Coronavirus: How will local governments spend $142M in federal stimulus money?

The U.S. Capitol (Michael D. Pitman/Journal-News)
The U.S. Capitol (Michael D. Pitman/Journal-News)

But CARES Act money can’t replace lost revenue.

Local governments in Ohio got an infusion of $350 million over the past week to pay for unexpected coronavirus pandemic costs and help businesses and citizens recover losses.

But area leaders are still trying to grasp how they’re allowed to spend the money and get programs in place quickly before the federal Coronavirus Aid, Relief and Economic Security (CARES) Act funds go away Dec. 31.

“We don’t have it pinpointed down yet to what those programs might be, but we’re evaluating that as rapidly as we can,” said Mike Gebhart, Fairborn’s assistant city manager. “It’s important that whatever we roll out to help folks is done in a timely manner.”

Nearly $49 million flowed to nine area counties along with cities, townships and villages, including some in Montgomery County, that didn’t receive money in the first round of federal funding. That’s on top of the nearly $93 million Montgomery County government received in that earlier distribution directly from the U.S. Treasury to the state’s six largest population centers.

In total, that means about $142 million will flow into the region as part of the federal stimulus act.

CORONAVIRUS: Complete coverage from the Dayton Daily News

Gebhart learned last week that Fairborn will receive a little over $1 million of Greene County’s total $6 million distribution.

Fairborn and other jurisdictions have had discussions with Greene County officials to explore partnerships to benefit businesses and residents, but those ideas must pass muster with rules in the federal act that are somewhat hazy, said Brandon Huddleson, Greene County’s administrator.

“It’s very vague, some of the guidance that came down about what is allowable and what is not,” Huddleson said. “We’re still working our way through that.”

Every county and community in the state is “in the same boat,” Huddleson said.

“All of all of us are talking to try to better understand this together,” he said. “Nobody wants to misspend a dollar. We’ve got to be extremely careful. But with the time crunch, it makes it even more difficult.”

Bill doesn’t fix budgets

A bill signed June 19 by Gov. Mike DeWine directed $350 million of Ohio’s portion of the CARES Act funds to local governments that were not included in the U.S. Treasury Department’s first allocation that went only to state and county governments with populations above 500,000.

The city of Dayton didn’t receive money in the first round of funding, and neither did other localities large and small wracked with unexpected expenses due to the pandemic. But Dayton received $8.2 million of $13.2 million distributed to municipalities and townships in Montgomery County in that second round of funding.

Clark County along with its cities and townships received $4.2 million; Miami County government entities got about $3.8 million; and $5 million went to those in Warren County.

RELATED: Coronavirus: $13.2M in aid on way to area cities, townships

But federal rules prevent the money from being directly used to plug the biggest hole to local governments caused by the pandemic — the loss of income taxes and other revenue sources caused by business shutdowns. Local leaders say shortfalls have ranged from 10% to 20%, resulting in cancelled projects, hiring freezes, staff furloughs and other budget cuts.

Troy is tracking a potential 15% decline in revenue among its various sources after economic activity stalled following the state’s stay-at-home order, said Patrick Titterington, the city’s director of public service and safety. Troy is receiving a little more than $766,000, according to the Miami County auditor.

“Certainly, everything helps,” Titterington said. “The only thing this does not do for us is restore the revenue losses that we took from the governor’s actions.”

RELATED: Troy official: Governor’s actions have had an ‘devastating’ impact on Ohio economy

Both of Ohio’s U.S. senators wrote to Treasury Secretary Steven Mnuchin in April asking that local governments be given the ability to use CARES Act funding for revenue replacement.

“Ohio’s unique composition of tax revenues makes it much harder for our state and local governments to fully respond to this crisis,” wrote Sens. Sherrod Brown, D-Ohio, and Rob Portman, R-Ohio.

U.S. Rep. Warren Davidson, R-Troy, has introduced legislation that would expand rules to allow local governments to use CARES Act funds to offset budget shortfalls due to the pandemic.

“I know that Ohio’s needs differ greatly from other states, and that governors and mayors across the country have a better read on the needs of their citizens than we do in Congress,” Davidson said in a statement.

The new aid comes months after the state’s five largest county governments, including Montgomery County, and the city of Columbus received substantial allocations in May.

What will the money be spent on

Montgomery County received an initial allotment of $92.77 million.

Montgomery County commissioners created the temporary Office of CARES Act and named Marvene Mitchell-Cook as director to manage and distribute the funds.

MORE: Montgomery County cuts $11M, will distribute $92M in stimulus

Mitchell-Cook described the CARES Act rules as “broad and vague by nature” but said the county picked program components based on stipulations within the federal legislation.

While the county continues to update its budget, as of last week the federal money was allocated in these areas:

• Small businesses, $40 million

• Housing, $10 million

• Education, $7 million

• Agricultural, $5 million

• Public health, $5 million

• Montgomery County, $25.77 million

The county’s portion is a miscellaneous allocation to be redistributed to cover other expenses or needs as they arise, said Brianna Wooten, the county’s communications director.

Last month, the county started taking applications to distribute relief grants to small businesses.

The county had received 331 small business grant applications as of Tuesday. About half came from minority-owned businesses and roughly two-thirds of the applicants were located within Dayton, according to program records.

Montgomery County has about 17,000 small businesses and the county expects between 5,000 and 10,000 applicants. Businesses that have already received federal Paycheck Protection Program assistance are not eligible for the county program, Mitchell-Cook said.

MORE: Dayton-area small businesses eligible for $40M in relief

As coronavirus unemployment benefits dry up at the end of the month, the county is also looking to stem a wave of foreclosures and evictions.

Last week, the county upped to $10 million the amount going to housing programs. A planned mortgage assistance program will receive $5 million and another $5 million will go to help renters.

“We are looking to at least provide three months of financial assistance for individuals who are behind in their payments,” she said.

The county expects to begin taking applications for the housing programs in a couple of weeks. The hope is to also help people who fell behind paying utilities due to the pandemic, Mitchell-Cook said.

After the housing components launch, the county plans to implement an educational program that might provide tuition assistance and the purchase of technology to aid remote learning.

MORE: CARES cash to start flowing to Ohio cities; state capital projects given OK

While the CARES Act money can be spent on tablet computers for students, rules may not allow the county to provide broadband access to connect students and their devices to schools. The lack of an internet connection for many students has been identified as a community-wide problem, Mitchell-Cook said.

Programs are expected to be put in place to assist those in health care and agricultural industries. Montgomery County commissioners already provided funds to area homeless shelters and The Foodbank, which might be eligible for CARES Act reimbursement, according to the county.

Funding scrutinized

As smaller jurisdictions sort out how to spend their money, some of the programs might be patterned similarly to those in Montgomery County.

Huddleson, Greene County’s administrator, said he was asking commissioners to approve $500,000 toward a small business program to provide $10,000 grants.

“And I expect that all the other cities within the county to do something similar,” he said.

MORE: COVID death rate in Montgomery, Greene lower than other large counties

The Greene County portion of the money came in a little over $2.5 million of total of $6 million going to all county government entities.

Huddleson said he is certain that money will be spent.

“That $2.5 million, we can easily justify those costs just within expenditures we’ve had related to COVID,” he said.

Huddleson said CARES Act spending will be highly scrutinized by state and federal authorities and he’s still trying to get answers about certain expenses, including whether paying the salaries of public employees who had to be reassigned due to the pandemic is allowed.

“We’re on the hook as the recipient government agency for the audit trail,” he said.

‘A lot of money to spend’

Only a fraction of the money Montgomery County has received in May has been spent so far.

Costs to date primarily include expenditures to ensure facilities are safe and comply with the Ohio Department of Health recommendations for social distancing and outlays for new technologies to allow people to do their job from home or differently within the workplace, Wooten said.

MORE: How coronavirus has changed work forever

Just about $244,000 had been paid out as of June 23, a bulk of it on cleaning supplies for county facilities and protective equipment for employees. Another roughly $260,000 is encumbered for technology upgrades needed to have video meetings and to accommodate remote working, as well as for developing the county’s website funding portal and software to take online applications. About $30,000 had been spent on advertising and marketing to get the word out about the small business grants, according to the county.

“It’s a very small portion at this point. We still have a lot of money to spend,” said John Parks, Montgomery County’s budget director.

The clock is ticking to get the funding out the door by the end of the year, Montgomery County Commissioner Carolyn Rice said last week.

“We want to use every penny that has been sent our way for the good uses that it is allowed to be used on,” she said. “This is a booster shot to our economy to recover from COVID.”

Relief grants available for Montgomery County small businesses

Montgomery County has created a process for small businesses to apply for aid from the Coronavirus Aid, Relief and Economic Security (CARES) Act. Similar processes are being developed for individuals and households needing help with mortgage and rental assistance, as well as for other industries including agriculture and health care.

The county has currently set aside $40 million for grants up to $10,000 to help small businesses in Montgomery County offset losses resulting from the pandemic.

Preliminary small business grant requirements include:

• The applicant must be a small business with 30 or fewer employees.

• Must have less than $1 million gross revenue.

• Must be located in Montgomery County.

• Must not have already received any federal assistance (CARES or COVID-19, SBA loans, Paycheck Protection Program, etc.).

• Must have a physical storefront (restaurant, bar, retail, barbershop, etc.) and/or be an allowable home office as reported in most recent filed tax return.

• Must be current on all state, federal, and local taxes.

• Must be in compliance with state of Ohio small business requirements.

• Must retain one full-time employee for at least three months after grant award.

The deadline to apply for small business grants is Nov. 30. More information and a link to apply for the program can be found at https://mcobiz.com/cares-grants/. People can also sign up to receive email alerts about all the programs at https://bit.ly/MCOhioCares.

CARES Act summary

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act — the single largest stimulus package in U.S. history — was signed by President Donald Trump at the end of March.

About $500 billion was provided for loans to large, distressed businesses. Roughly $377 billion paid for small business supports, including the Paycheck Protection Program, which Congress added another $320 billion to in April, for companies with fewer than 500 employees. The legislation also included $300 billion for one-time cash payments to individuals and families, unemployment insurance of $260 billion and $150 billion for state and local governments. Payments have also gone to support hospitals and veterans, airlines and public transit systems.

So far, Ohio has received about half of the state’s allotted $4.5 billion.