It's Raining Stimmies in Ohio - America's Future

April 2, 2021

It’s Raining Stimmies in Ohio

By: Esther Bardo

Ohio’s budget was running at a $200M surplus before the COVID-19 pandemic took hold, resulting in blanket stay-at-home orders and shuttered businesses, as well as sinking the state’s budget to a $775M deficit. At the height of the pandemic in April, Ohio was down 800,000 jobs with an unemployment rate of 16.4%. 

Fast forward to March 2021, Ohio’s unemployment is now at 5% with labor force participation rising—currently at a pace ahead of the national average—however, it still has a quarter of those 800,000 lost jobs to recover. 

Like many states, Ohio started 2021 in better economic shape than it had anticipated mid-pandemic. The state’s sales tax revenue returned strong after the stay-at-home orders were lifted, keeping Ohio’s budget afloat. Like many other states about to receive a cash windfall, Ohio has yet to dip into its $2.7B rainy day fund. Nevertheless, it’s about to see spring showers in the form of funds from the federal government through the American Rescue Plan, on top of previous funds received under President Trump. 

Ohio will receive more than $11B from the American Rescue Plan in state and local aid, with about half going to state government and half directed to local governments. Assuming Ohio accepts the most recent stimulus funds, what will give the state of Ohio the most bang for its buck?

The America’s Future chapter in Columbus, Ohio recently discussed the state’s economic recovery to-date and the policies that would best help it continue the climb back. Logan Kolas an economic policy analyst at The Buckeye Institute spoke at our event and he laid out several guidelines Ohio lawmakers should follow when apportioning federal stimulus funds. In addition to making all aid disbursement transparent, Kolas suggested funds should be restricted to temporary projects, eliminating potential reliance on one-time federal funds, which would cause the state to come up with ways to raise those funds on their own in the future.  

Furthermore, funds should address economic and infrastructural needs, such as education, broadband access, as well as strategically directing the aid to help business sectors disproportionately impacted by the pandemic. Perhaps most importantly, funds should help pay for pandemic-related public health expenses like vaccine distribution and contact tracing. Kolas also suggested Ohio should save some of the federal aid preparation for looming federal tax hikes. Finally, Ohio’s own ability to strengthen the state’s economic footing should not be overlooked, policymakers have the power to shape the future by adopting free-market taxation, regulatory, and budgeting reforms. 

If the COVID-19 pandemic’s most destructive causes are broken down into two parts, government-imposed lockdowns and consumer’s avoidance of spending, the federal government’s $1.9T American Rescue Plan package does little to treat either. With less than 1% of stimulus funds allocated to vaccine efforts, less than 6% to pandemic containment efforts, and 7% to reopening schools, it becomes all the more important for the states to get the spending side right.  

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