MUNCIE, Ind. — A Ball State study says state and local governments will suffer huge economic losses, no matter what happens the rest of this year.
Mike Hicks, the director of the Center for Business and Economic Research at Ball State, says Indiana has already lost $600 million in tax revenue in 2020, and it will get worse.
“The very best case scenario shows losses of, anywhere between $600 million and $900 million,” Hicks said. “In worst-case scenario, about $1.7 billion.”
It’s not just because of the Indianapolis 500 being postponed or the Indiana State Fair being canceled. Hicks says one of the big reasons is the number of people in the state that have lost their job. One in five Hoosiers has lost their jobs since February because of the coronavirus pandemic and the economic shutdown.
“So those folks are not paying taxes, or income taxes during this time period that they’re not earning income,” he said.
With many businesses either closed or open with restrictions, fewer people have gone out and spent money on activities or items during the pandemic.
It’s even worse for counties who have casinos and rely heavily on them for their annual budget.
“We’re talking about, just, stunning losses. In some cases, as much as 50 percent of tax revenues this year,” Hicks said.
The drastic losses in tax revenues across Indiana will have big impacts on things that money usually goes towards, like school budgets.
“As school starts this fall, we’re talking about pretty steep cuts,” Hicks said. “Even under optimistic scenarios, they run into issues for 2021.”
A smaller amount of tax revenue dollars also means less money for road maintenance, so you might have to drive around more potholes this winter.
The impact of the tax revenue losses will be long-lasting, according to Hicks. He says even if things head back in the right direction towards the end of 2020, many counties and the state as a whole could be in the negatives for the next two years.
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