fall under three types of requests:  
 
·        Additional flexibilities to help address hardships that are greater or more costly than a municipality’s CLFRF grant can meet;
·        Improved direction and clarity for local governments operating in good faith at reduced capacities; and
·        Reconsideration of certain rules that appear to be out of step with Congressional intent, or where unanticipated circumstances warrant reexamination.
 
The list below provides a summary of NLC’s recommendations relating to issues and concerns most frequently raised during NLC ARPA webinars and other engagements with local elected officials preparing to obligate their ARPA grant dollars. NLC’s full comments can be viewed at www.nlc.org; and will be available to the public on the Regulations.gov website following their approval for publication.
 
NLC’s recommendations by expenditure category are:
 
Public Health and Economic Impacts:
·        The Final Rule should unambiguously state that eligible expenditures under the Community Development Block Grant program and the Brownfields Utilization, Investment and Local Development (BUILD) Act are also eligible expenditures under the public health and economic impact category.
 
·        The Final Rule should incorporate plain language that communicates a transfer of grant funds between different local units of government is permitted whenever a grantee determines such transfers will result in eligible expenditures that benefit (but not necessarily exclusively benefit) the residents within the grantees jurisdiction.
 
·        The Final Rule should clarify that those activities addressing behavioral health and well-being include both acute and chronic care, and a variety of services including support groups that do not often directly accept insurance payments.
 
·        The Final Rule should create a safe harbor for residents that stand to lose benefits as a result of aid provided by CLFRF grants, which are one-time emergency funds, as the IRS has done for recipients of Child Tax Credit payments.
 
·        Where early learning is mentioned, the Final Rule should clarify early learning begins at birth rather than PreK. Infants and toddler care is more expensive than PreK and is harder to find.
 
·        The Final Rule should provide additional direction to local governments for property acquisition.
 
·        The Final Rule should provide additional direction and clarity related to affordable housing development.
 
·        The Final Rule should permit local governments to use a portion of CLFRF grants to establish local equity funds.
 
·        The Final Rule should clarify whether APRA funds can be used to cover relevant costs that were incurred by a City after January 27, 2020 but before March 3, 2021.
 
Budget Calculations and Revenue Loss
·        The Final Rule should permit municipal governments to calculate losses based on the locality’s fiscal year or the calendar year.
 
·        The Final Rule should permit municipal governments to include revenue and losses from municipally-owned utilities when calculating lost revenue. 
 
·        The Final Rule should provide greater clarity on reporting for expenditures under the revenue loss category. In our view, once revenue losses are calculated, the “expenditure” in question is an expenditure to replace lost revenue as permitted by the Act. 
 
·        The Final Rule should permit flexibility with regard to revenue streams enacted after the base year or in direct response to the coronavirus emergency. Treasury should clarify that cities that enacted new taxes during either the base year of subsequent years be allowed to use alternative methods of determining revenue shortfalls that excludes this revenue. 
 
·        The Final Rule should reconsider the prohibition on depositing CLFRF grant funds into reserve accounts. Local governments that drew on their reserves for unbudgeted expenditures, or to cover revenue losses, directly related to the coronavirus emergency should be permitted to restore the reserves used for that purpose.
 
·        The Final Rule should permit flexibility with regard to expenses related to debt. If a local government borrowed funds to respond to the coronavirus emergency, or to cover losses related to the coronavirus emergency in order to balance their budget as required by law, CLFRF grant funds should be permitted to pay down the principal and interest on that debt.
 
·        The Final Rule should demonstrate complete allocation of dollars appropriated for the Coronavirus Local Fiscal Recovery Fund. NLC urges Treasury to reallocate any grant funds returned as a result of the 75% cap limitation on NEU’s to municipalities on a basis that adheres to original allocation principles.
 
Premium Pay
·        The Final Rule should use the Bureau of Labor Statistics Standard Occupational Classification (SOC) program to designate broader sectors as eligible for premium pay.
 
·        The Final Rule should provide direction on how local governments should calculate premium pay for irregular categories of employment such as volunteer firefighters and public safety staff who may be compensated differently than hourly wage staff.  
 
·        The Final Rule should provide clear direction on how local governments track and report premium pay allocations to non-government employment sectors eligible for premium pay grants, and if employers should withhold federal, state and local taxes from the premium pay. 
 
Investments in Infrastructure: Water and Sewer Recommendations
·        The Final Rule should expressly state that the local government is responsible for determining project eligibility for drinking water, wastewater and stormwater projects under the eligible project categories of the Clean Water and Drinking Water State Revolving Fund (SRF) programs.
 
·        The Final Rule should expressly state that determining project eligibility should be based on the Federal project categories and definitions for the SRF programs, and not based on each State’s eligibility or definitions.
 
·        The Final Rule should explicitly state that projects to be funded with Fiscal Recovery Funds do not need to apply for funding from the applicable State Clean Water or Drinking Water SRF program and that Fiscal Recovery Funds will be provided for eligible projects as grants not loans.
 
·        The Final Rule should allow Fiscal Recovery Funds to be used for projects eligible under the Secure Water Act.
 
·        The Final Rule should expressly cite consumer incentive programs designed to implement water use efficiency, conservation, green infrastructure, reuse and other distributed Clean Water and Drinking Water SRF eligible projects as authorized uses of Fiscal Recovery Funds.
 
·        The Final Rule should expressly state which other federal programs would be triggered by the use of CLFRF grant funds for infrastructure projects, such as National Environmental Policy Act (“NEPA”), and Davis-Bacon prevailing wage requirements.
 
Investments in Infrastructure: Broadband Infrastructure Recommendations
·        The Final Rule should increase the speed threshold for “underserved” to encompass all areas without 100/100 Mbps service to align with modern broadband usage needs and patterns and ensure a “donut hole” of locations with marginal service is not inadvertently created.
 
·        The Final Rule should specify that eligible investments are those that prioritize or focus on providing services at adequate speeds to unserved and underserved households and businesses, to ensure that communities are clearly able to choose the projects and network designs that make sense locally, rather than being forced to find ways to serve individual locations scattered around a jurisdiction in isolation.
 
·        Treasury should clarify that certain outdated technologies, such as copper, by definition do not meet the threshold for reliable wireline broadband service and that areas served by these outdated technologies can be presumed to be unserved or underserved.
 
·        Treasury should clarify that local governments have flexibility to determine if a location is “reliably” served, including whether service is affordable for residents, whether network performance meets current needs, including resident and business experiences of network speeds or latency during key use times (such as the school/work day), whether end users report reliable service, and using data sources local governments choose, including local maps, resident surveys, and other methods.
 
·        Treasury should clarify that eligible projects are not required to solely provide service to unserved and underserved locations and may also provide service to areas with existing wireline 25/3 Mbps service to meet project feasibility requirements, provided that they prioritize addressing the needs of residents disproportionately impacted by the COVID-19 pandemic.
 
·        Treasury should clarify that if a jurisdiction lacks unserved or underserved areas, that jurisdiction may still use funds in the broadband eligible use category.
 
 
 
OHIO DEPARTMENT OF TAXATION ISSUES TRAFFIC ENFORCEMENT REPORT REMINDER
 
The Ohio Department of Taxation (ODT) has released the following reminder to Ohio’s local governments:
 
As a reminder, any local authority (i.e. a municipal corporation, county, or township) that operated or contracted with another party to operate traffic enforcement cameras during the previous fiscal year must file a report with the Department of Taxation on or before July 31, 2021. See R.C. 5747.502(B). The 2021 Traffic Enforcement Camera report is available on the Department’s website HERE.
 
Please email questions the Ohio Department of Taxation, Fiscal Services Division at revenueaccounting@tax.state.oh.us.
 
 
 
OHIO STATE AUDITOR ISSUES ADVISORY MEMO TO METRO CITIES ON AMERICAN RESCUE PLAN ACT (ARPA) SUBMISSION REQUIREMENTS AND FRAUD PROTECTION INSURANCE
 
The following is an advisory memo from the Ohio Auditor of State regarding American Rescue Plan Act (APRA) ID.me submission requirements and fraud protection insurance:
 
In response to the pandemic, Congress has passed several pieces of legislation providing significant COVID-19 Federal funding among various new and pre-existing programs to states and local governments. The American Rescue Plan provides $350 billion in emergency funding for eligible state, local, territorial, and Tribal governments to respond to the COVID-19 emergency and bring back jobs through Coronavirus State and Local Fiscal Recovery Funds.
 
The United States Department of Treasury has developed an online portal for primary (direct) recipients, like yourselves, to apply for these grant funds. The portal requires primary recipients to complete a series of identity verifications through ID.me.
 
Treasury’s portal is available at Coronavirus State and Local Fiscal Recovery Funds | U.S. Department of the Treasury, which lists the following submission requirements.
 
Submission Requirements:
 
To complete a submission on behalf of your jurisdiction, you will be asked to provide the following information:
 
1. Jurisdiction name, taxpayer ID number, DUNS Number, and address
2. Authorized representative name, title, and email
3. Contact person name, title, phone, and email
4. Funds transfer information, including recipient’s financial institution, address, phone, and routing number and account number
5. Completed certification document (to be signed by the authorized representative)
 
Jurisdictions must submit a request to receive funding even if they have previously applied for other programs through the Treasury Submission Portal. Eligible jurisdictions will receive further communications regarding the status of their submission via the email address provided in the Treasury Submission Portal.
 
As part of the submission, your authorized representative will need to create an ID.me account and provide personal identifying information. They will also need a smart phone with camera to complete the setup of the account. Below is a list of the verifications and examples of required documentation.
 
Items you will need for ID.me account establishment:
 
·        Smart Phone with Camera
·        Laptop or Computer (optional)
·        Email Address
·        Social Security Number
·        Photo ID (Driver’s License, Passport, Passport Card or State ID)
·        Secondary Identification Documents – 2 needed (Utility Bill, W2 form, Birth Certificate)
·        Getting Started:
 
Visit https://portal.treasury.gov/cares/s/slt, click on ‘create an ID.me account’, and follow the instructions.
 
Detailed Step by Step Instructions can be located at https://learn.id.me/rs/801-JLS- 289/images/IDme_IAL2Liveness_Guide_Treasury.pdf.
 
Should a Secondary Identification be required you may be asked to verify your identity on a video call and provide 2 secondary forms of identification.
 
When you’ve finished the verification process, you will get a confirmation email that allows you to log in to the State, Local, and Tribal Portal with your new ID.me account.
 
Risk of Identity Theft:
 
The Portal states that throughout this process, information will remain completely secure. However, officials have understandably expressed concerns over having to submit personal identifying information to apply for public grant funds.
 
Therefore, the Auditor of State will not take exception to entities who purchase 1 year of fraud protection for the length of the program for individuals submitting their personal information for application of these funds assuming the level of coverage is reasonable.
 
The payment for this coverage must be paid for using local unrestricted funds. We are currently discussing with federal counterparts if this expenditure meets the criteria for an allowable cost under the American Rescue Program Funds. Further information will be forthcoming as this issue is determined.
 
Please direct any questions to the Center for Audit Excellence at FACCR@ohioauditor.gov. Read the original memo HERE.
 
 
 
NEW BILLS WITH MUNICIPAL IMPACT
 
·        HB 364 – Waterworks Infrastructure Impact. Sponsored by Rep. Tom Patton (R – Strongsville), would make changes to the application process for the waterworks infrastructure improvement surcharge.
 
·        HB 365 – Water Quality. Sponsored by Rep. Lightbody (D – Plain Twp.) and Rep. Russo (D – Upper Arlington), would require the Director of Environmental Protection to adopt rules establishing maximum allowable contaminant levels in drinking water and water quality standards for certain contaminants.
 
·        HB 367 – Law Enforcement. Sponsored by Rep. Jarrells (D – Columbus), is regarding the use of body-worn cameras and dashboard cameras by peace officers, the use of excessive force by peace officers, and the public release of body-worn camera or dashboard camera recordings when there is an allegation of peace officer misconduct.