INside Story

Did Indiana need all the CARES Act money it received? Economist weighs in

INDIANAPOLIS (WISH) — Funds from the federal CARES Act saved a lot of people from economic disaster. Nationally the program has been ripe for fraud and misuse. Here in Indiana, we have not seen widespread abuse of the money. But did Indiana really need every dime that was sent our way?

From Lake Michigan to the Ohio River, more than 500 Indiana cities, towns and counties received hundreds of millions of dollars from the CARES Act. With guidance from the federal government, the Indiana Finance Authority tracked and approved the spending.

I-Team 8 obtained thousands of documents detailing how the money was used. We found the money was used to buy basic medical supplies, pay the salaries of front-line workers and build temporary medical facilities. We also found the money paid for drones and new ambulances, along with legal and consulting fees.

Indianapolis used millions to pay for hotels room to shelter the homeless. The list is voluminous, but was it all necessary? According to Matt Will, a financial economist with the University of Indianapolis, it was not.   

“Coronavirus was really, I think, was really an excuse to justify massive expenditures at the federal, state and local level,” said Will.

Will says when the government shut down the economy, they had some responsibility to make up for lost revenue. He questions whether the money has been used and distributed in a fair and equitable manner.  

“So, there are a lot of giveaway, here, really going to large cities and sophisticated jurisdictions that can afford the expertise to get the money. Supposedly this is to help everyone equally, but it does not because the small disadvantaged or not as sophisticated rural communities are not going to be able to file the paperwork to get the resources,” Will said.

I-Team 8 found a few smaller cities and towns hired outside consultants to navigate the CARES Act paperwork, and the consultants’ fees were paid for by CARES Act money. 

For some Indiana political leaders, the question now is: Can the state and federal governments pay for these programs?

Boone County Commissioner Tom Santelli is one of those asking. 

“The government is basically, unless the raise the debt ceiling, is out of money. It seems like today we talk, we used to talk in tens of millions, then we talked billions and now we talk in trillions and we don’t have the GNP to support it. We don’t have the tax base to support it,” said Santelli.

With the infusion of federal money, Will says there will be a tax revenue surplus here in Indiana, which means the state will issue a refund, further questioning why Indiana needed the federal money in the first place.

“The surplus is so significant because of CARES Act funding that Hoosiers are going to get a tax refund this year, so that just tells you how much money was fed from the federal government into the state coffers,” Will said.

Between the federal CARES Act and the American Rescue Plan, Indiana will receive $9 billion from the federal government. To put that into perspective, that is about half of the overall annual state budget.

This is the fifth story in a series we’re calling “INside Story.” The rest of Richard‘s stories looking into coronavirus relief bill spending aired this week on News 8.

 

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