From the start of COVID-19, small businesses have seen widespread financial struggles—ranging from complete shutdown or loss of revenue to near-standard success. In certain cases, the CARES Act and the recently passed stimulus bill offered some financial support to small businesses.
The success of local industries during the pandemic has rested in the hands of state and city government. Its influence has businesses to provide service in parking lots and provided financial aid in tax relief and grants.
Michael Overton, a University of Idaho assistant professor of political science and public administration collaborated with three other professors on a sample size study analyzing city governments’ abilities and limitations in aiding small businesses.
The framework around providing said support is denoted as Institutional Collective Action (ICA). There are two dimensions to this framework, which examine the social impacts and complexity of the possible actions of the city. Both dimensions deal with the ability of the city to involve itself and how many other groups must be involved.
Several cities around the U.S. have seen success from increased communication through dedicated websites and Zoom meetings while others have been able to create “interlocal agreements” (ILA). These agreements legally bind public and private institutions to a financial relief fund.
In Moscow’s case, city aid to local businesses has been limited, but not by choice. Art Bettge, a veteran Moscow city council member, discussed plans as early as March for financial relief, but was held back by boundaries out of his control.
“It is limited by our state legislator,” Bettge said. “Which strictly and specifically prohibits the use of public funds to private entities as a pass through. It’s 100% illegal in Idaho.”
“Our extremely conservative legislator is not amenable to allowing any public funds from cities or counties to be funneled to businesses directly, either through direct payment, salary support or waiving of taxes.”
Bettge said the closest thing the city was able to provide in direct financial relief to businesses was forbearance and postponed payments for city utilities, including water, sewer and sanitation services. Moscow’s city council also allowed restaurants to slightly expand into street parking to provide increased social distancing.
The Moscow Alehouse experienced both a shutdown and decrease in sales earlier in the pandemic, but now sees regular numbers with increased distancing and safety precautions.
As students return to campus, Moscow’s local industries will begin to see an influx of traffic and revenue. However, Overton thinks “we haven’t seen the full effects of COVID-19.”
“It’s not going to (financially) hit (UI), for example, until spring, maybe even fall 2021,” Overton said. “The local governments are doing the same thing. They are about to start doing budget processes which are heavily reliant on sales tax collection, Sales tax is going to be dropping like a rock. Without a significant state or local government bailout, you’re going to see a long, brutal recovery from the pandemic.”
This story has been updated to correct formatting errors and the subtitle.
Carter Kolpitcke can be reached at arg-news@uidaho.edu