Our local governments provide many important front-line services to our state’s communities, both in normal times and in times of crisis. Local governments are responsible for providing public transit, police, fire and emergency medical services. Counties and cities fund safety net programs to help families in need. To protect these services for Hoosiers, local governments will need help as their economies also suffer during the COVID-19 crisis. To help out, I am offering some common sense proposals to ease their financial problems during this time. What are some of the ways local governments get the money to operate?
- #1: Gas Tax. Sales tax on gasoline is declining due to a double hit: the retail price of gas is low and travel restrictions have fewer people in their cars. A county’s share of that tax distribution will decrease, making it difficult to do summer road preservation and maintenance. Currently, the counties are restricted regarding the use of these funds, half of which must be used on “new projects.” The state needs to lift that restriction now to allow them to spend funds where most needed.
- #2: Property Taxes. Counties normally receive property tax payments in May, but the governor has extended that deadline for 60 days. Although some payments will come in May, counties will have a 60 to 90 day delay in significant amounts of revenue. Counties need a bridge loan/grant to cover this short-term delay of expected funds.
- #3: Local Income Taxes. The governor has extended the deadlines for payment of our state’s income tax. While this provided much needed relief to Hoosier families, it means another revenue stream for local governments is delayed. Normally these local income tax distributions are made based on income tax received prior to July 1.
- #4: Gaming revenue. Finally, cities and counties that receive a share of gaming revenue will take a financial hit because casino and racinos have shut down.
Here is my leading solution that can be implemented immediately. Indiana expects to receive $2.6 billion from the Coronavirus Relief Fund, part of the federal CARES Act passed last month. This money was primarily intended as revenue replacement for the states. With the expectation that we will receive that money in the next few months the state should use some of its surplus, like the $300 million in unexpected revenue collected at the end of the last fiscal year, to provide bridge funding to local governments that need it.
It is my understanding that State Treasurer Kelly Mitchell has announced such a plan. This will provide counties with a bridge loan during this time of delayed revenue, so that Hoosiers can get the local services needed in your area of the state. While I fully support this resource, I advocate that these loans should be given at zero interest to the local governments that now need it. Most importantly, this financial assistance should be available NOW. Indiana has the money, so let’s make sure that cities and towns can survive this crisis. Hoosiers are depending on it.