The lead story in last week’s IBJ detailed the amount of money the state will receive from the $1.9 trillion American Rescue Plan that President Joe Biden signed into law in March and raised questions about how the state should go about spending it.
The package included stories about three options for the state’s $3 billion allocation—upgrading the state’s water infrastructure, deploying high-speed internet statewide and turning the White River into an amenity that could attract people to the area.
Our goal was not to endorse any one of these areas. In fact, we know there are many other great ideas related to talent attraction, infrastructure, education and bolstering IUPUI (maybe by breaking it off into an independent university).
Instead, we published the package to draw attention to what might be a once-in-a-generation cash infusion for the state and foster conversations around how to use it.
The American Rescue Plan allocated $350 billion overall for state and local governments. Estimates show Indiana will receive $5.6 billion, with $2.6 billion earmarked for cities, towns and counties and $3 billion for the state.
In addition, the state is expected to receive $200 million for a capital projects fund.
So far, the only restrictions appear to be that the money can’t be used to offset a tax cut or be deposited into pension funds. (The limits are especially interesting because history would indicate those two moves are just what many Indiana leaders would immediately seek to do.)
For many states, the money is needed to fill budget gaps left by increased costs and reduced revenue during the pandemic.
But Indiana—or at least state government—is emerging from the pandemic relatively unscathed financially. Although the state needed to spend some of its reserves to make up for reduced tax receipts in fiscal year 2020, those balances are projected to bounce back by the end of fiscal year 2021 on June 30.
And the budget proposals under consideration at the Legislature for the next two years would keep that reserve balance higher than $2 billion each year—without any additional federal aid.
So what to do with $3 billion?
We are not urging a specific course of action, but we do believe Indiana should be bold.
We urge lawmakers and Gov. Eric Holcomb’s administration not to fritter away the cash on this and that and the other thing that don’t add up to anything consequential.
That doesn’t mean, of course, that the state should spend the entire $3 billion allocation in one place. Our stories last week explored how far $3 billion could go in addressing each of the areas we highlighted. We fully recognize, however, that splitting the money to use on a few projects could be more impactful. But notice we said “a few projects.” Three billion dollars is a lot of money—until you try to spend it to solve too many problems.
This is the moment to attack a problem that is usually dismissed because the solutions are too hard and too expensive. We’ve got the cash. Let’s do something big with it.•
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