Control our fiscal destiny
What we can do on the local level
As I write this, 300 million people are heading for the “fiscal cliff.” Their fate is in the hands of the president of the United States and the Speaker of the House, who sit 400 miles and five states away.
And if that bus goes over that cliff, there will be huge local consequences. Not only will our taxes go up, as much as $4,000 for middle class families. There will be cuts to Medicare, which will make it harder for people to get the health care they deserve. Those in greatest need will see draconian cuts in human services such as child care, food, mediation services, heating assistance, etc. There will be less money for physical infrastructure, our roads, bridges and schools.
In addition, many types of tax credits, which encourage private funding of community projects, will be eliminated. Specifically, future projects that were made possible by the New Markets Tax Credit program will no longer be available. This credit attracted essential financing for the downtown revitalization of Greenfield and made the Greenfield Solar Farm at the transfer station possible. The River Valley Market in Northampton, the Holyoke Community Health Center and the Holyoke Library would not have happened without those credits.
The moral of the story is that we are far too vulnerable to forces beyond our control. We need to have more ownership of our local economy. Our work force, our schools, our industries require it in order to have more control over our local destiny.
It may seem like a tall order but let’s consider what we already have. Using 2010 figures, there was $24.3 trillion invested stock and bond markets. This averages to $129,000 for every adult in the county. While a strong national economy brings benefits to most local economies, we cannot target investments to our communities in a way that will directly foster local growth and will help to cushion the local economy during downturns.
Proportionately, the Pioneer Valley (Hampden, Hampshire and Franklin counties) with an adult population of 544,482 (2010 census) had invested over $70 billion outside of the community.
This is only an estimation based on the assumption of a uniform distribution of regional investment into the outside markets. However, what it indicates is that there are vast amounts of capital that have left the region. If we could focus 1/100th of that investment directly on our region, we would be investing $661 million in our local economies, annually. That would cover the cost of the River Valley Market Project, the Greenfield Solar Farm, the Holyoke Health Center and even the Holyoke High Performance Computing Center (at $170 million) and leave $445 million.
It is not a question of having the local resources. We are truly in a situation where there is “water, water everywhere but not a drop to drink.” The issue is finding ways to deploy that capital in a manner that will provide a real financial return, in addition to a “social” return.
We need to close the circle from merely “buying locally” to also include options for “investing locally.” The solution lies within the region by making opportunities for local investment. How can we do that? Common Capital has taken a first step and formed a local investment fund called the Community First Fund which offers a 2 percent return on secured loans made to local businesses. ( www.common-capital.org ).
Creating opportunity for local investment is difficult. Even with ample funds for investment, it can be difficult to invest in local business. They need the capital but it can be riskier to invest. To help mitigate that risk we provide support to businesses to help them acquire the necessary skills and knowledge to succeed. Also, community projects such as health centers, libraries, theaters and community centers all need capital but where is the return for the local investor? There are multiple federal and state incentives which are designed to increase returns for institutional investors. We need to create similar incentives for local investors.
The solution is in our hands. Over the next few months Common Capital, with many sponsors, will be providing local forums for the discussion to continue. Stay tuned! Let us vow never again to be as beholden as we are today to two people in Washington whose primary interest is not western Massachusetts.
Christopher Sikes, the CEO of Common Capital, lives in Greenfield.