Gov. Tim Walz and legislative Republicans struck a cooperative pose Tuesday in announcing proposals to help Minnesota businesses hurt by the state’s latest coronavirus-related closures.
Whether that tone will translate to actual legislation is unclear, but both sides were hopeful that a special session could be held as early as next week to reach a deal.
After hinting on Monday that an aid proposal was coming, Walz followed up on Tuesday morning with details on a package that includes direct payment to businesses — including bars, restaurants, fitness centers and entertainment business — hit by the latest round of restrictions aimed at combating the state’s surging number of COVID-19 cases. In addition to the direct payments, Walz’s plan, which was developed with DFLers who control the state House, also includes proposals to waive state and regulatory fees for service industry businesses like bars and restaurants and an eviction moratorium for businesses.
The governor’s plan would also extend unemployment benefits for another 13 weeks and provide a one-time $500 payment for families on the state’s welfare program, the Minnesota Family Investment Program. Walz’s proposal also would pay restaurants a one-time grant to make food for health care workers, homeless shelters or long-term care facilities as well as offer a tax credit to businesses that donate food they would have been forced to throw away.
Standing in front of a closed-to-indoor-service restaurant in St. Paul Tuesday morning, Walz said that all residents of the state should share in the financial pain inflicted on a relatively small segment of the economy. “They shouldn’t have to absorb all of this because what Minnesotans are doing with our tax dollars … is collectively making sure we hold those numbers down in the hospitals,” he said.
House Majority Leader Ryan Winkler, DFL-Golden Valley, said the direct business grants — based on a $25,000 check to the roughly 14,000 businesses impacted by the recently imposed restrictions — could cost around $350 million and those payments would be the same for every business. But he said the size of payments and scale of the program is still under consideration.
The money to pay for the program could come from state budget reserves or the state’s general fund, Walz said. The $500 payments would come from reserves in the federal Temporary Assistance for Needy Families (TANF) program that is administered by the state, said Rep. Mohamud Noor, DFL-Minneapolis.
Minnesota House Republicans unveil their own plan
An hour before Walz’s announcement, House Republicans announced their own relief plan, this one drawing from the state’s rainy-day savings account to pay for a similar package of aid.
The House GOP package would cost $400 million, and the plan would stipulate that should the federal government ever agree on additional help for states, the first use of those dollars would be to refill the state rainy day account.
The state has already spent nearly all of the $1.87 billion dollars sent to it by the federal CARES Act and now has less than $20 million in a $200 million state COVID account created in the spring.
Rep. Barb Haley, R-Red Wing, said grants proposed by the House GOP would be aimed at businesses that have seen revenues drop by 35 percent or more, with the grants being administered by county governments. Rep. Dave Baker, R-Willmar, said the plan would offer varying amounts of money to businesses based on need.
Republicans also proposed a three-month sales tax “holiday” for businesses that would allow them to keep some extra cash on hand. The holiday would go into immediate effect for businesses that are operating, but are “curtailed,” said Rep. Kristin Robbins, R-Maple Grove. The holiday would be implemented for businesses that are currently closed once they reopen. Business could keep the sales tax money under the proposal, and it would not be a deferment.
Rep. Jim Nash, R-Waconia, said the state should also give bars, restaurants and other alcohol-sellers like breweries some temporary flexibility to sell more booze. That includes doubling a cap on takeout beer, wine and liquor sales, which the Legislature approved in April.
It also includes giving taprooms and craft distillers more ways to package their alcohol. Currently, breweries can sell glass growlers and metal crowlers at preset sizes — but not in other common ways like six-packs. Liquor stores have fought expansion of selling options for breweries, insisting they’re not retailers like the stores. “What better way to help these breweries out than to just let them sell the product that they’ve already made,” Nash said.
The GOP also asked Walz to let gyms and fitness centers open now, or before the end of his four-week restrictions, and House lawmakers proposed waiving a state fee for businesses that sell alcohol until 2 a.m.
Robbins, the Maple Grove Republican, said the GOP supports the release of extra money in the federal Paycheck Protection Program and expanded unemployment in Congress to help workers, but she said Republicans don’t have state-level plans to help employees similar to Walz.
‘This is the rainy day’
During his announcement, Walz said he asked his budget office to move up the revenue forecast from next Thursday to next Tuesday and that — if there is bipartisan agreement — a special session could coincide with that report.
Walz also indicated that the updated forecast will look much better than the emergency forecast done in May, when uncertainty about the economic impact of the pandemic was less clear. That spring forecast projected a $2.4 billion budget deficit, slightly more than the state’s sizable Rainy Day savings account.
Since the start of the fiscal year on July 1, however, Minnesota tax collections have brought in $800 million more than was expected, and Walz said “it’s not guaranteed” that the state would need to tap it’s savings.
“I’m in dangerous territory, forecasting a forecast, but there’s the potential we won’t go into those rainy day funds for this next biennium’s budget,” Walz said. “We believe that those numbers will be materially better.”
Even so, he noted the state’s economic situation would meet the definition of a rainy day and didn’t dismiss the suggestion by House Republicans of funding business grants from the reserve. While he said he wanted to “wait and see what the numbers show,” he also said, “I would absolutely agree with them on this: this is the rainy day.”
While Senate majority Republicans have been mostly silent, Walz said he communicated with Senate Majority Leader Paul Gazelka Monday evening and reported that they are also working on a relief plan.
“I say we go as soon as we have a deal,” Walz said in reference to the Legislature. “If that means early next week … that makes sense. I don’t think we wait an extra day. The difference between getting something next week and in a month is huge.”