Here’s what federal stimulus package could mean to Hoosiers

Federal aid is on its way to Americans after President Donald Trump signed a coronavirus relief bill into law Sunday night.

The $900 billion stimulus package is the first significant effort in nine months to get financial aid to the people and institutions most affected by the ongoing pandemic. Congress passed the bill early last week, but the president delayed signing it after criticizing what he called low stimulus payments to Americans and wasteful spending on other programs.

The federal government last made COVID-19 help available when it passed the $2.2 trillion Coronavirus Aid, Relief and Economic Security, or CARES, Act in late March. At that time, most individual adults received $1,200 stimulus checks and $500 per dependent child under age 17.

Now adults earning up to $75,000 per year will soon see $600 checks. Those with children under 17 will see more money, $600 per child. Like the CARES Act, the latest stimulus package excludes college students from receiving individual checks if their parents counted them as dependents on their tax forms.

The new stimulus package will also resume federal help for unemployment benefits, offering unemployed people an additional $300 per week for 11 weeks, and add $284 billion to the Paycheck Protection Program to keep small businesses afloat.

Poverty swelling

The relief arrives as families face increasingly dire situations in Indiana and around the country. Data collected by researchers at the University of Chicago and the University of Notre Dame show the nation’s overall poverty rate increased to 11.7% in November. It marked the biggest increase in the rate in a single year since the government began collecting information about poverty 60 years ago, reversing five years in annual declines that saw the rate fall 4.3 percentage points, from 14.8%.in 2014 to 10.5% in 2019.

The pandemic’s toll on Indiana has affected job security, food access and more. Some 158,000 people are currently receiving either state or federal unemployment, according to the Indiana Department of Workforce Development, and first-time unemployment applications continued to rise in December.

Michelle Waugh Dahl, who operates Michelle’s Little Free Pantry in Johnson County, said her community’s need for food and clothing has grown “exponentially” in the pandemic.

Michelle’s Little Free Pantry began in 2017 when Dahl placed a wooden cupboard outside her home in Franklin. The pantry later expanded to Greenwood, with both locations now offering residents a 24/7, self-service option to get groceries, hygiene products and more.

Because the pantry is 24/7, Dahl doesn’t know every person who visits. But the need has clearly increased, she said, judging by how quickly items have gone during the pandemic. This month, for example, the pantry shared food boxes through a USDA program. The pantry put out nearly 600 boxes three Fridays in a row and completely ran out, and that doesn’t include the supplies shared at the pantry itself.

Dahl said it’s this reality leaders in government are disconnected from—and one they need to understand if they want to provide real help to Americans.

“It’s frustrating that our leaders are putting people’s lives on the line. I feel like it’s been a game,” Dahl said. “And they’re not talking to the people we talk to every day.”

Housing needs persist

Closely connected to poverty are concerns about the future of housing. Between 569,000 and 720,000 Hoosier households are at risk of eviction beginning in 2021, according to estimates from groups like the National Low Income Housing Coalition. Landlords are also in danger of falling behind on their own bills and mortgage payments without aid.

Housing advocates estimate evictions spiked in Indiana soon after the state moratorium expired Aug. 14. In the week after, Indiana’s branch of the National Low Income Housing Coalition estimated 600 eviction notices were filed in Marion and Allen counties, two of the largest counties in the state.

The new relief package provides $25 billion in rental assistance payments and extends a nationwide eviction moratorium to the end of January. Both are steps that Andrew Bradly, policy director for Prosperity Indiana and part of the Hoosier Housing Needs Coalition, said are essential to prevent further damage to housing in the state.

“Without that rental assistance, the whole tower falls down,” Bradley said.

Under the current arrangement, though, Bradley said there could still be a wait before landlords and tenants see the aid. The rental assistance needs 30 days to be authorized for state use, and it could take another month or two longer to get through the system to those who need it.

That’s why Bradley said the state should use some of Indiana’s remaining $700 million from the CARES Act to address the gap. Gov. Eric Holcomb proposed putting most of that total—around $400 million—toward the state’s unemployment fund, depleted this spring.

State and local governments

From Indiana’s perspective, a federal stimulus matters in deciding what might be possible to fund in the next state budget, which lawmakers are required to draft in the 2021 session.

A recent State Budget Committee meeting showed about the same level of revenue is available as in the past, around $34.9 billion, thanks to deferred income tax payments. But much of that revenue could be lost to expected increases in Medicaid spending.

Holcomb also underscored the importance of the stimulus as he unveiled his legislative agenda, saying at a recent press conference that many of the state’s biggest initiatives in the coming years depend on federal funding.

“If the federal government doesn’t,” Holcomb said, “some of these things may not happen. It’s that blunt.”

The current stimulus package is only a short-term solution, said Michael Hicks, director of the Center for Economic Research at Ball State University. While this funding will be enough to stabilize the economy for another six months, he says, another stimulus will be needed to ensure a full recovery.

Hicks said the relief package’s focus on giving direct aid to families and businesses is needed to spur spending and keep tax collection going. Tax collection supports state and local government jobs and informs funding decisions, including the drafting of the state budget and debate about issues like teacher pay.

“At a time when the tax losses might be so bad that we’re going to have to lay teachers off, the CARES Act and the stimulus is going to really have made a big difference in that,” Hicks said.

The stimulus package has faced criticism for not providing more direct funding to state and local governments. President Trump also said it should have paid $2,000 stimulus checks. But Sen. Todd Young, R-Indiana, said last Tuesday the $600 amount was the only way forward.

“The number was just the right number in order to get a bill passed. Hoosiers sent me to Washington to get an outcome, and outcome often involves principled compromise,” Young said. “Hoosiers couldn’t wait any longer.”

Correction: This story has been changed to reflect the correct number of people currently receiving unemployment benefits. The Indiana Department of Workforce Development told IBJ roughly 158,000 people received benefits weekly in December.