Government aid could be coming for the small Utah businesses that have been hit hardest by the coronavirus pandemic under a new bill that received a unanimous vote in the Senate on Tuesday.
The proposal from Sen. Kirk Cullimore, R-Sandy, would put $30 million toward a relief program for Utah-based businesses with fewer than 250 employees that can demonstrate they experienced a loss in revenue due to COVID-19.
“The reality is that a lot of these businesses were doing and would have been doing just fine but for government intervention,” Cullimore told the Senate Business and Labor Committee, which also heard the bill on Tuesday. “And it’s because of that government intervention that I feel it appropriate that there be some government intervention, again, to help them out of the mess.”
The program would be administered by the Governor’s Office of Economic Development (GOED) and would prioritize companies that have lost 90% of their revenue and can demonstrate an inability to secure similar government funding over the past year.
Eligible businesses could receive up to three months of operational expenses, including rent, equipment, inventory, payroll and insurance costs and any other expenses GOED determines are related to the decline in revenues. The funds would come from the extra $1.4 billion in one-time money the state has to spend this year and would likely be distributed this fall.
Many businesses have struggled to make ends meet during the pandemic as Utahns have been directed to socially distance and stay home when possible to avoid spreading the coronavirus, and some have received coronavirus aid from the federal government or other grant programs to keep them afloat.
But nearly a year into the coronavirus pandemic, not all that need it have been able to get access to government aid. And some businesses — particularly those in the service and arts and entertainment industries — continue to struggle.
Crystal Young-Otterstrom, executive director of the Utah Cultural Alliance, told lawmakers Tuesday that the arts community has been heavily impacted by shutdowns and coronavirus restrictions over the past year.
Before COVID, the industry employed 155,000 Utahns and generated $7.2 billion for the economy. Since the pandemic hit the state, it has lost $76.5 million in revenue and 25,000 jobs.
“We’re currently holding on to $17.5 million dollars of ticket liability rollovers as well, which means even if restrictions lifted today, we’d still be unable to generate full revenue for our businesses,” she noted. “And so we are very grateful for this proposed program and for the support given last year by the state of Utah. And we are still in desperate, desperate need. And so we ask that you all support this bill and this program.”
Jacey Skinner, executive vice president of public policy and general counsel at the Salt Lake Chamber, said during public comment on the bill that people might be fatigued from talking about stimulus programs and coronavirus relief. And she believes a lot of money from the federal CARES Act went to businesses that “probably did not need it.”
“But what we’ve also seen are many businesses, many well-established businesses, that have struggled in ways that in many instances are well beyond their control,” she said. “Many businesses have made significant efforts to pivot and to adapt, and they have worked hard and they followed the rules and they’ve complied with those things that have been asked of them, but have been impacted significantly throughout.”
Skinner said she thought Cullimore’s bill was a “narrowly tailored approach” that would provide assistance to those businesses that are genuinely struggling.
Cullimore’s bill, SB202, received unanimous support from the Senate Business and Labor Committee on Tuesday, after several lawmakers peppered him with questions about how the program would ensure the money would do just that.
Sen. Curt Bramble, R-Provo and a certified public accountant, said he’s sat across the table over the past 12 months with many businesses that felt entitled to getting “free cash,” whether they needed it or not.
“My primary concern is when government starts handing out money, there’s never enough to go around and everyone deserves — according to their own evaluation — their fair share,” he said. “And how do we identify those businesses that really need the grant?”
Bramble was particularly uneasy about a portion of the bill that would allow relief for a business that began operations on or after Jan. 1, 2020, and could demonstrate that it had “incurred expenses and is operating at a net loss due to the public health emergency related to COVID-19.”
Most startups die within the first three to five years, with or without a pandemic, Bramble noted, and he worried it would be difficult to tell which had actually been impacted by the coronavirus and which would be struggling either way.
While more established businesses would be required under the bill to show a loss in revenue from March to June 2020 compared to the same period in 2019, Cullimore noted that wouldn’t be possible for a startup. But there are still businesses that fall into that category that need relief, he said.
Kori Ann Edwards, managing director of operations at GOED, acknowledged there’s “no magic way to know if a company just started up is going to make it or not based on on the valuation of it” but reiterated that the state agency would ask companies to fulfill certain requirements before they received any money.
As part of the bill, businesses that apply for the grants would be required to sign a declaration under penalty of perjury that their application is complete and correct and to submit to a possible audit. If an audit found that the company had misrepresented its losses, GOED could recapture those grant funds and require the business to pay a fine to the state.
The bill passed received unanimous support in the Senate and now requires one final procedural vote there before moving to the House for further consideration.