Beck calls on governor to support local governments as they face economic fallout from COVID-19

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HOBART — Today, State Rep. Lisa Beck (D-Lakes of the Four Seasons) called on Governor Holcomb to support local governments as they continue to weather the economic fallout from COVID-19.  

In a letter to Holcomb, Beck outlined several ways the governor could drive funding to local governments that are currently treading water across the state as they work to meet the needs of Hoosiers during this public health crisis.

The text of the letter is copied below:

 

April 22, 2020

Dear Governor Holcomb:

I am writing to request financial assistance for local units of government from the Coronavirus Relief Fund (Section 5001). Section 5001 is the primary program in the CARES Act that provides non-program specific funding to State Governments and local units of government only if their population as a unit is 500,000 and above. Indiana is set to receive $2.6 billion in total minus any “direct funding” to local units.

 Marion County/City of Indianapolis is the only local governmental unit in Indiana that meets the “direct funding” component of the Coronavirus Relief Fund. It is my understanding that Marion County/City of Indianapolis has requested their share of “direct funding”. If the Marion County/City of Indianapolis “direct funding” is granted, the State of Indiana will have approximately $2.4 billon remaining in available funds. In the 2010 Census, Lake County was determined to have a population of 496,005. From an equity standpoint, “due to the accident of geography” only one county unit, Marion County/City of Indianapolis will directly receive any of the Coronavirus Relief Fund dollars as things now stand.

 However, a fair reading of the Coronavirus Relief Fund (Section 5001) would infer that there is no substantive legal bar whatsoever for a State Government to “share” their statewide allocation of funding to other local units of government such as county, city, or town units. In fact, multiple levels of civil governments are actually referenced in Section 5001. In fact, the enumerated list goes beyond counties, cities, towns to include townships and villages EVEN THOUGH I am not aware of any town, city or village in the United States having a population of 500,000 or above. I make note of this because there must have been some rational reason why the drafters of Coronavirus Relief Fund (Section 5001) specifically enumerated towns, townships, and villages. If the true and only intent was to fund local units over 500,000, then only county and city units would have been denominated.

 Also, unlike in the last Great Recession, the American Recovery & Reinvestment Act of 2009 specifically permitted Federal dollars to “replace” lost State and local revenue due to the Great Recession. As you are aware, the Coronavirus Relief Fund does not allow supplanting of funds already part of the most recent enacted State or local budget. Due to this fact, there is the real possibility that the State of Indiana will not be able to identify an eligible purpose for the expenditure of the full $2.4 billion and Indiana will run the real risk of ultimately having to return some of the $2.4 billion allotment to the Federal Government.

In light of this the sub-allotment of some of these Coronavirus Relief Fund dollars to local government purposes would be fiscally justifiable. Let's make sure Indiana does NOT leave any money on the table when local units so desperately need financial assistance in this time of dire crisis. We are proposing that something be done now, since Congress is set to pass a Corona 4.0 bill and there is no additional money for State or local government assistance. This proposal may be the only “bite at the apple” for local governments to receive funding.

I am suggesting a set-aside of $400 million dollars from the Coronavirus Relief Fund for local governments. The actual details of the allocation could be either through a set formula distribution and/ or competitive individual application and award process. Proceeds could only be used for the allowable purposes enunciated in the CARES Act so another words only unanticipated local government expenditures for items like Personal Protective Equipment, Overtime hours attributable to the COVID-19 crisis, Telework facilitation costs (i.e., hardware, software, other technical costs, etc.) COVID-19 testing costs, unreimbursed costs related to county or municipal employees asserting their right to Paid Sick Leave and Emergency Family Medical Leave, etc.

In addition, I am suggesting the following State funded (non-Federal) funding compliments as well:

A. Allow the Indiana Bond Bank to “rebate” back any interest costs associated with the Tax Anticipation Warrants (TAW) that are associated with any Indiana Bond Bank borrowings by local units during this crisis. The interest may only be nominal, but any modicum of relief would be beneficial to local units.

B. Allow local units to borrow from the State Rainy Day Fund interest free. Allow perhaps $100 million dollars be made available to local unit Rainy Day borrowing. Local units have been borrowing from the Rainy Day Fund for forty years. At this time there are no outstanding Rainy Day Funds and the balance of the Rainy Day Fund is over $500 million dollars. To ensure that the Rainy Day Funds are paid back permit an “intercept” provision to be made to recoup any unpaid loans as is the case with public school borrowings from the Common School Fund.

C. Change the thresholds under which Local Income Tax (LIT) reserves are distributed to local units of government from a 15% reserve threshold requirement to a 5% threshold requirement. Further permit the county unit of government to direct all of their increased distribution money to their Economic Development component of their LIT.

Local units of government need help from the State of Indiana. Thank you for your consideration. I look forward to discussing this with you. 

Thank you.

Sincerely,

 

Lisa Beck
State Representative
House District 19

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