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Businesses that defy COVID restrictions to get money under Minnesota Legislature’s relief plan

Meanwhile, the legislation — which passed late Monday night — did not include a proposal to provide one-time $500 checks to those in the Minnesota Family Investment Program, which provides assistance to low-income families with children.

Senate Majority Leader Paul Gazelka
Senate Majority Leader Paul Gazelka expressed sympathy for businesses that say they will reopen this week regardless of Gov. Tim Walz’s upcoming decision on closures.
MinnPost photo by Peter Callaghan

An emergency COVID-19 relief package adopted by the Minnesota Legislature Monday created a set of winners and losers that might be awkward for lawmakers — especially DFL lawmakers — to explain to constituents.

By adopting the aid package, Senate File 31, the Legislature voted to send $216 million to businesses and nonprofits hurt by the latest closure orders by Gov. Tim Walz. Depending on the number of employees, recipients of the money — restaurants, bars, gyms, bowling alleys and other businesses closed or limited last month — will get grants of up to $45,000 from taxpayers. The same package will also extend by 13 weeks state unemployment insurance for about 120,000 Minnesotans who will run out of benefits later this month.

At the same time, the deal struck over the weekend will not send one-time checks of $500 to those in the Minnesota Family Investment Program, which provides assistance to low-income families with children.  That money — totaling $13 million — would have come from a federally funded reserve account and cost the state less than $100,000 in administrative fees. About 27,000 Minnesota families are on the program and 72 percent of those helped are children

DFLers said Republicans wouldn’t agree to the $500 checks. “There is really no reason not to do this, absolutely no reason not the include this, except that we cannot get agreement from Republicans in the House or the Senate right now to include it,” said House Speaker Melissa Hortman.

Money to go to business that defy restrictions

A group organized as the ReOpen Minnesota Coalition claims that between 100 and 200 businesses that will defy Walz’s closure orders this week, yet the relief money will flow to businesses whether they remained closed or not. 

Leaders from both parties said having to assess whether a business is in good standing with the executive orders would complicate the distribution of business checks. “It’s a tiny percent — 100 businesses out of 10,000 — that are trying to make a statement that they should be able to be open and get people sick,” said House Majority Leader Ryan Winkler, DFL-Golden Valley. “They are causing a public health crisis but they are not going to stop the other 10,000 businesses that will be helped. If we create a program in which all these checks and verifications have to take place, the money will get out the door much later and frankly too late for all the businesses who are following the rules.”

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In a statement released Monday night, Department of Employment and Economic Development Commissioner Steve Grove said: “We’re keeping this process simple to ensure financial relief is delivered to struggling businesses as quickly as possible. As with any situation, businesses who violate the law are subject to penalty.” 

House Speaker Melissa Hortman
MinnPost photo by Peter Callaghan
House Speaker Melissa Hortman
Senate Majority Leader Paul Gazelka expressed sympathy for businesses that say they will reopen this week regardless of Walz’s upcoming decision on closures. “I think those businesses should be able to do whatever they want to do,” the East Gull Lake Republican said. “They’re desperate. There are 160-or-more businesses that said if we stay closed any longer, we’re done. At that point they say they’d rather be open and take a chance or fail no matter what.”

Gazelka did not answer whether a business that reopens early should also receive a check from the state’s taxpayers.

Hortman said such businesses face fines and legal expenses, including civil penalties from the state attorney general, that could exceed the amount on COVID relief checks. “I guess there’s a situation where a business could get money and then pay it to an attorney to fight with the attorney general,” Hortman said.

How funds will be distributed

The business relief money will be divided into three pots (details here):

  • $100 million will be distributed by the state Department of Revenue, which will use tax records to find the businesses impacted by the most recent closure and have lost at least 30 percent of revenue compared to a year ago. Businesses will not need to make applications for the money, and checks could arrive by the end of December or early in the new year.
  • $14 million will be doled out by the Department of Employment and Economic Development, which will process requests from convention centers with capacity of 1,500 or more and from movie theaters based on the number of screens. Not included in these grants are live music venues or performing arts theaters.
  • $112 million will be distributed by counties, based mostly on population, for more-flexible grants to businesses within each jurisdiction. These grants would be determined by county officials and could be done in-house or contracted out to a bank or other entity. Money from this fund is expected to go to businesses not covered by the Department of Revenue checks, businesses such as dry cleaners, music venues, recently opened restaurants or a business that lost revenue but didn’t hit the 30 percent threshold to get money from the Department of Revenue. 

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The bill also contained some licensing and fee flexibility for affected businesses, including waiver of wastewater fees charged small brewers and the need for catering permits and permits to serve alcohol after 1 a.m. for restaurants and bars. The package passed the Senate 62-4, and the House voted late in the evening, passing the measure on a 117-13 vote. Walz supports the deal.

“This state aid will hopefully act as a bridge until Congress passes needed federal relief,” said Liz Rammer, president and CEO of Hospitality Minnesota.

Unemployment insurance extension

Legislators also called the grants and unemployment extension short-term relief that they hope will be supplemented and broadened by Congress which continues to struggle with another CARES Act-type relief package. The unemployment extension, for example, would be replaced by any federal extensions.

The unemployment insurance extension will cost up to $200 million, and will come from a loan from the federal government that must be repaid, though at very low interest rates and over an extended time period. Minnesota’s trust fund has been drained and the state has borrowed $836 million for current benefits. In the past, states have borrowed from the treasury and paid back slowly and at small or no interest rates. In some recessions, such borrowing has been forgiven by the federal government.

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In addition to the MFIP grants, there were other issues that did not get agreement from all four legislative caucuses. A bill to add $50 million to the rental and mortgage assistance was not brought up, neither was a push to add money to child care. Both could return when the Legislature convenes in regular session January 5. 

Questions over closure order hang over debate

Underlying the debate over aid were the related issues of the current closure order, whether he would extend it when it expires Friday, how much notice businesses would receive and whether Walz should continue to exercise executive powers under the state of emergency. The session was convened Monday under a legal requirement that lawmakers be given an opportunity to pass judgement on the latest state of emergency declaration

State Sen. Michelle Benson
State Sen. Michelle Benson
Unlike in the one-day session in November, Republicans moved to rescind those powers. But unlike in the five special sessions over the summer and fall when such a motion was made and debated at length, Senate GOP leaders limited the speeches to two. Sen. Michelle Benson, R-Ham Lake, said the Legislature needs to be part of the decision making and that Walz needs to share more information with lawmakers.

“Do we know what data is going to tell us when he can open up businesses again,” Benson said. “Do we know how many businesses are going to just give up and be done, or frankly run out of money, in spite of the grants we’re passing today.” During his floor speech, Gazelka, who was sickened by COVID-19 last month said that his mother in law who had been living in memory care died from a viral infection.

It passed 40-25 with eight DFL votes, including the two senators who are caucusing as independents: Sen. Tom Bakk of Cook and David Tomassoni of Chisholm. House Republicans could not muster enough votes to suspend the rules and take up the issue Monday so the emergency powers remain in place.

Gov. Tim Walz
MinnPost photo by Greta Kaul
Gov. Tim Walz
Walz had been planning to announce what will happen after Friday on his closure order. That was put off until Monday and then rescheduled until Wednesday.

“That second shutdown is proving out to be a real challenging thing for many of our restaurants and gyms and theaters that we really didn’t see coming,” said Rep. Dave Baker, R-Willmar. “The manner with which he shuts us down and reopens us has to be done in a methodical and well-planned out manner.” A restaurant, for example, needs a week’s notice to schedule staff and order food and alcohol.

“When you keep leaving us in the dark it becomes incredibly frustrating,” Baker said.

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Sen. Eric Pratt, R-Prior Lake, was the lead negotiator for the Senate GOP caucus. He said the bill wouldn’t have been needed without Walz’s latest order. “We knew the spike (in COVID cases) was coming. We should have been ready for this without shutting down our economy for a second time,” Pratt said. 

Senate Minority Leader Susan Kent
Senate Minority Leader Susan Kent
But Senate Minority Leader Susan Kent, DFL-Woodbury, said it wasn’t Walz that closed businesses, it was the novel coronavirus that was surging at the end of October and into November. While case numbers are getting better, they are still dangerous, Kent said.

Minnesota Chamber of Commerce President Doug Loon Monday called on Walz to end the shutdowns Friday. “Employers have worked diligently to mitigate community spread from impacting their workplaces, and protect their employees and customers,” Loon said. “Businesses stand ready to safely reopen and we urge Governor Walz to end the pause as planned.”