Chamber Members:
Happy Friday! Looks like it will be a nice and warm weekend. In today’s wrap up to the week, news comes from Springfield that the government will drop their plea to use federal funds to pay off borrowed funds. Additionally, more news from both sides of the infrastructure debate as Republicans and the White House go back to another round of proposals and discussion with a Memorial Day soft deadline approaching quickly. Finally, some new aid starts to move out to those under the Shuttered Venue Operators Grant which is good news.
*Daily Coronavirus update brought to you by Silver Cross Hospital
Latest on Illinois Budget Talks – No Need to Utilize Federal Funds to Pay Debt
With less than 10 days before the legislative session wraps up, Governor Pritzker, Comptroller Susana Mendoza, and leaders of the General Assembly announced they are moving ahead with a budget that doesn’t rely on money from the American Rescue Plan Act to pay off the remaining $2 billion of a $3.2 billion borrowing bill. The Democratic leaders who control state government say Illinois can find enough revenue from April and May to pay off the debt early and save an interest payment.
The loan was scheduled to be repaid in three installments by December 2023. Instead, the Comptroller will utilize the state’s revenue overperformance and effective cash management to pay off the debt in its entirety within the next budget year. Early repayment of the borrowing will save taxpayers up to $100 million in interest costs.
The state was on pace to bring in nearly $1.5 billion more than expected in the current year and another $842 million in additional revenue in the fiscal year that begins July 1, according to the Tribune. “Repaying the federal government is an important step in our efforts to ensure the state remains on sound fiscal footing,” Pritzker said in a statement.
The news comes after months of hoping a portion of the $8.1 billion coming to Illinois from ARPA would be used to pay off the debt that occurred when the state borrowed money to shore up recent budget holes.
Senate President Don Harmon said the loan was “a lifeline to keep our state and our economy afloat” while the pandemic ravaged state finances. But the U.S. Treasury’s strict rules do not allow the money to be used to pay off debt — even if it’s debt to the U.S. Treasury. Sen. Dick Durbin and Rep. Raja Krishnamoorthi are both working behind the scenes in Washington to get clarification on that.
Lawmakers must forge ahead without ARPA help (for now). With state funds paying off the debt, Pritzker and Democratic leaders say it’s essential to close corporate tax loopholes to find $1.3 billion that avoid budget cuts in education, higher-education and human services. “It’s a very bad scenario,” House Majority Leader Greg Harris warned in a news briefing Thursday.
It’s a big sticking point for Republicans. Programs labeled by Pritzker as tax loopholes are meant to help small businesses and families, Rep. Tom Demmer told WSPYNews.com
Meanwhile, House Speaker Emanuel “Chris” Welch said the General Assembly “will continue to work on a spending plan” to use ARPA funds to help communities recover by establishing affordable housing, community-based mental health and substance abuse services, and upgrades to area hospitals in disproportionately impacted areas throughout the state.
GOP Infrastructure Talks Hit Crucial Stage
Negotiations between the White House and Senate Republicans over President Joe Biden’s $2.3 trillion infrastructure plan are hitting a crucial stage ahead of talks after the latest GOP offer left some dismay in the administration that there wasn’t more movement off the Republicans’ initial $568 billion proposal.
Republicans did increase their offer and have been working in good faith with the White House, according to a Republican granted anonymity to discuss the private talks. But the slog of the closed-door talks is certain to spark fresh worries from Democrats that time is slipping to strike a compromise. The president’s team had set a soft Memorial Day deadline to determine if a deal was within reach.
Senate Republican leader Mitch McConnell reiterated Thursday on Fox News that tax hikes on corporations or the wealthiest Americans are nonstarters. Republicans are unwilling to undo their signature domestic accomplishment with Trump, the 2017 tax cuts, which reduced the corporate rate from 35% to 21%. Biden proposes lifting the corporate tax to 28%. “If they’re willing to settle on target an infrastructure bill without revisiting the 2017 tax bill, we’ll work with them,” McConnell told Fox’s Larry Kudlow, a former Trump adviser. But he said a package topping $2 trillion or more “is not going to have any Republican support.”
The administration and the GOP senators have been in talks ever since Biden met with a core group of Republican negotiators last week over the possibility of working together on a plan. The White House dispatched the Transportation and Commerce secretaries and top aides to Capitol Hill to meet with the Republicans late Tuesday after the president asked the senators to provide more details on their initial offer.
The lead Republican negotiator, Sen. Shelley Moore Capito of West Virginia, was encouraged by the talks and expected the White House to be back in touch by week’s end, her office said. But there was “not a significantly changed offer” from the Republicans during their meeting with the administration this week, according to a person granted anonymity to discuss the private negotiations.
The White House’s hopes for a bipartisan deal on infrastructure have cooled but they have not abandoned the effort, according to an administration official not authorized to speak publicly about the private conversations. There was some dismay that the Republican counteroffer did not substantially budge from the party’s original $568 billion proposal, leaving it far short of the White House’s plan, according to the official.
White House Counters with $1.7 Trillion Infrastructure Proposal
White House officials are presenting a $1.7 trillion counterproposal to Republicans today in pursuit of a bipartisan deal on infrastructure, reducing the price tag of President Biden’s infrastructure proposal by nearly $600 billion.
“In our view, this is the art of seeking common ground,” White House press secretary Jen Psaki told reporters at a briefing Friday. “This proposal exhibits a willingness to come down in size, giving on some areas that are important to the president … while also staying firm in areas that are most vital to rebuilding our infrastructure and industries of the future.”
Psaki said that the counteroffer reduced funding for broadband expansion to match a Republican offer spearheaded by Sen. Shelley Moore Capito (R-W.Va.) and also reduced proposed investments in roads, bridges and other major infrastructure projects.
Additionally, the counterproposal shifted investments in research and development, supply chains, manufacturing and small business out of the infrastructure negotiations and into other ongoing legislative efforts, including the Endless Frontiers Act and the Chips Act, Psaki said. Further details of the offer are expected to be released later on Friday.
White House officials and Republican senators involved in the infrastructure negotiations have publicly expressed optimism about the ongoing talks, though there is broad skepticism among both parties that a deal can be reached. Psaki said Friday that the counteroffer also “reflects our view that the Republican offer excludes entirely some proposals that are key to our competitiveness,” noting that it falls short in investments in the power sector, building and construction, veterans’ hospital improvement, workforce training and home care.
Republicans have been critical not only of the size of Biden’s infrastructure proposal, which he laid out in March, but also of his proposed increase of the corporate tax rate from 21 percent to 28 percent to pay for the investments.
Psaki sidestepped questions on Friday about whether the White House adjusted the pay-fors, but she said the counterproposal mainly focused on investments. Biden remains opposed to raising taxes on Americans making less than $400,000 through a gas tax or user fees, she said.
White House officials say they want to see progress on infrastructure by Memorial Day – a deadline less than two weeks away – but it’s unclear exactly what they will view as progress.
Proposed Tax Hikes Would Hurt U.S. Competitiveness
President Biden proposes to raise the corporate tax rate to 28% from its current 21% level. The 2017 Tax Cuts and Jobs Act (TCJA) lowered the rate from 35% to the present level. Big picture: Prior to that reduction, the U.S. was bleeding investment and jobs to other developed countries because our rate was so much higher than the norm. The (weighted) OECD average is 26.3% (the OECD is an organization of developed nations). When adding on the average state rates, the combined rate was close to 40%. China is 25%. Ireland is 12.5%. These key facts alone show why tax reform was badly needed. The strong economy prior to COVID showed it was working.
The TCJA was not a rate reduction alone though. It was truly tax reform because it broadened the tax base to the tune of almost $700 billion. The business community paid for a big chunk of its tax rate cut. Raising the rate up to 28% is losing steam in Congress, but there appears to be a desire to raise it to 25% instead. President Biden has indicated willingness negotiate so the 25% rate may have more legs.
The President often argues that he wants to raise the rate less than the TCJA cut it. The implication being the rate increase won’t be too damaging because we won’t be going back to the prior rate. In fact, raising the rate to even 25% would be extremely harmful. Competitively it would put us back near where we were prior to tax reform. Combined with the average state rate, our rate would be 29.3%, back above the OECD average. And well above China’s 25% rate.
Further, comparing raising the rate under the now-broader tax base to the tax code prior to tax reform is an apples-to-oranges comparison. A recent report from the National Association of Manufacturers (NAM) shows just how damaging a rate increase to 25% would be. The NAM report finds a 25% rate would cost the economy 1 million jobs in the first two years and an average of 500,000 over ten years. It would reduce GDP by $107 billion in the first two years as well. These are large, painful effects.
Bottom line: The corporate tax hike is supposed to pay for infrastructure spending. We need that spending, but Congress would be better off finding a different way to pay for it than undoing the progress of tax reform.
Covid-19 Aid to Concert Halls, Theaters Set to Be Distributed Next Week
The Small Business Administration is aiming to start awarding Covid-19 aid to concert halls, theaters, and other live-entertainment venues early next week, according to agency administrator Isabel Guzman.
Congress created the Shuttered Venue Operators Grant program, designed to deliver coronavirus aid in the form of $16 billion in grants to the performance-venues industry, in December. The agency has taken months to distribute the funds as it built the program from scratch and dealt with technological challenges. The program, part of a $900 billion rescue package, aims to provide grants of up to $10 million per business.
The SBA is currently reviewing submitted applications for the program, Ms. Guzman said Thursday in an interview with The Wall Street Journal. More than 12,000 applications have been submitted since the program opened April 26, according to SBA data released this week.
Agency press officers previously said the SBA was aiming to begin grant awards this week. The long wait for aid has become a sore point for the industry. “These small businesses are going under while $16 billion is waiting for them,” said Audrey Fix Schaefer, a spokeswoman for the National Independent Venue Association, which lobbied Congress for the grant program. “The delay in delivering funding is causing the exact opposite effect of the intended bill to save venues.”
The program’s initial launch on April 8 was disrupted by technical glitches that forced the agency to close the application portal within hours of its opening. The agency relaunched the portal nearly three weeks later, after working through the problems. Ms. Schaefer said applicants are becoming increasingly desperate without aid to help them avoid evictions, rehire workers and resume operations.
A similar, $29 billion grant initiative that the SBA is administering for restaurants and bars, known as the Restaurant Revitalization Fund, was enacted in March and opened in early May. The SBA said it disbursed grants to 16,000 applicants totaling more than $2 billion in the first week following the launch.
Ms. Guzman said the venue program has been more difficult to roll out because of how it was designed by law. For example, each application for the program must be manually reviewed, she said.
The law that created the restaurant program gave the SBA flexibility to automate some of its application-review process, Ms. Guzman said. That has contributed to the faster pace of disbursements, she added.
The restaurant program was “from statute all the way to implementation a much simpler program,” Ms. Guzman said. She said the restaurant program is also benefiting from lessons learned from the agency’s work to launch the venue initiative.
“Shuttered venues coming first paved the way for future improvements,” Ms. Guzman said. “We’ve learned and gotten better in the process.”
Program Notices & Reminders – Expanded Information
Will County Announces Round 3 of CARES Act Funding
Will County is pleased to announce Round 3 of the CARES Act Small Business Grant Program for Will County businesses adversely impacted by the recent pandemic. All small businesses physically located in Will County able to demonstrate COVID-19 impact are encouraged to apply for these grants of up to $10,000. The following criteria must be met to determine eligibility:
• Have not received a previous Will County Small Business Grant
• Annual revenues under $5 Million in 2020
• Less than 50 full time employees in 2020
• In operation since February 15, 2020, or earlier
• Have proof of COVID-19 impact
• In good standing with the IRS, State of Illinois, and Will County
• Not currently in bankruptcy
For more information and to apply visit: www.willcountyillinois.com/COVIDbizgrant
All required documents must be included and uploaded with each application. This is a requirement to expedite the review of eligibility and determine approval for the grant monies. Priority will be given to businesses located in the Illinois Department of Commerce and Economic Opportunity (DCEO) Disproportionately Impacted Area (DIA). DIA zip codes in Will County include: 60432, 60435, 60436, 60466, and 60471.
CDC Mask Guidance
The CDC still recommends that unvaccinated people continue to take preventive measures, such as wearing a mask and practicing social distancing. In their latest guidance, the CDC now reports that indoor and outdoor activities pose minimal risk to fully vaccinated people and that fully vaccinated people have a reduced risk of transmitting SARS-CoV-2 to unvaccinated people.
Fully vaccinated people can:
• Resume activities without wearing masks or physically distancing, except where required by federal, state, local, tribal, or territorial laws, rules and regulations, including local business and workplace guidance
• Resume domestic travel and refrain from testing before or after travel or self-quarantine after travel
• Refrain from testing before leaving the United States for international travel (unless required by the destination) and refrain from self-quarantine after arriving back in the United States
• Refrain from testing following a known exposure, if asymptomatic, with some exceptions for specific settings
• Refrain from quarantine following a known exposure if asymptomatic
• Refrain from routine screening testing if feasible
For now, fully vaccinated people should continue to:
• Get tested if experiencing COVID-19 symptoms
• Follow CDC and health department travel requirements and recommendations
Governor Pritzker Mask Changes:
Small Business Administration Restaurant Revitalization Fund
The deadline for this program is Monday, May 24th.
- If you haven’t already, register for an account on the application portal at restaurants.sba.gov. If you are working with Square or Toast, you do not need to register.
- Review the sample application, program guide and cross-program eligibility chart on SBA COVID-19 relief options. SBA also added screenshots of the application portal that are available here.
- Applications must be submitted in English or Spanish. SBA has documents in additional languages to help you understand eligibility requirements, fill out applications, and answer frequently asked questions. See the additional languages and materials here.
- If you were unable to attend one of the webinars held last week which covered program details and a demonstration of the application portal, you can watch the recording here.
For more information, visit sba.gov/restaurants.
Details on application requirements, eligibility, and a program guide are now available in English at www.sba.gov/restaurants or in Spanish at www.sba.gov/restaurantes.
As the SBA builds and prepares to roll out the program, this dedicated SBA website is the best source for up-to-date information for eligible restaurants interested in the RRF.
Small Business Administration Shuttered Venue Operators Grant Program
The SBA has completed rigorous testing and the Shuttered Venue Operators Grant application portal reopened on Saturday, April 24 at 12:30pm ET. Updated guidance documents have been posted below. Applicants may continue to register for an application portal account.
Supplemental documents
- FAQ regarding Shuttered Venue Operators Grant
- SVOG preliminary application checklist
- Cross-program eligibility on SBA COVID-19 relief options
- SVOG-specific version of IRS Form 4506-T
- SVOG applicant user guide
Small Business Administration Paycheck Protection Program
As of May 6, 2021, funding for the Paycheck Protection Program has been exhausted. The SBA will continue funding outstanding approved PPP applications, but new qualifying applications will only be funded through Community Financial Institution, financial lenders who serve underserved communities
Finally, Congresswoman Lauren Underwood and her team want to check in with you, our members to hear about your experience during COVID-19 and federal relief programs. Her office has developed a short survey to allow businesses in the 14th District of Illinois to provide feedback to Congresswoman Underwood about their experience with COVID-19 federal relief programs for businesses including PPP, EIDL, Shuttered Venue, and Restaurant Revitalization Fund; how federal relief programs have benefitted the local small business community; and what assistance they continue to need going forward. The survey can be found here.
We know that a great majority of you do not fit into the 14th District, but there is a sliver and I’m sure they won’t mind the extra feedback even from those out of district since they’ve asked. The survey deadline is May 26 by 6:00 p.m. CT.
Stay well,
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Mike Paone
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct