MONTPELIER — The Legislature’s Joint Fiscal Committee isn’t ready to sign off on a $75 million request from the administration of Gov. Phil Scott for additional coronavirus relief for businesses.
The panel, made up of members from the state House and Senate’s financial committees, deferred action Monday on the request until Saturday.
The reasons were twofold: Some lawmakers wanted assurances that funds would go to the neediest businesses, most notably the hard-hit hospitality industry; others said with winter coming and prospects of additional federal aid questionable at best, funds should be dedicated to social safety net programs.
The committee has the task of reallocating more than $81 million in CARES Act federal coronavirus aid that has yet to be spent. The bulk of the funds came from a health care stabilization grant program, and lawmakers are still waiting to hear from health care stakeholders if they are comfortable with the proposal.
State Sen. Dick Sears, D-Bennington, was among voices seeking assurances that the hospitality sector, hard-hit by the pandemic and by Vermont’s quarantine rules, would be a significant portion of whatever relief funds are reallocated.
“I want to make sure whatever we do that the hospitality industry is targeted with what’s left,” Sears said. “They are hurting because of our restrictions.”
Right now, Sears said, would-be visitors from just over the state line in New York can’t come to Bennington County for a weekend getaway at an inn without a 14-day quarantine, or seven days’ quarantine and a negative PCR test. The impact on the county’s inns and hotels has been significant.
“I want to make sure we don’t lose sight of that group. I want to be sure we target a portion of whatever’s left for an industry which, to my mind, has been hardest hit,” Sears said. “Please let’s not lose sight of that. “
The panel needs to act this week. Under legislation passed this summer, the administration must submit its request for reallocating CARES Act funds to the Joint Fiscal Committee, which then has 10 days to approve or turn down the requests.
Between now and Saturday, lawmakers have a lot to think about.
During Monday’s hearing, Joint Fiscal Office and economists Tom Kavet and Joyce Manchester briefed the committee on how funds might best be spent, and whether the Scott administration’s criteria for determining need among businesses would result in the funds doing the most good.
The state Agency of Commerce and Community Development (ACCD), in determining grant awards to businesses, based its decisions on how much revenue businesses had lost over a period of 2020, compared to revenue from the same period in 2019.
The JFO analysis took issue with that, saying that profitability, or lack thereof, is a a more accurate measure of whether a business faces imminent failure. Kavet and Manchester said that ACCD could use profit and loss statements to determine which businesses were at greatest risk.
“If we’re simply talking about replacing revenue we may not be defining the true unmet need very accurately,” Manchester said. But both Manchester and Kavet acknowledged that a more thorough review of business finances is likely impossible given the short time constraints.
But Joan Goldstein, the state commissioner of Economic Development, said ACCD staff had debated using profitability as its criteria, but decided against it after determining it was problematic.
“It’s not a question of expedience. It’s a question of equity,” Goldstein said.
Furthermore, profitability doesn’t protect a business from having to shut its doors, she said. Furthermore, profitability might reflect that a business laid off workers to survive.
“Really, the determining factor is cash flow. Lack of cash will close a business down,” she said.
Members said they needed more time to consider the administration’s requests.
“I need to understand that in much more detail before I can support that,” said Rep. Mary Hooper, D-Montpelier.
The committee also heard from Labor Commissioner Michael Harrington on the health of the Unemployment Insurance trust fund, which pays unemployment benefits to Vermont workers.
The fund remains in good shape, particularly when compared to some other states, Harrington said. It presently sits at $262.1 million, about half of where it stood at the start of calendar 2020.
But the fund could be depleted to zero if the state has to go through another COVID-19 shutdown, Harrington warned. According to the Labor Department, a doubling of new unemployment claims would bring the fund to about zero; steeper increases in joblessness would put the fund squarely in the red.
In that case, the state would be able to borrow from the federal government to cover the shortfall, as it had to following the 2008 recession, Harrington said. But that loan would have to be repaid out of the state’s general fund.
State Sen. Richard Westman, R-Lamoille, said he’d like to replenish that fund if possible.
“If the unemployment rate goes over 10 percent ... it wouldn’t take much of a shutdown to reach 10 percent and that scares me,” he said.