Category: National

By Mary Wurtz

CSG provided an initial summary of this event earlier this week. This article looks further into how states can take advantage of apprenticeships as a way to develop the workforce.

The White House hosted the American Rescue Plan Act Workforce Development Summit on July 13 to announce more than $40 billion in funding. In her opening remarks, Vice President Kamala Harris called the funding “a direct investment in working people in America.”

Local leaders from across the country shared examples of how their cities, counties and states are utilizing funding from the act to build a skilled workforce that strengthens capital infrastructure and public health and expands participation among underserved populations. One focus of the event was the historic levels of federal investment in the promotion of Registered Apprenticeship Programs and pre-apprenticeship programs, especially for infrastructure-related occupations.

Apprenticeship is a work-based learning model that enables individuals to receive supervised on-the-job training and job-related education while earning a competitive, full-time wage. The U.S. Department of Labor has validated and catalogued apprenticeships for more than 80 years as part of the Registered Apprenticeship Program. Pre-apprenticeship programs provide resources to prepare individuals to enter and complete Registered Apprenticeships.

Leaders shared their communities’ plans to utilize federal funding to promote apprenticeships during a panel focused on encouraging public-private sector partnerships to develop a diverse workforce.

Los Angeles County Board of Supervisors Chair Holly J. Mitchell presented on the county’s efforts to promote infrastructure apprenticeships, with a special focus on the need for equity through investment in historically underserved communities. The county is utilizing $40 million to launch a High Road Apprenticeship Readiness Program, which will double the number of trainees participating in and placed through construction and infrastructure programs by the end of 2024. The funding will allow Los Angeles County to build on the strong outcomes already achieved, including $20/hour median starting wages, according to Mitchell.

Washington, D.C., Mayor Muriel Bowser presented on the DC Infrastructure Academy , an innovative job-training program that recruits, screens and trains residents to pursue infrastructure careers in construction, energy, telecommunications, roads and water. Through employer-led training partnerships, paid job readiness training programs and apprenticeships, the academy has helped connect more than 2,300 residents to careers in infrastructure. Federal funding will enable the academy to train an additional 400 residents over the next two years.

Mayor Greg Fischer of Louisville, Kentucky, shared his administration’s proposal to use Rescue Plan funding to expand pre-apprenticeships through the Kentuckiana Builds program. This six-week pre-apprenticeship training program teaches specialized construction skills in partnership with the Louisville Urban League and the Carpenters Union. The program has provided over 350 individuals with access to union apprenticeships and construction jobs. Federal investments will enable Louisville to expand this program, with a focus on formerly incarcerated individuals. John O’Grady, commissioner of Franklin County, Ohio, also shared how funding will be used to fund job training programs like the Building Futures Pre-Apprenticeship Program to support low-income residents pursuing skilled construction trades.

These investments are just a few of the ways federal funding will be used to promote Registered Apprenticeships and pre-apprenticeship programs over the next several years. For example, the Department of Labor and Department of Transportation recently partnered to encourage state transportation agencies to use a portion of funding from the Bipartisan Infrastructure Law to invest in Registered Apprenticeships in infrastructure jobs. States are encouraged to develop Registered Apprenticeships to fill jobs created by the law, especially in the fields of transportation, renewable energy, public utilities and information technology.

The July 13 summit highlighted one of many opportunities for states and cities to take advantage of federal funding to promote Registered Apprenticeships and pre-apprenticeship programs. Through these initiatives, states can utilize apprenticeships to meet critical workforce needs and develop quality, high-paying jobs for residents.

By Blair Lozier

On July 13, the American Rescue Plan Workforce Summit took place on behalf of Vice President Kamala Harris, the White House American Rescue Plan Implementation Team and the White House Office on Intergovernmental Affairs. The summit addressed key areas of infrastructure that were funded through the American Rescue Plan Act including public health, infrastructure and expanding the workforce. Here are some of the highlighted examples of state and local governments putting American Rescue Plan dollars to work from the summit:

Perspectives from the States

The American Rescue Plan allocated $350 billion for state, local, territorial and tribal governments. Within the $350 billion, $195 billion was allocated directly to state governments. With the historic amount of funds given to states, the summit highlighted two states that are making a difference by using the funding for transformational change.

• North Carolina Gov. Roy Cooper was able to maximize the delivery of health care by utilizing the increased the Federal Medical Assistance Percentage and implementing the Medicaid expansion provisions available from the Biden administration.
• Pennsylvania Gov. Tom Wolfe discussed the efforts to transform the post-secondary education system within his state.

Infrastructure Jobs focus on Pre-Apprenticeships

The Bipartisan Infrastructure Law distributes $550 billion in a federal program mostly dedicated to states and localities. States and cities presented innovative ways that they have been distributing the American Rescue Plan dollars to create jobs and skilled workers for building infrastructure through pre-apprenticeships.

• North America’s Building Trade Union highlighted a pre-apprentice model developed for Building Trades Academy in the Baltimore–Washington, D.C., area. The apprentice program provides guided access into the building trade, they partner with local counsel, state and community-based organizations to end barriers and attract individuals to the workforce.
• Franklin County, Ohio, developed the Building Futures Program. This 12-week program is to get individuals ready for a career in construction.
• Los Angeles County, California, created the High Roads Training partnerships to Build Back Equity. This partnership invests in career opportunities, launches a worker equity fund, supplies intensive case management, and removes barriers to success in underserved populations.
• In Kentucky, Louisville Mayor Greg Fischer presented Kentuckiana Works. This program is designed to help individuals with training for skilled workers.
•  Washington, D.C., Mayor Muriel Bowser is funding an Infrastructure Academy. The Infrastructure Academy is for high-impact job areas with good compensation to eliminate the housing crisis within the D.C. area.

Care and Public Health Workforce

The America Rescue Plan also had a focus on funds for care infrastructure, which includes child care, public health, health care and elderly care. Service Employees International Union Secretary April Verrett mentioned the importance of elderly care, “All 50 states applied for home care dollars.” The Caregiver Initiative is all about investing in care and enabling caregivers the pay they deserve.

• Ramsey County, Minnesota, distributed every penny of its American Rescue Plan funds for transformation and foundation work in The Early Childhood Academy and Career Pathways program. The Early Childhood Academy aims are eliminating barriers in child care. Career Pathways program supply training for health care professions.
• The Erie County, New York, Health Care Careers Grant provides training for health care occupations that are in high demand.
• FAST Programs were developed in Manchester, New Hampshire, to encourage community building. The intended purpose is to reduce unintended emergency calls, supply the proper level of care in situations and empower the community to work together by becoming community health workers.
• Community RISE Programs are developed to promote health care education to underserved populations. The program is funded through the U.S. Department of Health and Human Services throughout the U.S. and territories.

Expanding Access to the Workforce for Underserved Populations

States are using the American Rescue Plan to end barriers to gaining employment. Here are some examples:

• In Milwaukee, Wisconsin, WRTP Big Step is an apprenticeship to supply sustainable jobs by removing lead pipes. Employ Milwaukee aids individuals with employment, the goal is to get people out of the low-income/poverty cycle.
•  Harris County, Texas, developed Employ to Empower where individuals can aid individuals experiencing homelessness by gaining work, career readiness and other resources that give a helping hand.
• Opportunity Memphis focuses on R3: rethinking, rebuilding and rebranding individuals between 16-24 looking for workforce readiness in Memphis, Tennessee.

Financial transparency and interbranch collaboration are important to Utah as the state focuses on equitable distribution of federal funds

By Christina Gordley

The American Rescue Plan Act of 2021 provided $195 billion directly to states through the Coronavirus State and Local Fiscal Recovery Fund. States are to use this assistance to:

• Respond to the negative economic impacts of the public health emergency.
• Provide premium pay for specific professions.
• Replace lost revenue.
• Invest in water, sewer and broadband infrastructure.
• Provide assistance to disproportionately impacted households and communities.

States have focused on how to best use the funds and sustain long-term economic recovery since the relief was enacted in March 2021. Recently, the Senate Finance Committee requested the Government Accountability Office begin a review and assessment for oversight and accountability of how states have used the State and Local Fiscal Recovery funds to ensure proper use and transparency. Just as the impact of the pandemic has varied by state and region, the use of funds and the transparency surrounding spending has differed across the country.

Utah is an example of a state using several methods to provide financial transparency and interbranch collaboration for the strategic and equitable distribution of these federal funds. The Executive Appropriations Committee initially divided $1.65 billion of the state fiscal recovery and capital funds into broad categories.

Utah Sen. Kirk Cullimore described how “the buckets were established based on the criteria from the federal guidelines and regulations for items like public health response as it should, sectors of the economy that were drastically impacted more than others, infrastructure, things like water, infrastructure, networking and broadband, education remediation, access to justice and then housing and homelessness. Each of those buckets were the big, big things we were going to try to address. Within those buckets, we created seven principles that had to be met in order to spend these federal funds.”

Original Category Allocation	Amount (in Millions USD)
Revenue Replacement, Unemployment and Infrastructure	$630
Water Infrastructure	$280
Public Health Response and Remediation	$205
Networking and Broadband	$175
Emergency Preparedness	$110
Education Remediation	$80
Housing and Homeless	$70
Impacted Economies	$65
Access to Justice	$35
Total	$1,650

Transparency and oversight

Cullimore described the use of seven guiding principles for allocating the rescue plan funds to ensure compliance with the federal guidelines and to achieve the statewide goals. The guiding principles established for the use of the state and local fiscal recovery funds were:

1. Fall within the broad policy category.
2. Do not finance a function performed by another level of government or private sector.
3. Avoid a structural deficit or expectation for funding on an ongoing project with one-time funds.
4. Inspire innovation.
5. Provide improved government provision of service
6. Avoid inflationary pressures by creating unmet demand
7. Follow the established budgetary review prioritization and recommendation process.  

Each policy category was assigned to one of the appropriation subcommittees to review each project request for adherence to the guiding principles seek public opinion, and sometimes they were able to direct the project to be funded through other streams of funding in the American Rescue Plan.  

Utah’s allocation of these state and local fiscal recovery funds is available on various websites hosted by different state agencies. The legislature provides information in the Flexible Federal ARPA Dollars report. The state auditor provides an interactive dashboard data tool to view the distribution decisions of local governments and non-entitlement units. The Office of Planning and Budget hosts the Utah Coronavirus Stimulus Summary. Budgeted and expended amounts for each spending category and project are provided. The interactive display by Utah is a unique approach, allowing the user to select four streams of revenue from the Coronavirus Relief Fund, the Federal Emergency Management Agency, the American Rescue Plan Act and additional state funding budgeted for the same program. For example, grants to impacted businesses include $15 million from the rescue plan act, $64.3 million from Coronavirus Relief Fund and $213,0000 from state funds.

Cross branch collaboration and innovation

Cullimore explained, “the Executive Appropriation Committee is made-up of members of leadership, both in the majority and minority of both the Senate and the House. I understand that is a little bit unique to Utah, but it’s been very effective, and obviously, it helps.” For the infusion of rescue plan funds, Utah was not faced with filling holes in the budget and Cullimore felt that Utah was a unique place with established fiscal resiliency after years of building up the reserve funds and budget contingencies funds to prepare for an economic downturn like COVID-19 has the potential of presenting. To allocate the unexpected federal funds, he spoke highly of the usual collaborative budget process that is generally accepted practice in Utah and incorporated a lot of advice from the executive offices that were directed with spending the funds.

In a May 2021 special session, the Utah legislature appropriated $50 million of federal relief for the COVID-19 Local Assistance Matching Grant Program, a statewide competitive program created to leverage state and local funds for projects that will provide the most significant impact on rural and urban communities. The five-member application review committee included a cross-section of state and local leaders with one member each from the Utah Senate, House of Representatives, Governor’s Office of Planning and Budget, the Utah League of Cities and Towns, and the Utah Association of Counties. The collaboration among branches and layers of government provided inclusive and strategic planning to avoid duplication of funding. The scoring guidelines focused on the project’s potential impact on individuals and communities disproportionately affected by the pandemic, long-term benefits, innovation and measurable results.

As a member of the application review committee, Cullimore described how the matching grant program was aimed to incentivize local governments that had their own American Rescue Plan funding to use it to achieve regional and statewide goals for a large impact instead of focusing on individual local goals. He lauds how the Local Assistance Matching Grant Program was wildly successful and used $50 million to match local funding awarded to 36 projects for a total of $300.7 million impact throughout Utah. The largest portion went to water infrastructure projects that address a critical yet expensive need that local communities could not finance independently. In the Weber River Watershed Restoration Project in Summit County, a $1 million investment from the grant program ensured the $84 million project to address the rural water and wastewater needs. Using $1.5 million in Tooele County, it secured a large return on investment for a $19.4 million project for rural housing.

Equity and inclusion

The Multicultural Advisory Committee of Utah’s COVID-19 Response was convened to provide an inclusive lens for public policy development. The committee was composed of racially and ethnically diverse leaders from state agencies, non-profit and community-based organizations, faith-based entities, health care and education advocates and the private sector. Members engaged in strategy workgroups to identify gaps in the delivery of services during the COVID-19 pandemic. Lessons Learned about communications, digital equity, economic sustainability, food security, equitable access to health care, language access and housing services have provided strategies to be applied in all facets of government. Utah used the input to inform the allocation of several programs and initiatives to help achieve a more equitable recovery. Using the local matching grant program as a successful model, Utah invested $35 million to support a Redeveloping Matching Grant Program to incentivize local redevelopment and rezoning of commercial, retail or vacant industrial land for higher density affordable housing to serve disproportionately impacted communities.

Like many states, Utah is working to ensure an equitable recovery from the impacts of COVID-19 and has utilized funds from the American Rescue Plan to provide opportunities for investment in education, social services, housing, water infrastructure and investments.

This story is the first in a series that will highlight the use of American Rescue Plan funds by state governments.

How is your state using American Rescue Plan funds to make an impact? You can help The Council of State Governments tell your story. Email [email protected] to let us know how your state is successfully using ARPA funding.

By Rachel Dietert

Native American nations faced disproportionately high rates of COVID-19 that amplified existing health inequities caused by underfunded health systems and services, insufficient infrastructure and underlying health disparities.

Underfunded health systems have led to a lack of testing and treatment opportunities for Native Americans. Insufficient infrastructure, such as a lack of water and overcrowded housing, can heighten the impact of COVID-19. Health disparities such as chronic illnesses, diabetes and obesity also impacts the prevalence of COVID-19 in Native American populations. (More information about the causes behind the high rates of COVID-19 in Native American populations can be found here). Through the American Rescue Plan Act, $32 billion was allocated to help these tribal communities recover from the pandemic.

The Coronavirus State and Local Fiscal Recovery Fund, a part of the American Rescue Plan, is a pot of somewhat discretionary funding that must be used to address the impact of the pandemic. This means that if tribes can justify how their spending of these funds addresses the impact of the pandemic, they are able to determine how these funds are used. Included in the Coronavirus State and Local Fiscal Recovery Fund is $20 billion allocated to 570 federally recognized tribes. Here is a breakdown of that allocation:

Five Tribes Awarded the Most American Rescue Plan Funding* 

Tribe	Enrolled Citizens	Full-Time Equivalent Annual Employees	Total ARPA Funding
Navajo Nation	399,494	14,906	$2,079,461,465
Cherokee Nation	391,002	11,903	$1,996,025,479
Choctaw Nation of Oklahoma	202,502	10,256	$1,094,352,141
Chickasaw Nation	72,307	14,661	$552,614,537
Muscogee (Creek) Nation	90,794	4,715	$493,282,104

*This is a combination of all funding sources in the American Rescue Plan from direct allocations and the State and Local Fiscal Recovery Fund.

Oklahoma is home to four out of five of these tribal nations, which received funds totaling $4.1 billion. The fifth tribe, the Navajo Nation, is located in parts of Arizona, New Mexico and Utah.

Few tribal nations have published what they plan to do with the funding other than providing direct assistance to their citizens. However, the Cherokee Nation has provided some insight on how they plan to use these American Rescue Plan funds:

• $840.12 million — Direct payments to every Tribal citizen.
• $131.53 million — “Housing/quarantine/domestic violence.”
• $131.53 million — Education, native language revitalization and higher education relief and assistance.
• $191.61 million — Government revenue replacement.
• $142.31 million — Health infrastructure and behavioral health and wellness programs.

Information on how the Cherokee Nation allocated the remaining 28% of its share can be found here.

The Red Cliff Band of Lake Superior Chippewa in Wisconsin has also published how it plans to use these funds from the American Rescue Plan State and Local Fiscal Recovery Fund:  

• $5.1 million — Directly to tribal members.
• $2.5 million — New cultural center.
• $1 million — Repatriating 854 acres from Bayfield County (Due to the Dawes Act, reservations were broken up, and land was allotted to individual tribal members. Eventually, much of this land was no longer owned by tribal members. The act of repatriation is returning the land to the tribe. More information about repatriation in Bayfield County can be found here.)
• $12.6 million — New housing developments.
• $1.5 million — Infrastructure.
• $4.2 million — Premium pay to tribal employees.

The remaining tribe allocations can be found here.

In addition to Coronavirus State and Local Fiscal Recovery funds that went directly to tribal governments, Native American nations also received funding through federal agencies. The section-by-section allocations can be found here. The three agencies allocated the most funding are:

• Section 11001: $6.1 billion to Indian Health Services to fund COVID-19 vaccine campaigns and testing, third party medical billing reimbursements, construction of Indian Health Services facilities, telehealth, potable water delivery and behavioral health.
• Section 2202: $1.1 billion to the Department of Health and Human Services to support tribes participating in the Child Care and Development Block Grant program which provides financial assistance to help low-income families afford child care.
• Section 11002: $900 million to the Bureau of Indian Affairs to address the impact of COVID-19 on social welfare and public safety programs. This includes money toward tribal government services, the Bureau’s Housing Improvement program, potable water delivery and administrative costs and oversight.

Through direct payments to citizens and tribal governments, these funds will address the inequities in Native American communities that were exacerbated during the pandemic.

By Blair Lozier

As inflation continues to put pressures on communities across the country, many states are implementing a sales tax holiday, or a period when specific items are exempt from states sales tax, to help encourage consumer spending and provide relief for those individuals feeling the pinch of rising costs.

A common example is a “back to school” tax holiday, which removes sales tax on items children need for school including shoes, clothing and school supplies . Recently, states have enacted emergency supplies holidays at times when natural disasters are most prevalent. The tax relief is generally focused on power generators, housing protection and materials to help recover from a disaster that occurs.

This is not a new practice — since 1997, 27 states have implemented at least one sales tax holiday. Michigan and Ohio enacted the first sales tax holidays in 1980, focused on automobile sales. A few years later, New York implemented a sales tax holiday on clothing to compete with neighboring New Jersey, which did not have a sales tax on clothing at the time. In 2021, 17 states temporarily suspended sales taxes to encourage consumer spending, particularly on goods they would purchase anyway.

2022 Sales Tax Holidays

Back to School

This year, 16 states have enacted a “back to school” sales tax holiday stretching between July 15 and Aug. 27, with 11 of those states having holidays during Aug. 5-7. All 16 states include clothing and footwear as sales tax exemptions, and eight include school supplies, accessories and computers among the tax-exempt items. Florida’s holiday also includes learning aids.

State	Dates	What is Included	Itemized list
Alabama	July 15-17	Clothing, computers, computer software supplies, school supplies and books	Qualifying Items
Arkansas	Aug. 6-7	Clothing, clothing accessories, electronic devices, school supplies, art supplies and instructional materials	Qualifying Items
Connecticut	Aug. 21-27	Clothing and footwear	Qualifying items
Florida	July 25-Aug. 7	Learning aid items, clothing and accessories, school supplies and computers and computer-related accessories	Qualifying Items
Illinois	Aug. 5-14	Clothing, footwear and school supplies	Qualifying Items
Iowa	Aug. 5-6	Clothing and footwear	Qualifying Items
Maryland	August 14-20	Clothing, footwear and accessories	Qualifying Items
Mississippi	July 29-30	Clothing, footwear, accessories and school supplies	Qualifying Items
Missouri	Aug. 5-7	Clothing, school supplies, computers and software and graphing calculators	Qualifying Items
New Mexico	Aug. 5-7	Clothing, footwear, computers and school supplies	Qualifying Items
Ohio	Aug. 5-7	Clothing and school supplies	Qualifying Items
Oklahoma	Aug. 5-7	Clothing and footwear	Qualifying Items
South Carolina	Aug. 5-7	Clothing, accessories, footwear, school supplies, computers and backpacks	Qualifying Items
Tennessee	July 29-31	Clothing, school supplies and computers	Qualifying Items
Texas	Aug. 5-7	Clothing, footwear, school supplies, face masks, backpacks and school supplies	Clothing School Supplies
West Virginia	Aug. 5-8	Clothing, school supplies, instruction materials, computers and sports equipment	Qualifying Items

Energy Efficient Appliances

Four states have enacted sales tax holidays in 2022 that are designed to encourage renting, leasing or buying energy-efficient appliances. In Missouri, individual counties have the discretion about whether their merchants participate.

State	Dates	What is Included	Itemized List
Florida	July 1, 2022- June 30, 2023	Energy star appliances	Qualifying Items
Maryland	Feb. 19-21	Energy Star appliances	Qualifying Items
Missouri	April 19-25	Energy Star appliances	Qualifying Items
Texas	May 28-30	Energy Star appliances	Qualifying Items

Severe Weather Preparedness

Three states that are prone to emergencies or disasters enacted sales tax holidays for emergency supplies this year. Qualifying items generally include generators, batteries and various supplies under a designated dollar amount.

State	Dates	What is Included	Itemized List
Alabama	Feb. 25-27	Emergency supplies	Qualifying Items
Florida	May 28-June 10	Emergency and pet evacuation supplies	Qualifying Items
Texas	April 23-25	Emergency supplies	Qualifying Items

Other Forms of Sales Tax Holidays

State	Dates	What is Included	Itemized List
Connecticut	April 10-16	Clothing and footwear	Qualifying Items
Florida	July 1-7	Freedom Week sales	Qualifying Items
Florida	Sept. 3-9	Skilled worker tools	Qualifying Items
Florida	Oct. 1-31	Motor fuel	Qualifying Items
Massachusetts	Aug. 13-14	Annual holiday	Qualifying Items
Mississippi	Aug. 26-28	Second Amendment holiday	Qualifying Items
Nevada	Oct. 28-30	National Guard members pay no sales tax	Qualifying Items
Tennessee	Aug. 1-31	Groceries	Qualifying Items

Costs and Benefits

Tax holidays can have a direct impact on consumers. The timing of consumer spending is often responsive to tax holidays, according to the Federal Reserve. A Massachusetts study found that sales tax holidays boost sales during the entire month of the holiday. According to economic analysts, consumers with higher income take advantage of sales tax holidays more than lower-income consumers. However, whether the holidays contribute to long-term economic activity depends on additional various internal and external factors.

Additional Resources:

2022 Sales Tax Holidays: https://news.bloombergtax.com/tax-insights-and-commentary/some-states-are-offering-sales-tax-holidays-for-shoppers-in-2022

Sales Tax Holiday History: https://itep.org/sales-tax-holidays-an-ineffective-alternative-to-real-sales-tax-reform-2021/

By Christina Gordley

Most indicators of the health of the U.S. economy have returned to pre-pandemic levels. Unemployment is at 3.6% and the employment payroll has returned to 151.7 million jobs. Consumer spending was $405.5 billion in the last quarter.

The economy is healthy, but these indicators point to what could be too much of a good thing. Demand for goods continues to outpace supply, which is creating a substantial increase in prices. The Consumer Price Index, the measure of price changes in a basket of goods and services, increased 8.6% over the past 12 months. Wages have not increased at the same rate, so people are experiencing a cost of living squeeze.

Federal Response to Rising Prices

The federal government has some levers to try to control escalating prices.

The Federal Reserve System is the combination of entities that try to maintain a sound financial system and promote employment and stable prices.

• The Board of Governors is responsible for overseeing the 12 regional Fed banks. The board is composed of seven members appointed by the president and confirmed by Congress.
• The Fed banks function as the “banks for the banks,” providing services like loans, payment processing and other support to help financial institutions conduct business with individuals, businesses and governments.
• The Federal Open Market Committee sets the target for the federal funds rate, which is the interest rate that financial institutions pay to the Fed banks for access to the resources necessary to respond to the financial needs of consumers.

A rule of thumb is that financial institutions will charge an interest rate to individual and business borrowers about three percentage points higher than the federal funds rate. When the federal funds rate is 1%, for example, banks charge around 4% to consumers. The Fed reduced the federal funds rate in March of 2020 from 1.75 to 0.25. This resulted in the interest rate to consumers falling from 4.75% to 3.25%. This was part of the Fed’s effort to spur consumer spending by making it cheap to borrow money.

The Fed is now adjusting the federal funds rate upward, trying to dampen consumer spending.  When the federal funds rate rises and it costs more for banks to secure assets, the interest rate for borrowers also increases. The intended result is a slowing of price increases as demand decreases. In June, the Fed ordered an increase in the rate to 1.75%. In addition, an increase in the lending rate makes it more attractive for consumers to save money because they get a better interest rate.

The Fed also influences how much in financial reserves that banks must maintain. For example, a bank has $100 million in deposits from customers. Instead of having to hold the $100 million and then use other assets for lending, a reserve rate might require the bank to keep 10% of the deposit amount on hand and can use the other $90 million for lending. In March of 2020, the Fed reduced the reserve rate to 0% to increase the cash banks had available to lend and decrease the cost of borrowing. The Fed can also increase the threshold for reserves, reducing the amount of money available for lending.

While many of the factors influencing inflation — supply chain issues and the war in Ukraine — are outside of the control of the federal government, the increased cost of borrowing money will hopefully ease price increases. Meanwhile, state governments are monitoring the impact of high prices on their citizens as the cost of living outpaces increases in wages.

State Responses to Rising Prices

State budgets are experiencing robust balances because of three rounds of federal investments to offset the impact of the COVID-19 pandemic and enable economic recovery. State budgets also benefit from the recent increases in employment and wages, strong consumer spending and rising prices. This is because most state governments rely on sales taxes, which reflect spending and the cost of goods and services. For example, states have unprecedented levels of savings in their rainy day funds, according to a recent report by the National Association of State Budget Officers.

States will be impacted in the near term in their own spending by increases in the cost of goods and services and the cost of borrowing. While the Fed can implement policies in an attempt to temper inflation, states have few options to combat prices because states operate in the midst of a national and global economy.

Policymakers may have several issues presented to them with few solutions available for a quick fix.

• Borrowing will cost more. State governments do not borrow funds from a bank like a private consumer. As a result, state budgets are not impacted by the federal funds rate and resulting interest rate increases in the same way as households. However, states do issue long-term bonds and short-term notes to private individuals and businesses to finance larger capital projects like roads, school buildings and technology infrastructure. The cost of borrowing for states will increase because they will have to offer higher paybacks to potential bond and note purchasers.
• Capital projects may cost more than originally anticipated because borrowing money is more expensive, wages for workers are up and supply chain issues will affect the availability of equipment, which may extend the timeline of projects.  
• Pension obligations, which are often sustained by investments of available funds in stocks, will be affected by the recent decline in the value of such assets during the current market downturn.
• Social services will be in greater demand as households continue to face rising prices from the fuel pump to the grocery store while wages are not rising as fast.

It is a delicate balance for states that are experiencing revenue surpluses while their residents are struggling to make ends meet. Policymakers have implemented or are considering actions to provide financial relief to their residents, such as sending direct cash payments or providing increased services.

However, inflation is a complex national equation and increasing the spending power of individuals can also contribute to the inflationary pressures by sustaining the heightened demand for goods and therefore prolonging higher prices.

• California is considering an $8 billion relief program funded from the budget surplus to provide a $200 cash rebate for each taxpayer and $200 per child.
• The Colorado Cashback program is providing a $400 dividend from the state surplus for direct relief to households.
• Georgia adjusted the income tax credit for 2020 and 2021 to redistribute some of the state’s budget surplus. Depending on the individual filing status, the amended individual income tax refund received ranged from $250 to $500.
• Hawaii will provide $300 to each taxpayer and dependent in households earning less than $100,000 and $100 to each taxpayer and dependent in households earning less than $200,000.
• Kansas eliminated the sales tax on grocery items.
• Maine recently approved a supplemental budget that uses half of the state budget surplus to provide $850 direct relief payments to individuals who filed a 2021 income tax return. Maine retirees — who are often on a fixed income — will receive an increased exemption from tax on their pension income. Maine has also increased the Earned Income Tax Credit to benefit an estimated 100,000 low- and middle-income working families.
• Michigan appropriated $4 million for the Food Security Council in the budget that begins in October 2022.
• Minnesota Gov. Tim Walz proposed a $500 rebate for each taxpayer.
• New Mexico sent $200 million in direct economic relief payments to households. Individual tax filers received $250 and joint filers received $500 payments in June, with a similar payment set for August. Additionally, New Mexico set aside $20 million for economic relief payments for households that did not file income tax returns due to their income levels.
• Pennsylvania Gov. Tom Wolf wants to utilize the American Rescue Plan funds to send $2,000 to each taxpayer.
• Utah enacted a property tax program that allows individuals over the age of 75 and with income below 65,000 to defer their property tax payments until there is a transfer of ownership. Utah policymakers also reduced cell phone bills by eliminating fees that were directed to public safety communications, appropriating general fund resources to support those services.

Forty-eight state leaders were chosen for the selective program

Forty-eight state government officials from across the U.S. have been selected for The Council of State Governments distinguished Henry Toll Fellowship. The program is the nation’s premier leadership development opportunity for state leaders.

Elected and appointed officials from the executive, legislative and judicial branches in 32 states will meet at the CSG national headquarters in Lexington, Kentucky (Aug. 26-30), for an intensive, five-day leadership boot camp that is designed to stimulate personal assessment and growth while providing priceless networking and relationship-building opportunities.

“While the CSG Henry Toll Fellows come from every region of our nation, from both political parties and all three branches of state government, they share one thing in common — they are all people of purpose with a passion for public service,” said CSG Executive Director/CEO David Adkins, a former Kansas state senator and 1993 Toll Fellowship alumnus. “Toll Fellows are selected based on their demonstrated commitment to solve problems, to work collaboratively to get things done, and their belief that state government can and must be a force for good.”

The CSG Henry Toll Fellowship is not a traditional professional development or policy program — it’s an intense leadership experience that challenges participants to move out of their comfort zones and take an introspective look at how they view themselves as leaders. There are more than 1,300 graduates of the Toll Fellowship, which began in 1986. Distinguished alumni include five state/territorial house speakers, three sitting state supreme court justices, ten sitting members of Congress, five sitting governors and 200 Toll alumni currently serving as state/territorial legislators.

The 2022 fellowship graduates will be honored during the 2022 CSG National Conference in Honolulu, Hawaii, in December.

“Congratulations to the 2022 Toll Fellows for being selected to participate in the premier state government training program in the country,” said Washington state Sen. Sam Hunt, who serves as CSG National Chair for 2022. “As part of a very selective group chosen from state governments across the country, they are in for a rewarding experience. As a former Toll myself, I know they will sharpen their skills in making government more effective.”

The following leaders have been selected for the 2022 CSG Henry Toll Fellowship:

• North Dakota Treasurer Thomas Beadle
• Jace Beehler, chief of staff, North Dakota Office of the Governor
• Mississippi state Rep. Christopher M. Bell
• Eric C. Berthel, deputy Senate Republican leader, Connecticut
• Rhode Island state Rep. Nathan W. Biah Sr.
• Georgia state Rep. Rhonda Burnough
• Dr. Antonina Capurro, deputy administrator, Nevada Department of Health and Human Services, Division of Health Care Financing and Policy
• Jesse Chadderdon, chief of staff, Delaware Senate Majority Caucus
• Maine state Rep. Kristen S. Cloutier
• David D’Arcangelo, commissioner, Massachusetts Commission for the Blind; council member, National Council on Disability
• Illinois state Sen. Dale Fowler
• Hilary Franz, commissioner of public lands, Washington Department of Natural Resources
• Illinois state Sen. Ann Gillespie
• Maine state Rep. Lori K. Gramlich
• Alabama House Minority Whip Jeremy Gray
• Pennsylvania state Rep. L. Elizabeth F. Hanbidge
• Illinois state Rep. Sonya Harper
• Jay D. Hartz, director, Kentucky Legislative Research Commission
• Hawaii state Rep. Troy N. Hashimoto
• Taylor Hawk, policy director, Delaware Senate Majority Caucus
• Kentucky state Rep. Samara Heavrin
• Beverley Henry, supervising committee administrator, Connecticut General Assembly Office of Legislative Management
• Ohio state Rep. Paula Hicks-Hudson
• Louisiana state Rep. Jason Hughes
• Nebraska state Sen. Megan Hunt
• Kathleen James, assistant House majority leader, Vermont
• Sandra Jauregui, Assembly assistant majority whip, Nevada
• Alaska state Rep. DeLena Johnson
• Jennelle H. Jones, general counsel, West Virginia Office of Technology
• Shawn Jurgensen, special counsel to the chief justice, Kansas
• Washington state Sen. Patty Kuderer
• Tennessee state Sen. London Lamar
• Idaho state Rep. Laurie Lickley
• Alaska state Rep. Daniel H. Ortiz
• Oklahoma state Rep. Daniel Pae
• Tennessee state Sen. Bill Powers
• South Dakota state Rep. Taylor Rehfeldt
• Chris Reykdal, state superintendent of public instruction, Washington
• Minnesota state Rep. Ruth Richardson
• Jen Robison, chief of staff, Office of the Lieutenant Governor, Utah
• Arkansas state Rep. Jamie Scott
• Daniel Shannon, director, Wyoming Department of Corrections
• Delaware state Rep. Michael F. Smith
• Wisconsin House Minority Caucus Chair Lisa Subeck
• Kansas Senate Minority Leader Dinah Sykes
• Missouri House Minority Caucus Policy Chair Sarah Unsicker
• Connecticut state Rep. Quentin “Q” Williams
• Nevada District Court Judge Bita Yeager, Department 1, Eighth Judicial District Court

By: Victor Montgomery

ExxonMobil, a CSG Associate and one of the largest publicly traded international energy companies, is leading the transition to a lower-emission energy future. In cooperation with the Paris Climate Accords, ExxonMobil revealed one of the most ambitious and wide-reaching plans to achieve net-zero Scope 1 and 2 greenhouse gas emissions by 2050 in its Advancing Climate Solutions 2022 Progress Report. The report details concrete steps the company plans to take to drastically reduce emissions while meeting the world’s evolving energy needs.

“ExxonMobil is committed to playing a leading role in the energy transition. Advancing Climate Solutions articulates our deliberate approach to helping society reach a lower-emissions future,” said Darren Woods, chairman and chief executive officer at ExxonMobil. “We are developing comprehensive roadmaps to reduce greenhouse gas emissions from our operated assets around the world, and where we are not the operator, we are working with our partners to achieve similar emission-reduction results.”

As part of the company’s commitment to sustainability, ExxonMobil also announced plans to invest more than $15 billion toward initiatives focused on lowering greenhouse gas emissions. Funds are targeted at accelerating the development, deployment and scalability of lower emission technologies, which will support industry-wide leaps in carbon capture and storage, hydrogen and biofuels.

ExxonMobil expects to finalize most of its detailed roadmaps on achieving net-zero emissions by the end of this year, completing the remainder in 2023. For more information on ExxonMobil’s commitment to the transition to sustainable energy, including the most up-to-date information on ExxonMobil’s net-zero emissions progress, please visit ExxonMobil’s Advancing Climate Solutions webpage.