Cleveland Fed Report: Cleveland’s Stimulus Money Equivalent to Roughly One Year of Tax Revenue Could Be ‘Transformational’
CLEVELAND, Ohio – What difference could Cleveland’s $ 511 million, Cuyahoga County’s $ 239 million, and Ohio’s $ 5.4 billion US bailout make a difference in communities?
According to a recent report from the Federal Reserve Bank of Cleveland, we can find the answer by comparing a state or local government’s stimulus liquidity with its tax revenue for 2020. Cleveland’s windfall exceeds its 2020 tax revenue , while that of Cuyahoga County accounts for about 30% of its tax revenue and that of Ohio about 17%.
“When we hear that a county gets $ 500 million and a state gets $ 5 billion, both numbers sound pretty high, but what we don’t know is the change these allocations can create.” , we read in the report. “Scaling the annual tax revenues of our state or local government allows us to determine whether our [American Rescue Plan] the allocation could be transformational or just useful.
The researchers found that the ratios of stimulus money to 2020 tax revenue for almost all states are between 10% and 30%, with a median of 20%. Ohio is right in the middle of the pack, with a ratio of 16.8%.
For local authorities, the ratios were on average 25 to 45%. They ranged from less than 10% – which could help municipalities recoup some of the revenue lost during the pandemic – to well over 100%, “an amount that could create a unique opportunity to invest more than one. equivalent of a whole year of tax revenue without incurring new debt, ”the report said.
Cleveland’s ratio is 100.7%, according to the report.
East Cleveland has the highest ratio in the state with a staggering 258.5% rate. According to the report, only 17 cities in the country had ratios above 200%.
Cleveland’s ratio is also behind a handful of other cities in northeast Ohio, including Warren at 145.8%, Youngstown at 110.4%, Lorain at 110.3%, Lakewood at 107.7%. and Barberton at 102.8%.
Cleveland has the highest ratio of major cities in Ohio, with Dayton at 90%, Toledo at 80.7%, Cincinnati at 48.3%, and Columbus at 18.6%.
The other ratios of cities in northeastern Ohio are: Cleveland Heights (92.9%), Canton (90.8%), Euclid (76.6%), Alliance (66.7%), Akron ( 63.5%), Elyria (45.6%), Green (41.9%), Parma (37.5%), Kent (35%), Cuyahoga Falls (32.4%) and Mentor (6.9 %). Mentor has the lowest ratio in the state.
Learn more about the amount of stimulus money cities in Northeast Ohio are receiving.
Counties across the country had a median ratio of 24%, but counties in Ohio had a median of 52%. Cuyahoga County was among the lowest ratios in the state at 29.6%, similar to other large counties – Franklin at 29.4% and Hamilton at 30%. Geauga County had the seventh lowest ratio at 34%.
Lorain County had the highest ratio of Greater Cleveland at 57.6%. Portage and Medina counties each had about 52.2%, Summit County’s ratio was 50.4%, and Lake County’s was 42.4%.
Warren County in southwest Ohio had the highest ratio in the state at 268%, making it one of 72 counties in the country with ratios above 100%.
The Cleveland Fed report only considers governments receiving stimulus funds directly from the US Treasury, which does not include small towns, townships or villages. The research also noted that the money for the US bailout was not distributed evenly among all communities. The amount a state received was based on its unemployment rate during the pandemic; county funds were distributed on a per capita basis, unless the per capita amount was less than the amount the county would receive under the block grant formula for community development; and municipal funds were allocated solely on the basis of CDBG formulas, which take into account factors such as population, poverty rates and housing conditions.
Governments must allocate their stimulus funds by the end of 2024 and spend them by the end of 2026. Permitted uses include spending for revenue recovery; grants to households, businesses and non-profit organizations affected by the pandemic; increasing the wages of essential workers; or invest in public health, water supply or broadband infrastructure. While the permitted uses are quite broad, the US Treasury may force the refund if the money is used inappropriately, such as paying for a proposed project before 2020 that has no connection with the pandemic recovery.