Rural Communities Strengthened, Connected by Rural Finance Development
In April, more than 20 rural economic development groups gathered in Harrisburg, South Dakota, for the “Upper Great Plains Rural Finance Gathering.” The members of this diverse group work to increase access to education, healthcare, jobs, and other key services in rural communities across the nation. The group shared insights, success stories, and tackled many of the challenges facing rural community development. The hot topic? Protecting key federal community development programs most effective at supporting rural communities.
Congress finally passed an omnibus bill last week to fund the federal government for the remainder of Fiscal Year 2017. Now, Congress quickly turns to its work on 2018, which is presently underway. In addition, both President Trump and Congress are working to move along tax reform.
Community development organizations are watching these processes from the edges of their seats—and with good reason. The Administration’s “skinny budget” called for drastic cuts and would even eliminate many community development and housing programs that are used to spur distressed local economies and create jobs in rural communities like those Dakotas America deploys here in South Dakota and the region. While many communities have emerged from the Great Recession, that job is by no means done—especially in rural communities where limited private investment and new business continue to thwart economic growth.
The takeaway from our Rural Finance Gathering? Resources for federal programs that have a proven track record in accomplishing these goals, should be a priority. USDA Rural Development and the US Treasury’s Community Development Financial Institution (CDFI Fund) programs, including the New Markets Tax Credit (NMTC), more than fit that bill.
The NMTC is a particularly effective community development tool. Enacted in 2000, it is a bipartisan effort to spur private investment and economic growth in low income urban neighborhoods and rural communities that lack access to the patient capital needed to support and grow businesses, create jobs, and sustain healthy local economies. The NMTC provides taxpayers with a 39 percent federal tax credit, taken over seven years, on investments made in economically distressed communities. In short, the NMTC encourages the private sector to step up to the plate and join forces to help revitalize the rural communities that need it most.
In South Dakota, between 2003 and 2014, the NMTC has leveraged over $153.5 million in project investments in low income communities, creating over 2,000 jobs, including construction and full-time positions. Nationally, $42 billion dollars in NMTCs leveraged over $80 billion in total capital investments and created some $750 million jobs—all in economically distressed communities.
For years, the NMTC has periodically expired and Congress has had to extend the program. And while Congress has continuously extended the program with strong support from both Republicans and Democrats for years, it is time to make the program permanent. The program creates jobs, encourages economic investment in rural communities like our own and more than pays for itself – it’s a win-win-win.
Thankfully, a bipartisan group of members in the House of Representatives and Senate have introduced the New Markets Tax Credit Extension Act of 2017 to do just that – make the program permanent.
The need for permanency has never been greater. Federal community development funding has declined 75 percent over the last 40 years. This steady decline has left communities – rural communities in particular – in serious need of attention. Programs like the New Markets Tax Credit help to fill the gap and bring capital into rural communities where it otherwise would be limited.
The recent roundtable, hosted by Dakotas America, was an opportunity for dozens of people representing rural interests across America to share their experience with using the New Markets Tax Credit. The group, representing more than 20 economic development groups, including Dakotas Resources, Four Bands Community Fund, REED Fund, GROW South Dakota, a representative from Senator John Thune’s office, and many others.
Rural America feeds and provides energy to the entire nation and beyond. This work to keep rural places vital to America takes people and communities with a passion for quality access to healthcare, education, and critical services just like everyone. Without access to capital and programs like the New Markets Tax Credit, CDFI Fund, and USDA Rural Development it’s not simply rural America that faces a problem—it is every one of us.