OML UPDATE AT-A-GLANCE
- The League has issued a memo to Governor DeWine, along with House and Senate leadership, detailing our policy requests for economic recovery in the wake of the COVID-19 pandemic. The policy recommendations in the memo cover the need for municipal funding to sustain public services, investment in infrastructure and the need for expanded furlough authority as well as concerns regarding federal financial relief and the Local Government Fund (LGF). You can find the memo HERE.
- In the first Congressional coronavirus relief package, $8.6 million was allocated to the Ohio Department of Health (ODH) from the U.S. Centers for Disease Control and Prevention (CDC). Of those funds, the Controlling Board has approved $4.8 million for local health departments. You can find more Controlling Board actions in the article below.
- The Governor has announced $16 million in grants from the CARES Act for local law enforcement, as well as probation and parole officers, local courts, victim services providers and corrections agencies. The funds can be used for items including overtime costs, technology for virtual court hearings and personal protective equipment (PPE). Agencies may apply for up to 12 months of funding with no local match required. We encourage members that are interested in this grant opportunity to act quickly, as funding is limited and will be exhausted quickly. To learn more and to apply, go to ocjs.ohio.gov.
GOVERNOR DEWINE ANNOUNCES RESPONSIBLE RESTARTOHIO INITIATIVE
- As of Wednesday afternoon, Ohio is reporting 17,303 cases of COVID-19, 937 deaths, 3,421 hospitalizations and 1,104 ICU admissions.
- Governor DeWine announced the Responsible RestartOhio plan which aims to protect the health of employees and customers while supporting community efforts to control the spread of COVID-19, and responsibly getting back to work. Phase One of this plan is outlined by the following dates:
- May 1, 2020: Medically necessary procedures that do not require an overnight stay in a healthcare facility, or do not require inpatient hospital admission and minimizes use of personal protective equipment, may move forward. This includes regular doctor visits, well-care checks, well-baby visits, out-patient surgeries, imaging procedures, and diagnostic tests. Dental services and veterinary services may also proceed if a safe environment can be established.
- May 4, 2020: Manufacturing, distribution, and construction businesses may reopen if these businesses can meet mandatory safety requirements for customers and employees. Additionally, general office environments may reopen if they can also meet mandatory safety requirements.
- May 12, 2020: Consumer retail and services may reopen if these establishments can meet mandatory safety requirements for customers and employees.
- All businesses must follow general safe business practices as they reopen. Those include requiring face coverings for all employees, and recommending them for clients and customers at all times; conducting daily health assessments or self-evaluations of employees; maintaining good hygiene and social distancing; cleaning and sanitizing workplaces; and limiting capacity to meet social distancing guidelines.
- The Governor clarified yesterday that as Ohio's economy begins to reopen, masks will not be mandatory. Wearing face coverings in public is still, however, strongly recommended. Gov. DeWine stated that individual business owners could still choose to develop a business policy requiring face coverings for customers to enter their facilities. Face coverings would still be mandated for employees unless wearing a face covering is not advisable by a healthcare professional, goes against industry best practices, or is not permitted by federal or state laws and regulations.
- Schools and daycares, dine-in restaurants, beauty businesses, older adult daycare and senior centers, adult day support or vocational rehabilitation services in group settings, entertainment, recreation, and gyms are all ordered to remain closed due to their increased risk of COVID-19 exposure.
- Ohio's Stay at Home order will remain in effect to encourage Ohioans to continue making reasonable, rational decisions about leaving home. Large gatherings of more than 10 people are still prohibited.
- Two separate advisory groups have been formed to develop best practices for reopening dine-in restaurants, barbershops, and salons. The goals of these group is to develop recommendations for these businesses that balance the need to protect the health of employees and customers as they reopen to the public.
- More detailed information on the Responsible RestartOhio plan can be found at www.coronavirus.ohio.gov/ResponsibleRestartOhio.
CONTROLLING BOARD ACTIONS IN RESPONSE TO COVID-19 PANDEMIC
Over the last several weeks, the Ohio Controlling Board has approved funding for state agencies and local governments as they continue the battle against the ongoing COVID-19 pandemic.
The funding is allocated from the Coronavirus Relief Fund, which was created by the federal CARES Act to allocate revenues to states and local governments. The following funding requests from state agencies for Coronavirus Relief Fund revenues have been approved:
- $50 million, followed by an additional $52.45 million, for the Department of Public Safety for personal protective equipment for distribution to county emergency management agencies, hospitals and other medical facilities.
- $39 million for the Department of Health for testing materials, medications for COVID-19 treatment and laboratory supplies and staffing, followed by an additional $11.9 million for public antibody testing, laboratory overtime, staffing, supplies and ventilator maintenance.
- $8.8 million, followed by an additional $2.25 million, for the Adjutant General's Department for establishing temporary medical facilities and paying allowance for members on active duty.
- $76.1 million, followed by an additional $11.7 million, for the Department of Administrative Services for the purchase of ventilators and personal protective equipment (PPE).
- $65 million for the Ohio Department of Job and Family Services to support the new temporary pandemic child care centers serving about 22,000 children of essential workers.
- $35 million for the Office of Budget and Management (OBM) to reimburse eligible COVID-19 response expenses incurred by state agencies that aren't receiving standalone appropriations.
A total of $287.5 million has been allocated in response to the coronavirus pandemic over the month of April.
OHIO AUDITOR ISSUES COVID-19 ECONOMIC AND BUDGETARY IMPACTS MEMO
The following is a memo from Ohio Auditor of State Keith Faber:
"On March 9, 2020 Governor DeWine issued Executive Order 2020-01D which declared a state of emergency in Ohio due to the COVID-19 worldwide pandemic. Subsequently, the Governor has issued stay-at-home orders for the State of Ohio through May 1, 2020. Due to these orders, business-as-usual has been disrupted. Both the private and public sectors are having to manage a disruption to the provision of services, including essential services, which may be impacted by changes in revenues. During these times, the Auditor of State recognizes that local governments are faced with unique challenges.
This memo is meant to provide awareness to a variety of issues that your entity may encounter in the months ahead. It is not meant to be a roadmap for navigating each unique case; the way forward for each entity must be driven by local officials with help from their legal counsel. Opportunities do exist for assistance however, the Ohio Revised Code establishes the Auditor of State's (AOS) role in providing assistance to entities in a state of fiscal caution, watch, or emergency through our Local Government Services. Additionally, Local Government Services and the Ohio Performance Team are available to provide consulting services and performance audits to work through financial or operational challenges that political subdivisions may face.
The COVID-19 pandemic is leading to significant international and national economic dislocation. As a result of sweeping stay-at-home orders across the country, the United States has seen severe economic disruption in March and April. Some level of disruption is likely to continue for the foreseeable future. Most economists believe there will be a significant economic contraction in the second quarter of 2020, following likely negative growth in the first quarter. Two consecutive quarters of negative economic growth is generally indicative of a recession. What we don't know at this point is how long or how deep a recession would be. But, even without knowing that, we know there will be dramatic impacts on state and local revenue sources. A recession would put untold pressure on state and local budgets and dramatically impact public finances.
State Revenue Impacts:
The economic disruption is already beginning to have an impact on state revenues. For example, we began to see a slowdown of sales tax in March, but the full impact will not hit until April and beyond, as a result of so much commercial activity shutting down or reducing operations in compliance with stay-at-home orders. With commercial activity slowing, companies will lay people off, which we have already seen. Over the past five weeks, 964,566 people made new claims for unemployment which is almost a quarter-million more than the 715,512 people who initiated claims in years 2018 and 2019 combined. As people lose their jobs, personal income tax withheld from employee paychecks is going to drop, decreasing a major state revenue source. Additionally, the April 15th due date for federal, state, and local tax filings (annual and quarterly-estimated payments) has been extended to July 15th which delays the receipt of those tax revenues.
For the state and any other entity with a June 30 fiscal-year-end, the delayed date will move receipt of these revenues into the next fiscal year. Beyond the state sales and personal income tax, there are other state general purpose taxes that will likely be impacted by the economic slowdown, including the commercial activity tax and kilowatt hour tax. Reduced state general purpose taxes deposited in the general revenue fund will result in a reduction of the money distributed through the local government fund and the public library fund, impacting local revenues when paid in the month following state collection. It is also expected that gas tax collections will be depressed during the stay-at-home order which would then affect distributions of gas taxes to local governments. On the state expenditure side, the Governor has already announced a series of budgetary controls including an expectation for budget reductions in state appropriations for both FY 2020 and FY 2021. Local governments and schools should expect that state assistance provided through a number of programs will be impacted by these budget reductions.
Local Revenue Impacts:
Based on the economic impacts discussed and information on state revenues, the following are some various sources of revenues that local entities need to also consider during this challenging time. Permissive sales tax, like the state sales tax, is likely to be impacted. It is important to remember that receipt of these revenues at a local level has a three-month lag time so the full impact may not be recognized immediately.
The municipal income tax, received monthly, and the tax on net profit from businesses, received annually, will both be affected by the above mentioned economic impacts. Both the delay in Tax Day and the change to working from home may have significant implications for local governments, particularly those who have a heavy reliance on non-residents for income tax purposes. School district income taxes, which are collected by the state and distributed quarterly, will see significant timing-related reductions associated with annual payment delays in the second quarter payments received in July. Annual payment collections will be received by the state in July and distributed in the October payment. School district income taxes will also likely see reductions in withholding collections as mentioned above.
Casino revenue distributions to schools and local governments will be less than expected. With casinos closed since March 14th, the semi-annual school payments received in August and the county and city payments received in July will all be reduced. Lottery profits will also be impacted by the closure of racinos, with stay-at-home orders and business closures potentially further reducing lottery profits used to support school funding.
Lodging and admissions taxes will both likely see impacts from economic slowdown. Utility collections may experience significantly increased rates of delinquencies which may have an impact on operations as well as the ability to make debt payments. Real property tax collections in 2020 are based on 2019 valuations and rates. Because of this, no immediate impact on property tax is expected other than any potential delays in the timing of payments that may be sought by counties through the Tax Commissioner and any potential increase in delinquencies. Some of this impact may be offset by advances where possible. Local governments need to consider that the current economic climate and uncertainty may have an impact on the ability to pass levies and this needs to be taken into account as they plan.
Local Expenditure Impacts:
In addition to keeping track of revenue changes, it is vital that entities carefully monitor how expenditures may be impacted. For most local governments the largest item of expense is salaries and benefits. During these times, entities need to account for overtime or hazard pay, collective bargaining agreement requirements, and other potential salary-related impacts. If personnel changes are considered, the impacts of unemployment and severance costs must be examined. Jurisdictions should know federal eligibility for stimulus dollars from the CARES Act before decisions are made. There may be additional costs of supplies, information technology, telecommunications, etc. related to work-at-home arrangements. However, there may also be savings related to reduced or no travel, fuel, utilities, training, etc. due to the closure of offices or the rescheduling of events. Local governments who have outstanding debt or are looking to issue new debt need to look at economic impacts of their ability to do so, as well as work with
lenders related to any cash flow payment issues. With each entity having its own expenditure changes, it is important to track separately and review expenditures that have increased due to the COVID-19 emergency in order to properly plan and budget moving forward. Entities need to be aware of and properly track opportunities to access state and federal emergency funds. The use of these funds will be audited and need to strictly comply with the rules of each program.
We have been receiving questions regarding the use of local government carry forward funds and restricted purpose accounts. General Revenue Funds may generally be used for other purposes while special use or restricted accounts cannot. You should track your fund use carefully and use funds for their collected purposes. If this is an issue for you, please seek legal guidance. Our Local Government Services and Ohio Performance Team are ready and willing to help.
I hope this memo gives a deeper understanding of the many national, state, and local issues affecting revenues and expenditures for entities during and after the COVID-19 emergency. There are clearly going to be budgetary concerns in the short-term, but political subdivisions also need to consider the longer-term budgetary and operational issues they may face. My office stands ready to be a resource to help with the challenges that undoubtedly lie ahead and
encourage you to visit the AOS website to review the COVID-19 FAQ document that is continuously being updated as additional information becomes available. Local Government Services and the Ohio Performance Team can serve as resources as you navigate this uncertainty. Stay safe and healthy."
- SOCIAL MEDIA - EXPOSURE FOR PRIVATE ACCOUNTS
- Wednesday, May 13, 2020 - 11:00 a.m. - 12:00 p.m.
- Program Overview:
Elected officials and others widely use private social media to express
positions or opinions on issues related to their elected positions - think
tweets and Facebook - to express opinions and invite responses. In a number of recent instances, posted responses were removed resulting in lawsuits. Freedom of speech does not change on an electronic platform. This session will review the Court standards applied to the social media sites of public officials and entities and the exposure when deleting posts. The session will also address the standards for employee conduct on social media. The session will be interactive with questions welcomed.
- Presenter: Jonathan Downes, Zashin & Rich
- AN EMPLOYMENT LAW UPDATE - FROM DISCRIMINATION, TO COVID-19, TO THE FIRST AMENDMENT
- Thursday, May 21, 2020 - 11:00 a.m. - 12:00 p.m.
- Program Overview:
This is a must-see session for employment law compliance. From workplace discrimination, to First Amendment decisions, to recent laws stemming from the COVID-19 pandemic, the employment law docket has been very active over the past year. HR practices and policies may need to be reviewed and updated as a result. This session will provide an update of the various employment law decisions from courts and administrative agencies and explain how they impact public employers. This session will also provide a review of employment law legislation and discuss the implications on HR compliance.
- Presenter: Brad Bennett, Bricker & Eckler LLP
For more information and to register, click HERE
THE LEAGUE IN THE NEWS
- Crain's Cleveland Business: "Crain's editorial: By the numbers." You can read the full article HERE.
- ThisWeek Community News: "Canal Winchester, Groveport await COVID-19 budget impacts." You can read the full article HERE.