This week, Congress passed and President Biden signed into law H.R. 1315, the $1.9 trillion American Rescue Plan allocating COVID-19 pandemic relief. The final package allocates $130 billion for local governments. Specifically, the legislation allocates $65.1 billion in relief aid for cities, towns and villages across the country while Ohio municipalities have been allocated $5.4 billion in aid while the state of Ohio will receive $5.7 billion.
As we reach the one-year mark since the beginning of the pandemic, 12% of all adults in Ohio report not having enough to eat, including 17% of all adults living with children. 24% of Ohio renters are not caught up on rent, and 32% are having difficulty covering normal household expenses. In response, the American Rescue Plan includes economic impact payments of up to $1,400 per person for over 8 million people and a Child Tax Credit of up to $3,000 per child from ages 6 to 17 and $3,600 per child under the age of 6 for the families earning up to $75,000 each year or couples earning $150,000 each year. It also includes a monthly increase to approximately $27 per person in nutrition assistance for 1.4 million people.
We want to thank all our members who contact their Congressional delegation and advocated for greater and more flexible funding for local governments. We also want to thank the National League of Cities (NLC) for their advocacy efforts in getting this legislation passed. Ohio’s municipalities will be able to use these funds to prevent layoffs and furloughs, to continue the delivery of quality and critical local services, and to bolster their local economy into recovery. These measures will play a key role in ensuring cities and villages remain strong and vital economic centers for businesses and residents alike.
For information on allocation estimations and other provision in H.R. 1315 pertaining to local governments, you can find those resources from the NLC HERE.
The information below provides the latest details provided by NLC on the mechanics of the American Rescue Plan Act (H.R. 1315) including information related to the funding distribution model, estimations on funds communities will be eligible to receive, guidelines on qualified expenditures, and non-municipal provisions included the bill.
Much of the detail regarding disbursement and guidance on how local governments can spend the funding will be determined by the U.S. Department of Treasury. Pending Treasury guidance, here is how the bill outlines the way funds will be distributed to local governments:
· Entitlement cities (with a population above 50,000) should receive 50% of the allocation within 60 days of bill passage, and the other 50% 12 months later.
· Entitlement cities will receive funds directly through a formula based on how Community Development Block Grants (CDBG) are allocated. For information on the CDBG allocation formula, click HERE.
· For non-entitlement cities (with populations under 50,000), funds will pass through the state and states have 30 days to get the first tranche of funds (50%) to non-entitlement cities. States can apply for an extension under certain circumstances. The final 50% will be available 12 months later, and all funds must be spent by December 31, 2024.
o The U.S. Department of Treasury is in the process of developing detailed guidelines for uses of funds and the mechanism for how funds will get to non-entitlement cities. The League will share those with our members as soon as possible after these are released.
You can find a spreadsheet estimating allocations by local government HERE. This is not the final spreadsheet, but these are the latest projects we have been provided. We will send the official spreadsheet with the verified amounts to our members as soon as that document is made available.
For cities that have less than 50,000 residents, the estimates provided by Congress can be misleading, as there is a cap on the size of grants small cities may receive. No city with less than 50,000 residents may spend an amount of direct federal aid greater than an amount that is equal to 75% of their pre-pandemic budget, regardless of what the estimates indicate. This is not accounted for in the estimates because data on small city budgets is not systematically collected by any federal entity, so small cities and towns will need to certify themselves what that cap amounts to for the municipality.
For more details on allocations, click HERE. Information on how municipalities will have to register to receive the funds is forthcoming from the U.S. Department of Treasury.
Pending guidance from the Treasury, the bill text outlines the use of the funds accordingly:
· All funds must be spent by December 31, 2024.
· States may not impose additional restrictions or guidelines on the use of these federal funds for any jurisdiction.
· The bill provides four eligible areas for expense:
1. Respond to the public health emergency with respect to the COVID-19 or its negative economic impacts, including assistance to households, small businesses, and non-profits, or aid to impacted industries such as tourism, travel, and hospitality;
2. Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the county that are performing such essential work, or by providing grants to eligible employers that have eligible workers that perform essential work;
3. For the provisions of government services to the extent of the reduction in revenue (i.e. online, property or income tax) due to the public health emergency relative to revenues collected in the most recent full fiscal year of the county prior to the emergency (i.e. January 20, 2020);
4. Make necessary investments in water, sewer, or broadband infrastructure.
The bill also clarifies that the funds cannot be used for directly or indirectly offsetting a tax cut or for pension funds.
· Recipient governments must provide periodic reports to the Treasury Department with a detailed accounting of the use of funds. States and territories must also provide any modifications to tax revenue sources.
· Funds can be recouped by the Treasury Department if the recipient does not comply with the eligible uses.
Non-municipal Provisions in the American Rescue Plan:
In addition to COVID-19 relief for local governments, the bill also provides funding for:
· Agriculture and nutrition programs, including extending SNAP and the Pandemic Electronic Benefit Transfer (EBT) program;
· Schools and institutions of higher education to safely reopen schools, address learning loss, and support students and staff, including support for broadband for students;
· Childcare to help sustain childcare providers and expand childcare assistance to 857,000 children;
· COVID-19 vaccinations, testing, treatment, and prevention, especially for hard-to-reach communities and areas;
· Mental health and substance-use disorder services;
· Emergency rental assistance, homeowner assistance, and other housing programs to help families pay rent, mortgages, and utilities;
· Transit agencies to prevent layoffs of transit workers and prevent severe cuts to transit services;
· Multiemployer pension plans;
· Small business assistance, including specific programs for restaurants and live venues;
· Support for health care workers, transportation workers, federal employees, veterans, and other targeted populations;
· International and humanitarian responses and;
· Tribal government services.
The bill also includes the following provisions to:
· Extend enhanced unemployment benefits through September, providing an additional $300 per week on top of all state unemployment benefits;
· Provide direct economic impact payments of $1,400 per eligible individual and $2,800 for couples making up to $150,000 per year. Eligible families will also receive an additional $1,400 payment per child and adult dependent, amounting to $5,600 for an average family of four;
· Expand the Child Tax Credit and the Earned Income Tax Credit;
· Provide premium assistance for certain health insurance coverage; and
· Require coverage, without cost-sharing, of COVID-19 vaccines and treatment under Medicaid and the Children's Health Insurance Program (CHIP).
As more information becomes available to the League on this important federal assistance, we will provide it to our members, as soon as possible.