From state and local revenues to business bottom lines, the fiscal fallout from the COVID-19 pandemic is all around us. For quite some time, we’ll all be trying to stretch scarce resources and manage through tough circumstances. Helping local employers – and our policy priorities – survive the economic crunch will take an ‘all hands on deck’ approach from your Indy Chamber staff and members.
We’re down with PPP
This week, the Indy Chamber continues to deliver much-needed cash flow help to companies across the metro by processing Paycheck Protection Program (PPP) loans in partnership with Bankable, the non-profit lender based at the Flagship Enterprise Center. This builds on our regional Rapid Response Fund with the City of Indianapolis and other funders, bolstered with another $25 million approved by the City-County Council. (Check out the details and apply here.)
The Chamber launched the Rapid Response Loan Fund to help small businesses throughout Central Indiana manage economic disruption due to COVID-19 pandemic. Smaller, more recently-established employers are the most vulnerable to job loss during an economic downturn, and the Fund is targeted at these ‘at risk’ businesses – filling the gap as the first phase of PPP funding was gone within days, mostly to firms with existing lending relationships and Small Business Administration connections.
With hundreds of loan inquiries in the Rapid Response pipeline, we pursued the Bankable partnership and applied to the SBA to become an eligible Community Development Financial Institution (CDFI) lender for the new round of PPP funding.
These moves give the Chamber a ‘head start’ in deploying limited federal dollars to our region, given the existing capital liquidity and capacity of the Rapid Response Fund – thanks to financial commitments made possible by the collaborative leadership of Mayor Hogsett, Council President Vop Osili and others.
Our ability to move quickly relies on these strong public, private and philanthropic partnerships – but also the capacity and proven track record of our Business Ownership Initiative (BOI).
BOI provides 10,000+ hours a year of free business coaching and classes a year, and has run an active microloan program since 2011 (and has been an SBA microloan partner since 2015) with an enviable 93% repayment rate. The restructuring of the Indy Chamber that connected Entrepreneur Services with economic development, advocacy and other regional initiatives is paying off in a big way for small business, in the middle of this unprecedented crisis.
The COVID cash crunch – state & local budgets:
Several of our Indy Chamber policy councils also met virtually last week to hear presentations and updates related to our advocacy agenda, mostly dealing with how the coronavirus pandemic is reshuffling our priorities.
The Local Government & Fiscal Policy Council heard from the Central Indiana Corporate Partnership (CICP) about a wide-ranging study of Indiana’s economic challenges – educational attainment (and attitudes) influencing the pipeline of good and promising jobs available to Hoosiers, and the future of our advanced industries sector.
The innovation-based economic strategies championed by CICP can help our region rebound from the deep downturn caused by COVID-19, which also threatens calamity for state and local governments. We also heard the latest from the Indiana Fiscal Policy Institute on plummeting revenues and new budget realities.
Less than three months after an optimistic December revenue forecast added $530 million to the 2020-2021 budget projections, and the state surplus cruising towards $2.5 billion…everything changed:
- In the weeks following the COVID-related economic restrictions, 16.4% of Indiana’s non-farm workforce has filed for unemployment (updated with yesterday’s new claims, this number is now over 18%);
- Purdue economist Larry DeBoer predicts that up to 36% of all Indiana jobs and 26% of state personal income could be at-risk – and that a full quarter (through June) under the current restrictions would erase over a billion dollars in anticipated state revenues;
- The March state revenue report showed the first signs of what’s coming, finishing $70 million below forecasts (with sales and income taxes – our two largest revenue sources – nearly $35 million off);
- Projections by state and national experts suggest that state revenues could be more than $1.5 billion below the current budget plan by the time the General Assembly re-convenes in January, with losses over $2.5 billion by the end of the current (2020-2021) budget cycle next June;
- At the local level, revenues haven’t fully rebounded from Great Recession, and urban areas like Indianapolis were already under growing financial stress before the pandemic hit;
- Now, even conservative estimates for local income tax losses across the state exceed $200 million – Marion County could lose more than 10% of its income tax revenues in 2022;
- Large urban counties are more dependent on income taxes, and local governments will ultimately be hit from all angles – state road funding as gas taxes plummet, food and beverage tax collections (obviously), property taxes if a deeper recession impacts the housing market…and the grim revenue outlook doesn’t even start to address the added costs (from public health to poor relief).
It was a sobering set of projections that raised a number of issues related to our public policy agenda – to name just a few:
- In addition to our efforts to speed federal aid to small businesses, how do we keeping pushing for CARES Act funding (and any future stimulus aimed at state and local government) to be deployed where it’s needed most?
- At the state level, looking towards a tough budget session, how do we protect the priorities that are critical for keeping our region and state competitive through a recession and into the recovery – like employer-driven workforce development and essential economic development programs?
- Staying focused on the future, we’ll face a tough fight to preserve progress on early learning, and ensure that urban districts like IPS (already struggling with achievement gaps growing with every day of empty classrooms) aren’t more disadvantaged by cuts to complexity funding.
- We can also seize the opportunity to renew the push for higher cigarette taxes, given the urgent need for a short-term revenue boost and to improve public health as a top priority.
- And certainly, regional investment capacity and revenue reform continues to be an urgent concern – given the growing strain on local budgets predicted above, we need to move beyond the gains we made this year on working together to plan for the future – we need the ability to share costs, address fiscal challenges and pursue common goals across city and county lines.
Stay tuned as we continue to shape next year’s legislative agenda, and adjust our advocacy efforts to the COVID crisis that’s changed so much about how we live, work and do business.
The more things change…
Speaking of change, and next year’s agenda – one thing stays the same, no matter what: Voting is still the essential act of civic participation and most important duty as a citizen. Even as we practice social distancing, politics isn’t a spectator sport.
But voting will look different this year, starting with a new date for Indiana’s primary: The election will be held on June 2nd, and the registration deadline is coming up next week (May 4th). Check your status and voting options (like voting by mail) at https://indianavoters.in.gov/. Active Marion County voters will have already received an absentee ballot application by mail – so even if you feel safer at home on Election Day, there’s no excuse for not exercising your rights and having your say.