Monroe County, Bloomington both putting food and beverage tax money towards COVID-19 economic relief

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Screen grab of the March 25, 2020 meeting of the Monroe County council, conducted on the videoconferencing platform Zoom.
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Screen grab of the March 25, 2020 meeting of the Bloomington city council, conducted on on the videoconferencing platform Zoom.

Added together, Bloomington and Monroe County’s respective shares of unexpended food and beverage tax revenues, collected countywide since early 2018, stand at around $5.7 million.

In separate actions over the last week, Bloomington and Monroe County elected officials have taken steps towards appropriating $2.2 million of that money for relief of businesses impacted by the COVID-19 pandemic.

By early Wednesday, March 25, COVID-19 had claimed 14 lives in the state of Indiana.

Restaurants are now shut down for dine-in service under an order issued by the governor on March 16. Initial unemployment claims in Monroe county last week totaled 934, more than twice the peak number filed in any week since 2008, including that year’s economic downturn.

R-OUT Unemployment Initial Claims Monroe County 2008-2020

Action by city and county officials has come in response to an online petition authored by Switchyard Brewing Company’s Kurtis Cummings, calling for the use of already accumulated food and beverage tax revenue to go towards relief of small independent Monroe County businesses.  As of Wednesday evening, over 12,000 people had signed the petition.

Cummings told the Bloomington city council on Wednesday night that even in the week before the governor’s order, his business was off by more than 50 percent and he’d had to lay off all 24 of his employees. “Nowhere in the business plan does it say worldwide pandemic’,” Cummings told Bloomington city councilmembers.

The petition, Cummings said, was written for Switchyard’s staff, to show them “we are constant pushing forward for them.”

Also addressing the city council during public commentary time on Wednesday was Chris Martin, with Finney Hospitality. A month from now Martin said, maybe 50 percent of restaurants in Bloomington would cease to exist. Anything the city council could do would help, Martin added.

A question about the legality of using the tax revenue for economic relief of local business appeared to have been answered during a Tuesday meeting of the food and beverage tax advisory commission (FABTAC). But based on discussion at the Bloomington city council’s meeting held the following day (March 25), some lingering uncertainty might exist on that point, as final word is awaited from the State Board of Accounts.

For both the city and the county, the administration of the funds requires sorting through questions like: Which businesses are eligible for support? For what specific purposes can the money be spent?

For Monroe County’s part those questions will get answered by the three-member board of county commissioners led by Julie Thomas. Based on discussion at a special county council meeting held on Wednesday, county councilors want some input on how the commissioners administer the relief funds. [Updated March 26, 2020: The county’s website has been updated to include an application for businesses to fill out: “Please provide as much information as possible on the Monroe County Covid-19 Virus Relief Application .  Send the completed form to FBsupport@co.monroe.in.us.”]

For the city of Bloomington, some guidance on those questions is expected to come from constraints written into an appropriation ordinance that will likely get a first reading on Wednesday (April 1) next week and a second vote the week after that.

FABTAC

In order for either the city of Bloomington or the county government to expend food and beverage tax money, their respective legislative branches have to request a recommendation from the food and beverage tax advisory commission (FABTAC). The FABTAC is a seven-member group made up of two city electeds, two county electeds and three owners of businesses that collect the 1-percent tax, which was enacted by the county council in late 2017.

Bloomington’s and Monroe County’s formal action in the last few days has been separate, because each governmental unit gets a separate share of the food and beverage tax revenues. For money that’s part of its share, each of the legislative branches can request the necessary recommendation from the FABTAC.

The city’s share of the food and beverage tax revenues is 90 percent. Monroe County gets the other 10 percent. The 90-10 split is reflected in the relative amounts that the county and the city have separately requested that the FABTAC recommend for COVID-19 economic relief.

On Wednesday last week (March 18), Monroe County’s board of commissioners approved a request to the FABTAC  for spending $200,000 on economic relief related to the COVID-19 impact.

On Wednesday this week (March 25), Bloomington’s city council approved a similar request to the FABTAC, for $2 million.

At a special session of the FABTAC convened Tuesday (March 24) this week, the FABTAC approved the request from the county commissioners. The following day, the county council acted to establish some budget lines and transferred $200,000 from already appropriated funds to one of the new lines, which is called “36999 COVID‐19 Emergency Contractual.” The line from which the money was taken will be “backfilled” once the appropriation is done, sometime in April.

The backfilling approach came from guidance given by the State Board of Accounts, Margie Rice, county attorney, said at FABTAC’s Tuesday meeting.

Bloomington’s city council is taking a slightly different approach. At its meeting on Wednesday night (March 25), the council approved a resolution requesting that FABTAC consider recommending use of $2 million by Bloomington for economic relief. The council is expecting to meet the 10-day noticing requirement for an April 7 vote on an appropriation ordinance.

Already at its meeting the day before, the FABTAC had anticipated Wednesday’s action of Bloomington’s city council—Steve Volan is president of both groups. The FABTAC scheduled a meeting for Friday at 5 p.m. to consider any request that the city council might approve at its Wednesday meeting.

The amount of the city’s $2 million request drew a question Wednesday night from Bloomington city councilmember Matt Flaherty, based on the amount of money that’s not yet expended, compared to the amount that is already earmarked for something else.

Judged on that basis, the situations of the city and the county are different.

Of the $700,000 in tax revenue accumulated by the county, $500,000 has been approved by the FABTAC for the county’s planned limestone heritage designation site. That still leaves room for the $200,000 the county is planning to use for COVID-19 economic relief.

Bloomington currently has about $5 million of unexpended funds in its share of the food and beverage tax revenues. But Bloomington’s city council has already appropriated $6.25 million of the food and beverage tax money. That appropriation is supposed to go mostly for architectural fees, if the current negotiations between city and council officials ever put the chosen architect under contract for the final design work.

So Flaherty wanted to know how the $2 million would fit into that picture. City controller Jeff Underwood told Flaherty that the accounting still needs work and could require cutting back on other commitments.

The convention center expansion project appears that it will now be delayed even longer due to the COVID-19 pandemic—it’s not clear how much longer.

Another significant city initiative will also be delayed, due to the COVID-19 pandemic, Flaherty confirmed at Wednesday’s city council meeting. The proposal to increase the local income tax by 0.5 points to pay for climate action initiatives is “not appropriate at this time to recommend,” Flaherty said.

Flaherty chairs the city council’s climate action and resiliency committee that had been charged with the responsibility of public engagement and development of a more specific proposal, after Bloomington mayor John Hamilton’s New Year’s Day announcement.

Accounting, accountability, swift action

A common theme in the discussion among city and county electeds, as members of their respective bodies and in their service on the FABTAC, has been the need to balance accountability and transparency on one hand, with swift action on the other.

At Tuesday’s FABTAC meeting, county attorney Jeff Cockerill said that an audit trail on the COVID-19 emergency expenses could be established along the lines of what the county requires with Sophia Travis social services grant funding. Recipients of Sophia Travis grants have to provide an accounting for what how the money was spent, Cockerill said. In the same way, the COVID-19 relief expenditures could be checked to make sure the recipient uses the money in the way it is intended.

Sophia Travis grant funding is already connected to the COVID-19 emergency relief, in a different way. The previously reported allocation of $25,000 to the Hoosier Hills Bank and another $25,000 to the United Way’s COVID-19 Emergency Relief Fund tapped funds allocated annually for the Sophia Travis community service grants. The county’s intent appears to be that it will later backfill that money.

At Wednesday’s county council meeting, a key step approved by county councilors was the transfer of already appropriated funds from one budget line to a newly created one.

FROM:
33025 HealthNet, Inc. $200,000
TO:
36999 COVID‐19 Emergency Contractual $200,000

The new budget line, beginning with “COVID-19,” is one of four created by the county council on Wednesday.

According to county auditor Cathy Smith, establishing separate budget lines for emergency expenditures—each starting with “COVID-19″—will allow the county to “keep our eggs in one basket.” That would be useful, she said, if a request is made of the federal government to reimburse the county for money it has expended to deal with the impact of COVID-19.

Smith cautioned against creating layers of approval that could delay getting the authorization from commissioners, then to her, so that she could cut a check and get it out the door to the recipient.

How will the money be spent?

In addition to the challenge of achieving accountability, an additional complication arises from the way the funds are distributed.

At their Wednesday meeting, county councilors focused on the fact that it’s the workers for the business they want to help. During public commentary, Vauhxx Booker told county councilors the reason the online petition has so much support is because people want to see the workers helped.

During Bloomington’s city council meeting on Wednesday, councilmember Matt Flaherty reported that he’d heard from several constituents, who had concerns about the money going to business owners instead of workers or former employees. He said he wanted to want to spotlight that issue as the council looked at the wording of its upcoming appropriation ordnance.

A concern that the food and beverage tax money might wind up just being passed through to the lenders or the landlords of businesses was aired by county councilor Geoff McKim, when he addressed the FABTAC during public commentary at its Tuesday meeting. “I think it’s only fair that the landlords and the lenders take somewhat of a haircut, if possible, ” he said, adding, “It’s only fair.” McKim expressed similar sentiments during the county council’s Wednesday meeting.

Who gets the money?

In addition to decisions about how businesses will be helped, the question of which business will be helped could prove to be complicated.

Both resolutions—the one approved by the county board of commissioners and the one approved by the city council—allow for businesses to be supported that don’t collect the food and beverage tax. The only requirement is that they be related to tourism.

Alex Crowley, Bloomington’s director of economic and sustainable development, offered his perspective at Wednesday’s city council meeting—that the definition is more restrictive than what he’d recommend. The idea is not to be reckless, Crowley said, but he wants to make sure that it’s not the case that a good use of funds is identified, but later discovered to have been excluded at the beginning.

Bloomington’s corporation counsel, Philippa Guthrie, said the constraint on the connection to tourism comes from the statutory description of how the funds can be spent. Under the state statute, food and beverage tax money can be spent only “…to finance, refinance, construct, operate, or maintain a convention center, a conference center, or related tourism or economic development projects.”

While Crowley sees the definition as too restrictive, FABTAC member Susan Bright, owner of Nick’s, thinks it’s not restrictive enough. Bright said at FABTAC’s Tuesday meeting she thinks the relief money should be restricted just to those business that collect the food and beverage tax. The key difference is that such businesses have perishable goods, she said. Bright said had $150,000 worth of food in her refrigerators that she is now trying to figure out how to preserve.

The participation of Bright and Lennie Busch, co-owner of One World Enterprises, in FABTAC’s vote on Tuesday likely won’t be repeated on Friday, when the group meets to consider the Bloomington city council’s request.

At FABTAC’s Tuesday meeting, county attorney Jeff Cockerill said that FABTAC members should recuse themselves if they might get a direct benefit from the relief funding.

The request from Monroe County commissioners limited the funding just to those business outside the city limits. Bright and Busch’s businesses are inside the city limits, so they participated in the vote.

But on Friday, the question in front of FABTAC will be whether to recommend funds that could benefit businesses inside the city limits.

Based on the same consideration, FABTAC member Tony Suttile, of Fourwinds Lakeside Inn & Marina, could participate in Friday’s vote. Suttile did not attend Tuesday’s meeting, but presumably would have needed to recuse himself from that vote.

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