MIRS provides comprehensive news and analysis of state government delivered in written reports detailing the activities of the House, Senate, Judicial and Executive branches of Michigan state government.
Michigan News And Capitol Report, Week Ending Fri., March 20, 2020
Business Community Wanted More Ramp-Up Time, Now Wants More Answers
"To her credit, her administration has been open to input including, from the Michigan Chamber of Commerce and other business leaders," Rich Studley, president of the Chamber told MIRS on Monday. "We've been working very hard to help the administration understand, 'Yes, we must take action to protect the public health but we also must work to make sure we don’t do undue harm.’"
Throughout the negotiations, Studley said the business community had sought a longer ramp-up to the order. As it came out this morning, it's effective midnight Tuesday.
"We'd hoped there'd be a longer-term phase-in," said Studley, adding that the business leaders were told this morning in a conference call the order would be effective this evening. A longer ramp-up would have allowed business owners and operators more time to understand the orders' implications and carefully plan for them.
He noted one reason for the faster ramp-up was the rapidly changing public health situation in Southeast Michigan. While that faster ramp-up may have been necessary, it leads to more questions.
"What is the difference between essential and non-essential business?" Studley asked. "What is interruptible and what is not interruptible?" He also noted that it's critical for state and federal officials as they manage the health crisis to make sure they take every step to minimize long-term economic damage.
"First do no harm," he said. "This is a time when we need steady and reliable leadership from government and the business community. The Governor can’t say often enough and remind us often enough, that this is temporary."
Under the order, all businesses and operations are prohibited from requiring workers to leave their homes, unless those workers are necessary to sustain or protect life or to conduct minimum basic operations.
Studley pointed to the example of modern lawn care businesses. The services are sold over the phone or online, one person with a truck shows up to do the work. There is often no face-to-face interaction - can that business continue?
The order itself stresses that it must be "construed broadly to prohibit in-person work that is not necessary to sustain or protect life." For purposes of the order, workers who are necessary to sustain or protect life are defined as "critical infrastructure workers."
The order lists critical infrastructure workers such as health care and public health, law enforcement and public safety, grocery store workers and more.
Exceptions have also been made for farmers, police, first responders, public transit workers, sanitation workers, news media, communications and information technology workers, bankers, chemical workers, the defense industry and child care workers.
Other industries granted some exceptions include the insurance industry, those helping the poor and those providing "critical labor union functions."
In a separate email sent out by the Department of Labor and Economic Growth (LEO), "critical infrastructure workers" are those defined in the March 19 memo from the U.S. Department of Homeland Security.
In the memo, such workers are those "who conduct a range of operations and services that are essential to continued critical infrastructure viability, including staffing operations centers, maintaining and requiring critical infrastructure viability, operating call centers, working construction, and performing management functions, among others. The industries they support represent but are not necessarily limited to, medical and healthcare, telecommunications, information technology systems, defense, food and agriculture, transportation and logistics, energy, water and wastewater, law enforcement and public workers."
Whitmer said the order is not a recommendation, and that if businesses don’t adhere to it, there will be "ramifications" and she could see fines being associated with non-compliance. She said carry-out and delivery options for restaurants are still OK but she asked residents to take advantage of delivery services where applicable.
According to Charlie Owens, of the National Federation of Independent Business, there needs to be more clarity.
"Small-business owners appreciate and understand the seriousness of the current situation with the COVID-19 outbreak," he said. "However, we need more specificity on the types of businesses that can remain open during the period of 'stay at home' order."
In meeting with his members, Studley noted larger Chamber member companies pointed to the recent Ohio stay-at-home order as "being easier to understand and comprehend." Owens made the same observation, noting that the order signed by Ohio Gov. Mike DeWine included a listing of specific businesses that were considered "essential."
"That order also provided detailed descriptions of small businesses that included contractors, laundering and dry-cleaning, hardware supply stores, and more and that would be helpful here," Owens added.
Studley said he expects more clarification in the coming hours and days and that the Chamber is at work setting up a series of webinars this week to bring business owners up to speed on interpreting the order.
Other business leaders expressed relief their sectors were deemed "essential."
"The Michigan Restaurant & Lodging Association is relieved that Governor Whitmer's order deemed both restaurants and hotels as essential services and can remain open during these unprecedented times," said Justin Winslow, president and CEO of the association. "Restaurants are providing critical food service for the front-line health and public safety officials incapable of working from home and helping to manage public demand currently unmet."
UIA Staff Working OT To Process 1,500% More Unemployment Claims
State unemployment official are helping customers during business hours but processing claims "after business hours" to handle the influx of unemployment claims in the wake of the COVID-19 pandemic.
Erica Quealy, spokesperson for the Unemployment Insurance Agency (UIA), said the UIA is keeping up with the increased claims after Whitmer broadened unemployment eligibility earlier this week.
Asked about whether there's a backlog of claims, Quealy said, "our current systems are handling the demand." Between Monday and Wednesday of this week, more than 55,000 people filed claims, or 1,500% more than usual, she said.
People can file online anytime, and by phone from Monday to Friday from 8 a.m. to 5 p.m.
Quealy said the UIA has increased the capacity of the online unemployment application system and is continuing to monitor it to make sure it remains available.
Whitmer, DeWine Ask Trump To Support Autos
The federal government should provide loans and loan guarantees to manufacturers experiencing substantial revenue loss and allow companies to defer 2020 quarterly tax payments to preserve liquidity, Gov. Gretchen Whitmer told President Donald Trump and congressional leaders today.
In a joint letter with Ohio Gov. Mike DeWine, the Governors laid out at least seven recommendations on how to keep the manufacturing afloat as they shut down to keep employees from contracting the coronavirus.
The suggestions were based in making sure the businesses have the money to restore production as quickly as possible while preserving jobs.
"To mitigate the economic impact of COVID-19, we need leaders from both sides of the aisle, from local government to federal, to come together and do what’s best for our workers, our businesses and our economy," Whitmer said. "Hundreds of thousands of families are depending on smart leadership. My fellow leaders and I are committed to doing whatever is necessary to see our states through this crisis, and we’re hopeful that the president does the same."
Fed Taxes Not Due Until July, State Taxes Still Due April 15
First, the feds extended the payment deadline for taxes to July 15, but not the filing deadline of April 15.
Today, the filing deadline for federal taxes was extended to July 15, as well, in response to the COVID-19 pandemic.
But state taxes must still be paid and filed by April 15 as of now, Treasury spokesperson Ron Leix said Friday.
"We’re watching the federal situation closely," Leix said, who added that he doesn’t have any announcements to make "at this time."
Federal taxes can be paid and filed by July 15 without incurring any interest or penalties, U.S. Treasurer Steve Mnuchin tweeted today.
Mnuchin said that people who are eligible for refunds could file now and receive their money right away.
Hammoud Calls For Nationwide Moratorium On All Payments
Rep. Abdullah Hammoud (D-Dearborn) has put together a resolution urging the President and Congress to enact a nationwide moratorium on all payments -- mortgage, rent, utilities, phone and internet.
The yet-to-be-introduced resolution also calls for more testing kits, a mortgage moratorium, support to small businesses and deploying the National Guard to assist with sanitizing and medical efforts.
"Going forward, every action we take to make resources available will be vital in addressing the health of our communities, stabilizing our economy and protecting small businesses," Hammoud said. "The state of Michigan continues to work tirelessly to address this pandemic, and we need our partners in Washington to do the same."
State Groups Want Feds To Pause Rule-making
Seven state organizations, including the National Governors Association and the National Conference of State Legislatures, is asking President Donald Trump to formally pause, for all open public comment periods concerning both active rule-makings and non-rule-making notices across every federal department or agency.
At present, regulations.gov acknowledges nearly 700 open comment periods that will close in the next 30 days and more than 1,000 over the next 90 days.
"The extreme impact on normal working and living conditions will impair the ability of not only state and local officials, but also the general public, issue experts and others to provide thoughtful and meaningful participation and involvement in potential federal government actions that directly affect millions of people," reads the letter.
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Strategic Fund OKs $20M In Emergency Aid For Small Businesses
In a special meeting held virtually today, the Michigan Strategic Fund (MSF) Board approved $20 million in aid for helping businesses affected by the closures ordered in response to the COVID-19 pandemic.
The MEDC believes these programs -- $10 million in loans and $10 million in grants -- will help at least 1,100 businesses and represents a starting point.
And while the programs earned unanimous support from the MSF Board, some board members expressed concern the aid wouldn't be enough to make a difference and questioned some of the stipulations on the loan program.
According to the MEDC, roughly 117,000 businesses were estimated at being directly impacted by Gov. Gretchen Whitmer's business closure order. Those businesses are believed to collectively employ 593,000 Michiganders.
The $10 million in grants will be available in increments of up to $10,000 each for certain small businesses that have "realized a significant financial hardship" because of the coronavirus pandemic.
The criteria to qualify include being a business mentioned in Whitmer's business closure order, or a business that can otherwise demonstrate it has been affected by COVID-19. The company must have 50 employees or less and must show it needs capital to support payroll expenses, rent, mortgage, utility expenses and other similar expenses.
Yet MSF Board member Cindy Warner said $10,000 in grants might last a downtown business three weeks. She said if the pandemic persists for a long time, this aid might not do anything. And MSF Board member Charles Rothstein pressed the MEDC for why it couldn't do more.
Josh Hundt, executive vice president and chief business development officer for the MEDC, said the MEDC is looking at other funds it can reprioritize for future programs, and said this was intended to mark a starting point for emergency business aid.
He also said it was intended to complement efforts to get loans from the feds through the U.S. Small Business Administration (SBA) as well as the recently-approved federal aid package.
In the $10 million loan program, the borrowers can access loans of $50,000 or more, but are capped at $200,000. It would apply to businesses with fewer than 100 employees.
Warner raised concerns about the loan program and questioned the requirement that businesses demonstrate they cannot access credit through other sources.
She didn't think having businesses getting rejected from other sources over the period of weeks before coming to the MEDC for help would be a helpful hoop for businesses to jump through.
MSF Board member Ron Beebe asked why the full $20 million couldn't all be grants. He noted the interest rate being offered -- 0.25% -- won't earn the state a good return.
Hundt said some of the funds being used are required by statute to be in the form of loans.
Warner also called for a special MSF Board meeting to hear how much money the MEDC has in its funds.
"Because candidly, in good conscience, I could not approve a new business, that doesn't exist today, getting a grant or loan in the state of Michigan, until we fix the bottom falling out with" 593,000 Michiganders possibly losing their jobs, Warner said.
Ultimately, the MSF Board agreed to the MEDC's recommendations on the program, although the board put a one-year timeline on the request to delegate authority to the state to make decisions with regard to the business aid program.
Hundt said the aid approved today would be ready to be distributed by April 1.
Whitmer said in a statement today that "we understand small businesses across our state are facing unprecedented challenges as we take every step possible to mitigate the spread of coronavirus," and she added that "we are leveraging every resource available to support our businesses, communities and entrepreneurs around the state impacted by this outbreak."
Gov Says $1B In Small Biz Disaster Loans Now Available
In other business-aid news tied to COVID-19, Whitmer announced today the SBA has approved her request for a statewide Economic Injury Disaster Loan (EIDL) declaration, opening the opportunity to small businesses to access low-interest loans from the SBA.
This means that Michigan small businesses, small agricultural cooperatives, and nonprofits that have suffered substantial economic losses as a result of the COVID-19 outbreak will now have the ability to apply for low-interest loans as part of $1 billion in funding made available to the SBA by Congress earlier this month, according to the Governor's office.
The application for disaster loan assistance is available here.
For businesses looking for more information on how to apply for an SBA EIDL loan or whether it is something they should consider, visit michiganbusiness.org/covid19.
SBAM To State: Use Biz Interruption Insurance To Help
On another front, the Small Business Association of Michigan (SBAM) said the state should use the Business Interruption Insurance system to help affected businesses.
Business Interruption Insurance covers the loss of income that a business suffers after a disaster, according to SBAM. Though many small businesses have these types of policies, they don’t cover pandemics, viruses or government action.
If implemented by the state, once a business is forced to close, they could apply for funds through the traditional Business Interruption Insurance process but paid for by the state, SBAM said.
The organization has already begun discussions about this proposal with state lawmakers and the Governor’s office and hopes it can be put in place in the near future.
No Foreclosures During Pandemic, Gov Says
No one should lose their house to foreclosure in the middle of a global pandemic, Gov. Gretchen Whitmer said, so she issued an executive order Wednesday bumping back the deadline to pay back taxes.
Whitmer said Wednesday that people are "terrified" of losing their homes during the coronavirus outbreak, which prompted the Governor to order many businesses closed and recommend people stay home.
So her executive order in response to the virus was to move the tax foreclosure deadline from March 31 to May 29, or 30 days after the state of emergency is terminated, whichever comes first.
"This executive order will give families struggling to make ends meet real and immediate relief from the pressure of having their home foreclosed on while trying to focus on the health and safety of their loved ones," Whitmer said in a statement. "This order is the latest in a series of steps to protect the public, slow the spread of COVID-19 and give families comfort during these uncertain times."
Treasury Delaying Monthly Business Tax Payments Until April 20
Small businesses' monthly sales, use and withholding tax payments that would be due Friday have been postponed until April 20, Treasury announced today.
Treasury also said it would waive all penalties and interest for 30 days, as well.
The postponement will apply to small businesses that paid less than $720,000 in sales and use tax in 2019, Treasury spokesperson Ron Leix said. The waiver is not available for accelerated sales, use or withholding tax filers.
Delaying tax deadlines was one need mentioned by the Small Business Association of Michigan (SBAM) in the wake of Whitmer ordering the closure of bars, restaurants, gyms, coffee shops and other places where large groups of people could gather.
Between this and Internal Revenue Service (IRS) announcing a 90-day extension on federal tax payments, those decisions will be very helpful to addressing cash flow concerns for businesses, said Brian Calley, president of the Small Business Association of Michigan (SBAM).
By addressing tax payments for now, it takes a big issue off the table for businesses.
The Governor, in a press release, said this "past week has been hard for small businesses owners across the state as we work to mitigate the spread of coronavirus. Allowing them more time to pay their monthly tax payments will help us provide some much-needed assistance."
Leix said more than 95% of sales and use taxpayers are not paying on an accelerated basis. He added that Treasury "does not expect there to be a significant impact over the longer term" as far as state revenue goes.
State To Employers: Don't Fire Your Workers
The state has "strongly urged" employers to put workers on temporary leave rather than terminating them.
According to guidance issued by Michigan Department of Labor and Economic Opportunity (LEO), there'd be no additional cost to employers and employees would remain eligible for unemployment and employees may also remain eligible for potential federal assistance.
LEO noted there's uncertainty regarding potential congressional action regarding whether and how furloughed workers will be able to access federal paid sick, family and medical leave resources.
Unemployment Agency Lobbies Will Close
The state Unemployment Insurance Agency (UIA) is closing its lobbies to the public, except for appointments, to protect the health and safety of the public.
The move comes the same week that the Governor expanded unemployment benefits for workers who are affected by COVID-19 related closure orders.
The UIA said people could apply for benefits online at www.michigan.gov/UIA or by calling 1-866-500-0017. The agency said the changes -- beginning at 3 p.m. today -- would remain in effect "as long as necessary."
The Governor ordered unemployment benefits expanded to people with unanticipated family responsibilities, like those who have to watch their kids because of the state-ordered school closures. It also was extended to quarantined people, people with compromised immune systems and those who were laid off, among others.