7th Special Session Called
Governor Walz issued an order calling the Legislature back to St. Paul for the 7th Special Session of 2020. The Governor must call the Legislature back to extend his Emergency Executive Order which grants him the authority to issue all subsequent Executive Orders. The Legislature does not need to approve the Emergency Order, however they do have the authority to void the Governor’s Emergency Powers if both bodies pass a resolution voiding the authority. During the announcement regarding the Special Session, the Governor also urged the Legislature to pass legislation providing immediate relief to businesses impacted by the recent shutdowns called for in Executive Order 20-99.
Negotiations on a relief package between the Legislature and Walz Administration have been taking place for the past 2-3 weeks. Earlier today, legislation was posted and informational hearings are now being conducted on a compromise business relief package. Agreements have not been reached on proposals to extend Unemployment Insurance benefits or to provide direct support to Minnesota workers. While presenting the bill in the House Ways and Means Committee, Chief Author Representative Mahoney made clear there would be no separation between a business relief and workers relief package in the House. However, during a press conference earlier today, Senator Pratt the Senate Author made clear at this time, the Senate bill will only be focused on targeted business relief. Immediate relief will be provided to bars, restaurants, gyms, movie theaters, bowling alleys and some convention centers. Other businesses may be eligible for county administered grants. The business relief package will provide $216 million in relief to impacted businesses. As currently drafted the legislation will provide relief in the following manner (all grants are considered taxable income):
- $100 million directed to the Department of Revenue for immediate payment, businesses in this category will not need to submit any applications. Businesses eligible for this relief will be identified by the Department of Revenue and based upon a 30% reduction in sales. Sales reductions will be determined by comparing 2019 Q2 and Q3 sales tax submissions to sales tax submission in Q2 and Q3 2020. Support in this category is limited restaurants, bars, breweries, gyms, fitness studios, bowling alleys, and other sports recreation centers. This category also limits this support to businesses directly impacted by the Governor’s Executive Order No. 20-99. Grant recipients must have generated a minimum of $10,000 in revenue in 2019, be in good standing with the Department of Revenue and have a physical presence in the state. The size of the grants will be based upon the following:
- $10,000 to each small business that does not participate in the unemployment insurance program;
- $15,000 to each business that employs 20 workers or less;
- $25,000 to each business that employs more than 20 workers but no more than 100;
- $35,000 to each business that employs more than 100 workers but no more than 300;
- $45,000 to each business that employs more than 300 workers.
- $14 million for grants issued by the Department of Employment and Economic Development (DEED). These grants will be targeted to support movie theaters and convention centers directly impacted by the Governor’s Executive Order No. 20-99. It is our understanding DEED grant recipients will also need to demonstrate a 30% reduction in sales and apply for the grants. Grant recipients must be in good standing with the Department of Revenue. These grants will be distributed in the following manner:
- Eligible movie theaters will receive grants of $15,000 per screen for each of the first two screens in the theater and a grant of $10,000 per screen for each additional screen in the theater, with no theater receiving a total grant of more than $150,000;
- Eligible Convention Centers shall receive a grant proportional to the size of the venue and its workforce, no convention center will receive a grant of more $500,000. Grant funds may only be used for the direct operations and upkeep of convention center facilities, according to the House author these funds may not be used for promotional purposes.
- $102 million for County administered grants. Allows counties to make grants to both businesses and nonprofits impacted by any executive order related to the COVID-19 pandemic. Requires the grant recipient to be located in the county awarding the grant or on adjacent tribal lands. Grant recipients must be in good standing with the Department of Revenue. Counties may contract with a nonprofit to administer a grant program and allows counties to establish the grant amounts. Grant funds must be used for operational expenses incurred during the COVID-19 pandemic. Counties must return any undistributed funds back to the general fund by April 1, 2021. Each county will receive a minimum of $200,000 or $17.30/resident whichever is greater.
After monitoring the House Ways and Means hearing this afternoon it remains clear the situation regarding business relief is very fluid and may change between now and Monday. The House Ways and Means Committee heard a number of additional bills related to providing COVID relief and other financial support to a variety of groups and organizations.
On Monday, Governor Walz is also planning to provide additional clarity and guidance on his current order closing a number of Minnesota businesses and activities. That order is set to expire at 11:59 on December 18th. While COVID cases seem to have plateaued in recent days it seems likely parts of the current order will be extended through the remaining Holiday Season.