Ohio county gets $94.4 million in federal money but can’t spend most of it

AKRON, Ohio – Summit County in Ohio has received nearly $100 million in funding from the federal government during the coronavirus pandemic but can't spend most of it.

The funding came from the more than $2 trillion Coronavirus Aid, Relief, and Economic Securit Act that Congress approved in March. It established the $150 billion Coronavirus Relief Fund, providing for payments to state, local and tribal governments navigating the effects of COVID-19.

According to the U.S. Department of the Treasury, the funds can only be used to cover expenses caused by the ongoing public health crisis and incurred between March and Dec. 30 that were not in the entity’s most recent budget.

Brian Nelsen, chief of staff to Summit County Executive Ilene Shapiro, said that means the county is limited on how it can use the $94.4 million it received, even as it faces millions in lost revenue because of the economic downturn.

“All $94.4 million is sitting there right now while we figure out if and how we can use it,” Nelsen said.

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Summit County was eligible for a direct payment of the CARES Act funds because its population exceeds 500,000.

The county created a special fund for the money and is awaiting clearer guidance from the Treasury Department.

“Our single biggest true need is revenue replacement, from all of the lost sales tax dollars, property conveyance taxes, lack of building permit activities,” he said.

The county intended to distribute a majority of the money to the county’s cities, villages and townships to help offset revenue losses.

Ohio’s city and village governments are among the worst-positioned in the nation to ride out the financial impact of the coronavirus downturn because of the state’s unique system of funding communities primarily with income taxes, some experts say.

But Nelsen said the CARES Act money cannot be used as a revenue replacement, nor can it be used for employee wages or overtime not already included in budgets.

As of now, the county believes it can only use its CARES Act money to reimburse $530,000 it provided for a coronavirus emergency relief grant program for small businesses, the roughly $75,000 cost of purchasing computer equipment for county employees to work from home, and the costs of cleaning supplies and thermometers purchased because of the coronavirus pandemic.

Because the county is “on the hook for anybody we give that money to,” Nelsen said the county is creating a web portal and process for local communities to submit expenditures to the county for reimbursement using CARES Act funding.

Communities that seek reimbursements from the county will have to sign a contract making them liable for repaying the county if they’re deemed not to be eligible as reimbursement costs.

“I think it's unfortunate that the federal government will not treat us the same way that they are willing to treat private business, and I think it's a little unfortunate that we're kind of caught in the political crosshairs that are going on at the federal level,” Nelsen said.

“It is interesting to me that $94 million, we could give it all away to small business, and that would be perfectly fine under the Treasury guidelines because they don't seem to care if those businesses have made poor financial decisions. They just don't like state and local governments across the country that have made decisions that some members don't agree with.”

Given the limitations on how the federal funding can be used, Nelsen said the county is considering expanding the COVID-19 Small Business Emergency Relief Grant Program to provide funding to all businesses that applied. In the initial round, 311 small businesses, or 51% of eligible applicants, received a total of $1.546 million The county also is considering a potential second round of funding, with expanded criteria for eligible businesses.

In addition, he said the county is considering a similar program for nonprofits.

Nelsen noted the county’s local congressional delegation and Ohio’s U.S. senators, Democrat Sherrod Brown and Republican Rob Portman, have been “extremely supportive of getting relief to local governments and making that money usable as revenue replacement.”

Brown and Portman sent a joint letter to Treasury Secretary Steven T. Mnuchin last month asking the Treasury Department to issue additional guidance on how state and local governments can use funding secured in the CARES Act, including as revenue replacement.

Republican senators have signaled openness to broadening how states can use the funds already passed under the CARES Act since there is such a need, while Democrats are more focused on passing additional funds.

“If communities have to lay off police, firefighters, first responders, the federal government will end up paying for them one way or another, whether it's on the unemployment lines where they're sitting home, not working, or whether they choose to do the right thing and come through and fund local government so that we can continue to provide essential services,” Nelsen said.

This article originally appeared on Akron Beacon Journal: Ohio county gets $94.4M in CARES Act money but can’t spend most of it