State Controlling Board creates new fund accounts to accept federal stimulus: On April 19, the Controlling Board approved Ohio OBM’s request for three new funds to accept the American Rescue Plan Act’s state and local government stimulus payments:
• State Fiscal Recovery Fund (5CV3) – To accept funds allocated to the state of Ohio from the State Fiscal Recovery Fund from the American Rescue Plan Act. Ohio is estimated to receive approximately $5.5B from the U.S. Treasury to be used for costs incurred through December 31, 2024. Payments are to be made to the State from the U.S. Treasury within 60 days of certification of need by Governor DeWine.
• Local Fiscal Recovery Fund (5CV4) – To accept funds allocated through the State of Ohio from the American Rescue Plan Act to non-entitlement units of local government. Ohio local governments are estimated to receive $815MM in funds to be distributed within 30 days of receiving the funds to the local governments. Counties and metro cities will receive Local Fiscal Recovery Fund allocations directly from U.S. Treasury and will not pass through the Ohio OBM.
• Coronavirus Capital Projects Fund (5CV5) – To accept funds allocated to the State of Ohio from the Coronavirus Capital Projects Fund from the American Rescue Plan Act. Ohio is estimated to receive $274MM to carry out critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency. The U.S. Treasury is required to establish the application process for the funds no later than 60 days after the legislation’s enactment.
Searching for the signal within the white noise of economic data: The change in the Consumer Price Index (CPI) in April unexpectedly jumped 4.2% year-to-year, its fastest pace of change since 2008. On a monthly change basis, inflation rose by 0.8%. The Federal Reserve Board, which has vowed action to keep inflation under control, was “surprised” by this recorded change in prices.
The Fed and the Biden Administration’s economic advisors note that short-term inflation is to be expected as the economy awakens after a pandemic (which it has never done before). Unlike previous eras of big government spending, the Fed now operates under a new mindset: accommodating a certain amount of short-term inflation, intervening to raise interest rates only if (1) inflation rises by 2% on a sustained basis over time, and (2) the economy reaches full employment (i.e., < 5% unemployment).
Ohio’s $162.57B biennial operating budget proceeds through the General Assembly: On April 13, the House Finance Committee accepted a substitute version of HB 110, which was introduced with Governor DeWine’s proposed two-year budget. The House has made many changes, including a decades’ long legislative fix to Ohio’s K-12 school funding. The budget is further described in the legislative updates, below.
President Biden’s $2T infrastructure & climate plan update: The Biden Administration’s American Jobs Plan targets at least $1T worth of backlogged infrastructure improvements, according to the Biden Administration, including addressing a nearly 40-year backlog of bridge repairs. The measure would represent the largest increase in federal spending for research and development and public infrastructure since the 1960s.
More COVID Relief proposed in Ohio General Assembly: Lawmakers are proposing another $2.15B in funding for statewide distribution as President Biden’s federal package (totaling $1.9T) winds through the U.S. Congress.
Bills were proposed March 2 in the Ohio House and Senate to push funding out to schools, businesses and a variety of other Ohio entities. This state-level aid is sourced from the federal COVID relief package signed by the former president on December 27, 2020, with the state’s General Revenue Fund as another funding source.