UPDATE: The Joint Fiscal Committee met Saturday morning and unanimously approved the Scott Administration's proposal to dedicate $75 million of reallocated Coronavirus Relief Fund dollars to relief grants for the lodging and restaurant industry.
by Timothy McQuiston, Vermont Business Magazine The Joint Fiscal Committee could vote as early as tomorrow to allocate $75 million in Coronavirus Relief Funds to help businesses get through the pandemic. These funds would go to the Expanded Emergency Economic Recovery Grant Program, which piggybacks on top of a $76 million allocation in October.
Most of the money would go to the hospitality sector, which has been hard hit by the pandemic. Just today, because of record COVID-19 cases in the state, Governor Scott announced that bars must shut down starting at 10 pm Saturday.
The governor and his administration have been pressing the Legislature to use this $75 million (of the nearly $115 million in still-available CRF funds) to help lodging and restaurants and related businesses get through the economic downturn. See allocation table below.
The money is actually a re-allocation of funds that were budgeted but were either unspent or the need was met in other ways as the year went on.
Federal guidance requires CRF funds must be disbursed by the end of the year. The CRF is part of the $1.25 billion CARES Act money Vermont received from the federal government.
The governor noted at his regular Friday press briefing that these hospitality businesses need five or 10 times this amount of funding to be made whole, but this is all the state has to offer and it should be allocated as soon as possible.
Congress will need to appropriate another massive recovery package to restore the economy, Scott said. He said he was texting with Congressman Peter Welch on this subject Friday morning.
Last April, Congress passed the $2.1 trillion CARES Act. The House passed an even bigger package at the end of summer.
But the new recovery plan got bogged down in politics and never got past the Senate.
It appears that any new federal package will have to wait until Joe Biden becomes president in January. But, still, the US Senate is looking for a much smaller package.
As for these $75 million, legislative rules require that they cannot allocate funds – as they do during the regular legislative process – but only approve or reject recommendations by the administration.
In this case, negotiations between lawmakers and the administration have revolved around how the formula to allocate the funds should work.
Both sides agree that these businesses are in desperate need.
The existing formula is based on “unmet need” as determined by lost revenue during the pandemic minus pandemic recovery or stimulus funds already received.
There was much discussion between legislators and the administration on whether the “unmet need” should be predicated on revenue or on their break-even point (profit line).
It appears legislators will stick with the administration’s current revenue formula. In part, the break-even point has changed substantially from where these establishments were a year ago.
A restaurant, for instance, likely has laid off a substantial portion of its workforce, which therefore changes its profit and loss statement.
But the point is to get these businesses back up to their employment levels from a year ago. Plus, the ACCD would not need to re-engineer the funding formula or require more paperwork from the businesses if they keep the same formula. The qualifying businesses would just get more money.
Grants are capped at $300,000 per company.
Many if not most businesses have received grants or loans from the federal and state government already.
The Paycheck Protection Program (PPP) was a popular part of the CARES Act that was basically a grant program intended to keep people employed by supporting companies for not laying off workers.
The Small Business Administration also provided grants and very low interest, favorable term loans through its Economic Injury Disaster Loan (EIDL) program. The state also offered its own grants through the CRF.
All these programs were considered successful, but the pandemic has outlasted the money. Hospitality businesses that are still operating are at lower levels than last year, assuming they reopened at all after being closed down in the spring.
Some restaurants already have announced they will close for good and now the governor has ordered bars to once again close.
At the JFC meeting November 8, the Agency of Commerce testified that there was over $500 million in aggregate Net Unmet Need for the second round of this program, $317 million for the Department of Tax program and over $300 million for the ACCD program.
(Tax took applications for those businesses who largely paid sales or rooms & meals taxes, ACCD took applications from all other businesses.)
After applying the $300,000 cap to these applicants, however, the total amount of eligible grants to these businesses would be around $215 to $230 million, the administration said.
This means that the $76 million currently appropriated to the program would cover roughly one-third of the capped amount requested.
Should the committee increase the funding another $75 million as requested, approximately 60-65 percent of the capped requested amount could be met.