WATCH NOW: Governor Holcomb shares how Indiana plans to spend American Rescue Plan funds
WATCH NOW: Governor Holcomb shares how Indiana plans to spend American Rescue Plan funds
The U.S. rescue plan calls for approximately $ 3 billion in COVID-19 recovery aid to the state of Indiana and an additional $ 2.6 billion to Indiana cities and counties.
While not a single Republican in Congress – including Indiana Sens. Todd Young and Mike Braun and the seven US GOP officials who serve Indiana – voted for the legislation, the Republican-led Indiana General Assembly did and Republican Governor Eric Holcomb, apparently, voted No Objection to accepting federal support.
However, figuring out how the money can and will be spent is an entirely different matter.
In general, the US $ 360 billion bailout plan allocated to state, local, territorial, and tribal governments is primarily intended to cover the costs associated with the COVID-19 pandemic, including its negative economic impact on households, small businesses, nonprofits, and the travel, tourism and hospitality industries.
The law also allows the money to be used for bonus payments for key workers who stayed in the workplace as part of COVID-19 to replace lost government tax revenues due to COVID-19 prevention measures and necessary investments in water, sewage or broadband infrastructure, in part to accommodate more Americans who work from home as a result of COVID-19.
At the same time, the law forbids states to simply pay the money into a public pension fund or to use it to maintain government spending levels while lowering tax rates.
Holcomb said last week its intention was to use the money “wisely – in one word”.
“Most of this funding goes to specific areas that are dedicated to specific areas,” said Holcomb. “We will of course be working with our legislative partners who are dealing with and handling Indiana’s budget this year, and we look forward to it.”
Cris Johnston, director of the Holcomb Office of Management and Budget and a native of Crown Point, said that since the American bailout plan takes a broader perspective on COVID-19 relief than measures under the CARES Act 2020, there are opportunities to raise money for other government needs to spend when The money is not specifically directed to government agencies for existing programs such as rent and assistance with the payment of utilities.
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“There’s an element of budget relief that is eligible with the latest package,” said Johnston. “This adds a new crease and should open wider perspectives for discussion of how this should be used.”
Waiting for guidance
On the flip side, Johnston and Holcomb said they were willing to wait for specific guidance from the U.S. Treasury Department on American Rescue Plan spending to ensure Indiana doesn’t allocate dollars to a program that is later deemed ineligible.
Johnston said Indiana recently joined a number of state, county and town councils that direct questions to the Treasury Department to see how it will interpret the law.
“What sounds like a straightforward reading of the legislation really raises a lot of questions,” said Johnston. “It will take you some time to sort these questions out and send your feedback and answers to those questions.”
However, the Holcomb government may not have the luxury of waiting too long as the General Assembly is due to approve a new biennial state budget by the end of April.
As a result, the most likely outcome is that Indiana lawmakers will use the state money Indiana House has already paid for rural broadband expansion ($ 250 million), regional economic development programs ($ 150 million), and small business support grants ( $ 30M), Student Learning Loss Correction ($ 150M), and similar COVID-19 recovery efforts.
Holcomb said using federal money on these programs, and possibly even more spending than the state alone, would create a new pool of state funds that could be used to reduce Indiana’s debt burden in the short term and pave the way for sustainable development, government funded increases in salaries for teachers or tax cuts for Hoosiers a few years later.
“We have the ability to get out of this pandemic and accelerate it because of the strong position we have gone into and this help that is getting in our way,” said Holcomb.
One-time funds
Both Johnston and House Speaker Todd Huston, R-Fishers, insisted that these one-time funds be used in a way that creates an ongoing commitment, such as: B. Immediate salary increases for teachers, which is wrong policy for Indiana.
“We know these are one-time dollars and it is extremely important that you use one-time dollars to get higher returns on long-term investments rather than creating financial cliffs,” said Huston.
“Among other things, we try to think about the short-term and long-term effects. When you reduce debt that reduces long-term appropriation amounts by the state and gives us flexibility in tax cuts and economic investments in the future. “
Johnston said he worked with budget managers in both the House and Senate offices to find the best use for the money as lawmakers nears finalizing the new state budget.
“During this exercise, our goal was to use the money as wisely as possible to have the greatest positive impact on Hoosiers,” he said. “And also think about how we can achieve a lasting effect beyond the use of this money, but at the same time not create an obligation that the state can no longer meet after using this money.”
It is pretty clear that the legislature will not simply take on the job of deciding where the money goes to the governor’s office, as was largely the case with the spending of the CARES law, even if before the general assembly was adjourned for Not enough federal guidelines were in place that year.
For example, Senate President Rod Bray, R-Martinsville, proposed in House Bill 1123 to create a state fund for economic incentives that would hold all of the American Rescue Plan’s discretionary funds available to Indiana until the entire General Assembly, or at least that State Budget Committee should remain. decides how it should be spent.
This was also a primary focus of Senator Karen Tallian, D-Ogden Dunes, a member of the State Budget Committee who believes that every dollar spent by the state of Indiana, including money provided by the federal government, should be appropriated by the General Assembly, which does not issued only at the governor’s discretion.
During a recent statehouse committee hearing, former Indiana Supreme Court Justice Frank Sullivan Jr. told Tallian that it would likely be unconstitutional for the Holcomb administration to spend federal funds without express direction from lawmakers.
Braun, Rokita wants tax cuts
Meanwhile, Braun in Washington is trying to scrap the American Rescue Plan provision that bans states from using COVID-19 support for tax cuts.
Although Hoosier lawmakers have no plans to cut taxes in the near future – in fact, they might actually increase the cigarette tax this year – the millionaire businessman is appalled that the federal funds cannot be used to lower state tax rates.
“With this rescue plan for the blue state, states were not only penalized for reopening by calculating state funds on the basis of unemployment. Now they are trying to use it as a back door to forbid states from lowering taxes. My bill would make sure they couldn’t get away with it, ”said Braun.
There is little chance, however, that Braun’s idea of diverting COVID-19 aid from states to their richest residents, who benefit most from tax cuts for individuals and businesses, will be approved by the democratically controlled Senate.
Indiana Attorney General Todd Rokita, a Republican from Munster, recently indicated in a multi-state letter to Treasury Secretary Janet Yellen that if the Treasury Department interprets the law to prevent states from lowering taxes, a lawsuit is imminent.
In addition to state and local state aid, the American bailout plan gives most Americans financial relief in the form of a $ 1,400 per person stimulus payment, increased child tax credits, additional unemployment assistance and grocery stamps, funding for school infrastructure improvements, and money for COVID -19 tests, vaccinations and other preventive measures.
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