Portman requests CARES Act funding flexibility for states, local governments

U.S. Sen. Rob Portman (R-OH) called on the U.S. Treasury Secretary to provide the funding flexibility that states and local governments need to continue providing critical services during and after the coronavirus pandemic, particularly to replace any lost revenue.

“Local governments of all sizes will face serious revenue shortfalls in the coming months due to their reliance on sales and income tax revenue to finance their operations,” wrote Sen. Portman and U.S. Sen. Sherrod Brown (D-OH) in an April 21 letter sent to U.S. Treasury Secretary Steven Mnuchin. “As such, we ask that you provide immediate guidance that makes explicitly clear that funding from the CARES Act Fund is allowed to be used to replace lost revenue.”

For instance, Ohio state and local governments collect significant portions of their revenue through income and sales taxes, compared to most other states that collect a majority of their revenues through other more static revenue streams, such as property taxes, according to the senators’ letter.

“Income and sales tax collections tend to immediately respond to any positive or negative economic swings, meaning that Ohio’s revenue collections are highly likely to plummet as a result of current economic conditions,” they wrote.

Ohio on April 16 received $2.26 billion from the Coronavirus Relief Fund that was included as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, an amount that Sen. Portman and his colleague said was an important first step toward providing relief to the state and its localities.

“However, as Ohio stands ready to receive its total $4.5 billion in support through this fund, we ask you to issue additional guidance on how state and local governments can use these funds moving forward, including as revenue replacement,” wrote Sen. Portman and Sen. Brown.

They also asked the secretary to work with them to ensure that new funding for state and local governments beyond the CARES Act “is robust, dedicated and flexible,” which would allow them to provide critical services and address significant budget shortfalls related to the pandemic.