CLEVELAND, Ohio – Two weeks after announcing how much money counties and large cities will receive under the American Rescue Plan, the U.S. Treasury this week released guidelines for how much smaller cities, townships and villages should get.
But those funds could be denied to some local governments – specifically, townships, if the state determines they don’t provide a range of municipal services and wouldn’t have a use for the money.
As opposed to large cities and counties getting stimulus money directly from the Treasury, the feds are instead allowing state governments to receive and distribute the funds to smaller local governments. Ohio is slated to get $843 million for these municipalities.
Government leaders were initially unsure if townships would be eligible to receive funding at all. The American Rescue Plan Act only specified that states would be responsible for distributing federal stimulus money to “non-entitlement units of local government,” or NEUs. That’s a census term for towns, villages and cities with populations less than 50,000 that are not regularly entitled to Community Development Block Grants from the Department of Housing and Urban Development.
Earlier versions of the stimulus plan defined NEUs to include townships in Ohio and other states. But that language was omitted from the final version of the legislation signed by President Joe Biden in March, leaving nearly all of Ohio’s 1,308 townships in limbo. Three Ohio townships – West Chester in Butler County and Colerain and Green in Hamilton County – were categorized as metropolitan cities and awarded stimulus money directly from the Treasury - $6.6 million, $7.4 million and $8.9 million, respectively.
Read more: Why is Cleveland getting $30 million less than expected from American Rescue Plan? Stimulus Watch
Clarity came late Monday when the Treasury released its “Guidance on Distribution of Funds to Non-Entitlement Units of Local Government.”
Here are three takeaways from the guidance:
1. Ohio is one of eight states with “weak” townships and can therefore deem them ineligible to receive stimulus money.
The Treasury released a list of each smaller government in every state, including “incorporated places,” meaning smaller cities and villages, and “minor civil divisions,” or MCDs, meaning towns or townships. Ohio is one of eight “weak-MCD” states, where “the [townships] generally play less of a governmental role but are still active governmental units.” The other “weak-MCD” states are Illinois, Indiana, Kansas, Missouri, Nebraska, North Dakota and South Dakota.
Whereas the other 42 states were provided a list of all local governments that are eligible for stimulus distribution, these “weak” states are given an option to perform a “facts-and-circumstances test” to determine whether a township has “the legal and operational capacity to accept [American Rescue Plan] funds and provides a broad range of services that would constitute eligible uses under [the American Rescue Plan.]”
States are encouraged to consider a township’s leadership structure, size and budgets to determine whether the township should be eligible to receive stimulus money. The Treasury’s guidance says it will defer to states’ determination of whether a township should be eligible, “given their superior understanding of the particularities of their local governments’ authorities and operations.”
Ohio’s Office of Budget and Management is in charge of determining whether townships are eligible to receive funding and is tasked with receiving and distributing the money. The American Rescue Plan allows the state to use some of its $5 billion in stimulus money to tackle that feat.
A spokesman for the Office of Budget and Management did not immediately respond to an inquiry from cleveland.com and The Plain Dealer about how Ohio plans to determine whether townships are eligible and when the funds are expected to be distributed to the state’s NEUs.
The Ohio Township Association, a statewide organization that advocates for township governments in Ohio, said that, after waiting weeks to receive guidance from the U.S. Treasury, it is now waiting for the state to make determinations about whether townships are eligible.
Heidi M. Fought, executive director of the Ohio Township Association, said the definition of a township varies across states, but Ohio townships provide “essential services to millions of residents, just like cities and villages.
“The OTA cannot emphasize strongly enough that the rest of Ohio’s townships deserve to be included in direct funding from the American Rescue Plan,” Fought said.
2. Stimulus money for smaller governments will be distributed based on population and cannot exceed 75% of a municipality’s annual budget.
While metropolitan cities and counties received money based on formulas typically used to allocate Community Development Block Grant funds, non-entitlement units of government are receiving money proportionate to that community’s population.
However, the American Rescue Plan stipulates that each NEU’s total distribution over two years is capped at 75% of its annual total operating budget that was in effect as of January 27, 2020. If a local government is allocated more than 75% of that budget, the state must return the excess to the Treasury.
3. States have until August 31, 2021 to submit their initial reports to the Treasury.
It could take weeks or months for states to calculate and distribute stimulus money to local governments based on the new guidance. By the end of August, they must submit an interim report to the Treasury providing an update on whether smaller governments have received American Rescue Plan money, how much they were allocated, how that compares with the pre-pandemic annual budget and when the payment was transferred to them.
Similar to the two rounds of stimulus money coming to counties and metro cities from the feds in May 2021 and May 2022, states are expected to distribute money to smaller governments in two rounds at least 12 months apart.
Stimulus Watch is a public-service journalism project from cleveland.com and The Plain Dealer to track federal stimulus money coming into Northeast Ohio through the American Rescue Plan. Read more at cleveland.com/stimulus-watch.
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May 27, 2021 at 05:04PM
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Ohio among 8 states able to deny American Rescue Plan money to townships: Stimulus Watch - cleveland.com
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