A track from RZA and Wu-Tang delivers the perfect message for this week: We’re in this together, all with a part to play – it will take unprecedented public-private collaboration to tackle the coronavirus crisis, a health challenge unlike any we’ve ever faced before.
As a business community, we’ve rallied to help employers struggling to adapt and survive in this new reality, as well as the hardest-hit members of our workforce; check out the Indy Chamber’s Rapid Response Hub for the latest developments and resources.
At the state and local levels, the steady leadership of Governor Holcomb, Mayor Hogsett and elected officials across our region and Indiana has helped us navigate uncharted territory, even as dramatic and disruptive restrictions on how we live and work are essential to slow the spread of this pandemic.
Now help appears to be on the way from the federal government, as Congress has passed a $2 trillion economic stimulus package (with the House voting unanimously in favor this afternoon). The plan includes direct payments to Americans, expanded unemployment benefits, small business loan guarantees and employee retention incentives, and $150 billion in direct aid for state and local governments (primarily to offset the costs of combatting Covid-19).
You’ll find more analysis on the stimulus plan below, but first a few notes on news closer to home:
- We posted our 2020 Legislative Wrap-Up – check it out: We achieved modest success on each of our top priorities and played defense on some expected threats to the local business climate.
- Since the session, you can find a tally of the Governor’s action on passed bills here.
- The biggest news out of that list: A rare veto for SB148, which would set state standards on rental agreements but also overrule local ordinances with stronger tenant protections (such as one recently passed by our City-County Council); Governor Holcomb said that now is “not the right time” for such a law amid the widespread hardship of the coronavirus pandemic – we tracked this bill as part of our broader focus on home rule and inclusive growth, including housing affordability.
- Speaking of economic hardship, startling unemployment numbers out of the U.S. Department of Labor yesterday, with weekly jobless claims approaching 3.3 million – a record high, including more than 61,000 Hoosiers.
Such numbers would certainly swamp the state unemployment trust fund with the threat of costly federal loans (and necessitate revisiting HB1111, which froze rates of business contributions to the trust fund for the next five years).
Fortunately, the stimulus does include funds to offset costs of expanding benefits (eliminating the weekly waiting period and extending unemployment to contract and self-employed workers). It remains to be seen what further action may be taken to help state and local governments facing dire fiscal consequences.
But before we speculate about the future, let’s dive into some of the details of the bill cruising towards final passage by the House as we write this:
Highlights of Federal Stimulus (CARES Act):
Following is a summary of key provisions of the CARES Act as passed by the Senate (pending approval by the U.S. House) – keep an eye out for more analysis as we take a closer look at the 880+ page bill.
Aid to Small Businesses:
Impacted businesses have the choice of using either new SBA loan options or taking an employee retention tax credit (not both together).
- Employee retention tax credit for employers subject to closure for Covid-19:
- Refundable payroll tax credit for up to 50% of qualified wages paid to employees of businesses whose operations were fully or partially suspended, or whose gross revenues declined by 50% or more compared to the same quarter a year ago;
- For companies with 100 or fewer employees, all wages are qualified wages; for companies with more than 100 employees, qualified wages are those paid to employees not providing services because of Covid-19;
- Credit applies to only the first $10,000 in compensation (including health benefits) paid from March 13 through December 31, 2020 (making the total per employee $5000).
- Delay of payment of employer payroll taxes:
- Employers (and self-employed individuals) can defer the employer share of Social Security taxes, with half due by the end of 2021 and the remainder by the end of 2022.
- The Economic Development Administration (EDA) will receive $1.5 billion to provide economic assistance to local communities. This is anticipated to leverage an addition $20 billion in local and private investment that would support up to 100,000 jobs in industries such as hospitality. (Details of this program and the Indianapolis impact are still to come.)
Aid to Individuals and Workers:
- Direct cash payments to individuals:
- Amount is $1200 per individual ($2400 per couple) + $500 per child;
- Limited to only people with qualifying income (adjusted gross income) based on tax return filing status:
- Single: Phases out starting at $75,000 (no payment after $99,000)
- Head of Household: Phases out starting at $112,500 (no payment after $146,500)
- Married: Phases out starting at $150,000 (no payment after $198,000)
- Available only to people with a Social Security Number;
- For most people, the Treasury Department will automatically send checks or make direct deposit based on information from 2019 tax return (or 2018 if last year’s taxes haven’t been filed) – taxpayers without banking information on file could see delays of several months.
- People without income, who receive SSDI, or who don’t file returns are also eligible, but will have to take actions to be announced in order to get a check.
- Special increases in unemployment benefits:
- Provides temporary unemployment benefits for 1099 workers (independent contractors, freelancers, the self employed) or those who had not yet been employed long enough to qualify for unemployment;
- Increases unemployment payments by $600 per week for four months;
- Provides up to an extra 13 weeks of unemployment through the end of the year;
- Creates a temporary “short time” benefit to pay pro-rated unemployment to those workers who had their hours reduced (requires state action).
Other Key Provisions:
- $45 billion in additional disaster relief funds for state and local government;
- $100 billion in aid for hospitals and health care providers, plus a 20% increase in Medicare funding to treat people infected with the virus;
- $16 billion in increased funding to the Veterans Administration for coronavirus related care;
- $1.5 billion in increased funding for SNAP (food stamps) and $8.4 billion for child nutrition;
- $24 billion in aid for farmers and ranchers;
- $13.5 billion in aid to elementary and secondary school districts, $3 billion in discretionary education aid to states, and $14 billion in aid to higher education institutions;
- $3.5 billion in block grants for child care and early childhood education, targeted to ensure that first responders have access to child care;
- $25 billion for public transit, distributed by existing formulas;
- $10 billion in aid to public airports;
- $5 billion in additional Community Development Block Grant (CDBG) funds to support community response to coronavirus; and $4 billion in additional support for the homeless, those at risk of becoming homeless, and eviction prevention assistance.