A Chinese proverb says that a journey of 1,000 miles begins with a single step. Well, the Pueblo City Council took a first step toward recovery from the economic effects of COVID-19 this week.
The council approved a resolution allowing the use of $5 million from a half-cent sales tax fund set aside for economic development to help local businesses recover from the crisis. Businesses will be apply to apply for loans up to $100,000 and grants up to $20,000 from the emergency pool of money.
Mayor Nick Gradisar’s office will be responsible for developing a process for applying for the loans and grants. Presumably, that process will include the development of guidelines to determine eligibility for the assistance, as well as terms and conditions for repayment of the loans.
It’s important to recognize just how big of a step this is for the council. For decades, the half-cent sales tax money has been used to provide incentives for new businesses to relocate to Pueblo and existing businesses to expand their operations. It’s designed to attract so-called “primary jobs” to the community, which are generally those in the manufacturing industry.
Over the years, the fund’s critics have talked about redirecting some or all of that money to other purposes, including general operations of city government. Until now, the fund’s supporters have resisted such a move, citing the need to have a dedicated and stable source of funding for economic development projects.
However, we’ve reached a moment in time when “that’s the way we’ve always done things” rings a little hollow.
To their credit, officials at the Pueblo County Economic Development Corp. recognized the value of redirecting some of the half-cent sales tax funds on an emergency basis.
“Pueblo, as well as the entire country, is facing a health and financial crisis which requires us to consider a one-time change in how we use a portion of the half-cent sales tax fund,” Jeff Shaw, president of PEDCO, said about the initiative. “The purpose of these dollars is not intended to be a replacement or substitute to money being made available by the federal or state governments. Rather, these dollars are assigned to help Pueblo with capital needs in order for Pueblo businesses to recover as quickly as possible.”
The details of how these funds will be administered are important. If the city moves too slowly in doling out the money at its disposal, then some businesses might not be able to survive until help is available.
As big of a step as this was for the council, it might not be big enough. Depending on how long this lockdown lasts, $5 million may turn out to be a drop in the bucket in terms of the local business community’s overall needs.
In addition to the $5 million committed to emergency business relief, the half-cent sales tax fund has about another $8 million uncommitted to other purposes. It’s understandable that city leaders wouldn’t want to completely deplete the economic development fund if they can avoid it, but they should be willing to consider tapping that source again if necessary.
It’s important to remember that it is existing businesses that provide the sales tax money used to recruit new companies. If those revenues from existing businesses dry up, then there will be nothing available to fund economic development projects in the future.
This isn’t the total solution to the challenges our businesses will face in the months ahead. By like anything else, we have to start somewhere.