City of Indianapolis expected to receive at least $420M from latest COVID-19 relief package

The Daily Reformer

INDIANAPOLIS – As part of the massive $1.9 trillion economic stimulus bill passed in March, the city of Indianapolis will receive a portion of the money allocated to help local governments.

“That’s the point of this bill, to stimulate the economy, and I’m all for that,” said Ken Clark, Indianapolis City Controller.

The State and Local Coronavirus Fiscal Recovery Funds legislation, a part of the new American Rescue Plan, was signed by President Biden on March 11. This bill provides $350 billion to state and local governments to address the economic impacts of the COVID-19 pandemic.

Payments from the federal government will be split into two portions and distributed at least 12 months apart.

Indianapolis Mayor Joe Hogsett said the city is expected to receive upwards of $420 to $425 million in funding. Some of those funds can be put towards things like COVID-19 vaccination programs and economic recovery efforts.

“We certainly are excited about that money and how it’s going to be used to get the community back on track and people back working and small businesses recovering,” said Hogsett.

Mayor Hogsett said with individuals who have been struggling so mightily over the last year, this will be “a great shot in the arm. No pun intended.”

“The original bill that passed laid out that we can use the money for revenue replacement, essential worker premium pay, economic recovery from COVID-19, which is pretty broad, and then some infrastructure work for other sewer, water, and capital items,” Clark said.

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“We’re awaiting regulations from the Department of Treasury that will help us better define,” said Mayor Hogsett.

Across the nation, the coronavirus pandemic has wreaked havoc on revenues.

As cities, Indianapolis included, prepare to balance budgets for the next fiscal year, the 2020 economic revenue slowdown will be reflected in the money the city receives from the state.

It will most likely be a much smaller pass-through, which is likely to continue until the approval of the 2023 budget in the summer of 2022.

Revenue loss can be attributed to several areas, income tax included.

With millions of people being unemployed across the nation due to COVID-19, and businesses being forced to shutter their doors or reduce hours, this is one area that has taken a hit.

Clark said the city is in the process of estimating the loss in revenue due to income taxes, however, they expect that number to be more well-defined as the city prepares the 2022 budget this summer.

“Income tax filings are happening from last year’s income, so of course, our first big hit to income tax we do expect in the 2022 budget,” said Clark.

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“We’ll come up with an exact line loss, that number, of course, from a dynamics perspective, the money from next year’s income tax we would get from the state,” he said.

With less cars on the road of people heading to work this past year, gas tax and parking revenue also suffered a hit in Indianapolis, said Clark. These are also areas the city will look at for revenue recovery.

“We don’t have the exact guidance. Secretary Yellen from the Department of Treasury just said yesterday that we should be getting that guidance soon on how exactly we calculate revenue loss,” said Clark. “We do know it was based on what we had in 2019 in revenue and anything we lost in those future years, we’re able to use to put back into our budget, into our coffer.”

Clark said the money will go directly into the city’s fund balances so leaders can balance the budgets for the next several years.

Mayor Hogsett said although some revenue replacement will need to be done, Indy has financially fared better than many cities throughout the pandemic.

“Fortunately for the city of Indianapolis, we’ve been reasonably prudent and fiscally sound so I don’t think that much will be required in terms of replacing revenue, which really gives us the opportunity to use that affirmatively,” he said.

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This will allow Indianapolis leaders to look beyond just revenue replacement as they address areas they can support with this funding.

“Because of the way the city has budgeted over the last four years really puts us in an enviable position these of be some of our peer cities,” Hogsett explained. “I’m very optimistic that we’ll be able to put together a budget with the help of this revenue that will be fully funded and balanced.”

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