Happy Wednesday! Thanks to Sean Noble from ReadyNation for sharing information this morning on our virtual conference call about the crucial role that child care and early education plays in our economy and future workforce. The recording and some additional info can be found on our COVID resource page.
Fed Funding Latest
Early yesterday saw some reports of the players in negotiation getting frustrated and ready to take actions to force some movement. Speaker Pelosi suggested that no deal would be likely until next week and seems to be waiting for the GOP to fold soon. Meadows and Mnuchin are at odds over enacting executive actions and claiming victory for the President. Meadows seems to be fed up with talks, but Mnuchin pushes to get something agreed to. Usually there will be one stumbling block to work through. These negotiations however seem to have many. They’re talking about state and local funding, schools, SNAP, USPS, broadband, rent, and mortgage relief. Unfortunately, the big points like unemployment insurance and liability have not been touched.
A weeks’ end deadline was floated, but high hurdles remain. Senate Republicans were told Tuesday to plan to stay in town next week, which would allow for votes on a potential deal — or they could find themselves hanging around to give negotiators more time to talk.
Then, last night talk of some concessions surfaced. Concessions from the Republicans include:
- Enhanced unemployment insurance: An additional $400 per week until Dec. 15 (their initial offer was an extra $600 per week for a week)
- Eviction moratorium: extended through Dec. 15
- State and local: $200 billion (up from “flexibility.” Dems say the GOP only offered $150 billion).
The Democrat Concessions:
- Their USPS ask went from $25 billion to $10 billion — subject to a meeting with the postmaster general
Finally, Senator Mitch McConnell told reporters that he is “prepared to support” a proposal including the $600 in enhanced unemployment insurance benefits. He made the statement knowing that consensus amongst Republicans was not going to happen, but if the President and his administration were on board then he could go along. Overall, the progress is slow, but at least we are now talking about some progress. We’ll see what transpires next.
A letter from 100 industry leaders urged lawmakers to consider a new relief effort aimed at supporting small businesses hardest hit by the pandemic for the next several months. More than 100 current and former CEOs of some of America’s biggest companies, including Starbucks, Microsoft, the Walt Disney Company, and Salesforce, offered a chilling warning for lawmakers on Monday: “By Labor Day, we foresee a wave of permanent closures if the right steps are not taken soon. Tens of millions of Americans have already lost their jobs in this pandemic. Allowing small businesses to fail will turn temporary job losses into permanent ones.”
While the PPP, the $669 billion forgivable loan program aimed at providing aid to small businesses, helped limit some initial economic damage from the pandemic, the letter concludes that it falls short in providing ongoing support. Despite its being extended through August 8, the PPP’s uptake has been anemic in recent weeks; roughly $130 billion remains up for grabs.
While another round of the PPP could help, there is skepticism about whether that program would be enough to help harder-hit industries, which will need more significant and sustained support. That is the premise of the Restart Act, proposed by senators Michael Bennet (D-CO) and Todd Young (R-IN) in May. Among its key points, the Restart Act would offer funding to cover a business’s payroll, benefits, and fixed operating costs for a period of six months. Funding would be based on a company’s revenue hit during the Covid-19 pandemic.
Program loans, which could be forgiven in part, would come with a fixed interest rate between 2 percent and 4 percent for the first two years and a variable rate thereafter until year seven, when the loan is due.
Unlike the PPP, which largely requires companies to maintain employee head count and salary levels to get a loan forgiven, Restart’s forgiveness calculation would be based on the amount of revenue loss a business had experienced during the pandemic. And loan funds could be used toward broader purposes–like purchasing personal protective equipment and servicing debt payments–that aren’t currently supported under the PPP.
While the Restart Act has wide bipartisan support in Congress, it has failed to gain support with either side’s leadership, who are backing other proposals.
State of the State
Illinois Comptroller Susana Mendoza recently stated that she believes big challenges lie ahead for the State of Illinois. After surviving a 700+ budget impasse, the state started to climb back to overturn the crippling of state operations, human service providers, and higher education. The state was paying down a backlog of unpaid bills, investing in education, and looking forward to a new statewide construction program that would pump money into the economy and put people to work.
Obviously, with the pandemic forcing people to stay home, record breaking unemployment, and restrictions on business, less revenue has been collected by the state and many tough decisions face us all as we move on. Governor Pritzker said that Illinois faces the prospect of having to make deep spending cuts over the rest of the fiscal year if Congress does not pass an economic relief package that helps states make up for the massive loss in revenue they’ve seen since the start of the COVID-19 pandemic.
The budget for the next year is very dependent on federal funding and if you’ve been following the back and forth negotiations in DC, that is not yet a sure thing. That budget was roughly $5 billion out of balance compared to revenue estimates available at the time, but the plan was to fill in the gap by borrowing from the Federal Reserve and by passage of a proposed constitutional amendment to allow the state to levy a “graduated” income tax that would impose higher tax rates on higher levels of income.
The budget authorized borrowing roughly $4.5 billion through the Federal Reserve’s Municipal Liquidity Facility, something the Fed board approved earlier this year as a way to help state and large local governments make up for the loss of revenue they’ve seen. In Illinois, the plan was to borrow that money and pay it back with aid that lawmakers expected Congress to approve.
New Pandemic Cannabis Records
Purchases surged 28% to $60.9 million, beating a strong increase in June. In comparison, June sales came in at $47.6 million. Several new retail locations did open in the month and production was ramped up to meet increasing need. Sales per day have increased 70% since March. Remember, the market here in Illinois just began in January and seems to be experiencing steady growth.
The U.S. Postal Service (USPS) is under intense partisan scrutiny from both President Trump and Democratic lawmakers, who are warning the agency is ill-equipped to handle the tens of millions of mailed-in ballots expected to be sent for the November election. There are fears that ballots that are late, missing or disqualified for small irregularities will lead to lawsuits and questions about the integrity of the elections.
Chicago Fed Survey
The newest version of the Chicago Fed Survey of Business Conditions is open for collection of responses. The last day to respond is Friday, August 7. You can access the survey here:
Finally, here again is an extremely short survey on a topic that can have some scrambling at the end of the year. The State of Illinois has mandated sexual harassment training and we are interested in hearing how many organizations have complied so far and for those that have not, what the interest would be in a group training. We look forward to your responses: https://www.surveymonkey.com/r/6F782PV
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry