CISA Recognizes Laundromats as Providing ‘Essential’ Services
The Cybersecurity and Infrastructure Security Agency has recommended that laundries remain open as an essential service to the public during the COVID-19 crisis. This recommendation appears in the recently updated version of “CISA Guidance on the Essential Critical Infrastructure Workforce.” Although these guidelines are not binding on the state level, they do influence the decisions of state, county and municipal authorities.
The CISA executes the Secretary of Homeland Security’s authorities to secure critical infrastructure. Consistent with these authorities, the agency has developed – in collaboration with other federal agencies, state and local governments, and the private sector – an “essential workforce” advisory list. This list is intended to help state, local, tribal and territorial officials as they work to protect their communities, while ensuring continuity of functions critical to public health and safety, as well as economic and national security.
Once again, this list is advisory in nature. It is not a federal directive or standard.
Trump Signs COVID-19 Worker Relief Bill
President Donald Trump recently signed the Families First Coronavirus Response Act, a measure created to ensure paid sick leave for workers and to widen coronavirus testing.
Senators overwhelmingly supported the House bill that covers the cost of all coronavirus testing, expands federal food programs serving low-income seniors and needy families, and provides paid sick leave for workers forced to stay at home.
The vote was passed 90-8.
- Offers two weeks of paid sick and family leave to many American workers who have been forced to stay home because of COVID-19 or who have children whose schools have closed. Workers will get 100 percent of their normal salary.
- Provides up to 12 weeks of paid leave to many of those who have children whose schools have closed. Workers would get about 67 percent of their normal salary for this period.
- Bolsters unemployment insurance protections.
- Provides free testing for the coronavirus for those who need it.
- Boosts food assistance for needy families and federal funding for Medicaid.
The new law grants two weeks of paid sick leave at 100 percent of the person’s normal salary, up to $511 per day. It would also provide up to 12 weeks of paid family and medical leave at 67 percent of the person’s normal pay, up to $200 per day.
In other words, paid sick leave would fully compensate employees earning up to about $130,000 a year for that two-week period, and paid family and medical leave would fully compensate employees earning up to about $75,000 a year for the three-month period, according to the Center on Budget and Policy Priorities.
In addition, employees don’t necessarily have to have the coronavirus to receive the benefits. The two weeks of paid sick leave apply to anyone told to quarantine, showing symptoms, exposed to the virus, or trying to get a test or preventive care. Although this is a rather broad definition and the IRS likely will have to arrive at an exact rule, it’s apparent that Congress wanted to avoid a situation in which everyone is trying to obtain “a doctor’s note” to qualify.
Qualifying for family leave is different. An individual is eligible to take up to three months of paid leave to care for a child whose school or child-care facility is closed due to the coronavirus.
The Act also states that part-time employees will receive paid sick leave equivalent to the number of hours they typically work during a two-week period. For example, if a person usually works 20 hours a week, he or she is eligible for up to 40 hours of pay.
However, the law doesn’t cover everyone.
Small and mid-sized companies are required to provide these benefits for workers impacted by the coronavirus, but Labor Secretary Eugene Scalia can exempt businesses with fewer than 50 employees, as well as health-care providers such as hospitals and nursing homes.
The exemptions would apply if it “would jeopardize the viability of the business.” At this point, it’s unclear how lenient the Trump administration will be with these exemptions.
Of course, many small-business owners are worried about how to pay for these benefits, especially at a time when business across numerous industries has basically come to a halt. The bill provides a tax credit to cover the costs. The credit is applied to the tax the company normally pays for each employee’s Social Security. If sick leave or family and medical leave ends up costing more than the Social Security bill, the U.S. government will send the employer a check to cover the remaining costs. How this will be determined is up to the Treasury and the Internal Revenue Service.
Experts noted one of the biggest issues with these new benefits is the fact that they are largely being paid for by tax credits. That means small businesses will have to apply to the IRS to get a tax credit – or a tax refund if a person’s tax bill is not as large as the cost of their paid sick and family leave.
Although the Trump administration has pledged to get this process up and running as quickly as possible, it will take some time to create the forms and procedures.
Small-business groups have already voiced concerns over the fact that restaurants and travel and hospitality companies have seen sales plummet – and, as a result, simply don’t have the cash on hand to begin paying these benefits.
What the CARES Act Means for Laundry Owners
President Donald Trump has signed a massive $2.2 trillion economic rescue bill in an effort to offer some financial relief to the nation, which has been shaken by the recent COVID-19 outbreak.
The package – called the Coronavirus Aid, Relief and Economic Security (CARES) Act – will offer direct payments to most Americans, expand unemployment benefits, and provide a $367 billion program for small businesses to keep making payroll while workers are forced to stay home. It also steers substantial aid to larger industries as well.
Here’s why it matters most to laundromat owners:
The main benefits to small business include emergency grants and a forgivable loan program for companies with 500 or fewer employees. There also are changes to rules for expenses and deductions meant to make it easier for companies to keep employees on the payroll and to stay open in the near-term.
- Emergency grants: The bill provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs.
- Forgivable loans: There is $350 billion allocated for the Small Business Administration to provide loans of up to $10 million per business. Any portion of that loan used to maintain payroll; keep workers on the books; or pay for rent, mortgage and existing debt could be forgiven – provided workers stay employed through the end of June.
- Relief for existing loans: There is $17 billion to cover six months of payments for small businesses already using SBA loans.
Other highlights of the CARES Act include:
- Direct payments: Americans will receive a one-time direct deposit of up to $1,200, and married couples will get $2,400, plus an additional $500 per child. The payments will be available for incomes up to $75,000 for individuals and $150,000 for married couples. This is true even for those who have no income, as well as those whose income is derived entirely from non-taxable, means-tested benefit programs, such as Social Security.
- Use of retirement funds: The bill waives the 10 percent early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes, retroactive to January 1.
- The unemployed: The program’s $250 billion extended unemployment insurance program expands eligibility and offers workers an additional $600 per week for four months, on top of what state programs pay. It also extends unemployment insurance benefits through December 31 for eligible workers. The deal applies to the self-employed, independent contractors and “gig economy” workers.
- Large corporations: $500 billion will be allotted to provide loans, loan guarantees and other investments, overseen by a Treasury Department inspector general. These loans will not exceed five years and cannot be forgiven.
- Payroll taxes: The measure allows individuals to delay the payment of their 2020 payroll taxes until 2021 and 2022.
- States and local governments: States and municipalities will receive $150 billion, with $8 billion set aside for tribal governments.
- Hospitals and health care: The deal provides more than $140 billion in appropriations to support the U.S. health system, $100 billion of which will be injected directly into hospitals. The rest will be dedicated to providing personal and protective equipment for health care workers, testing supplies, increased workforce and training, accelerated Medicare payments, and supporting the CDC, among other health investments.
- Coronavirus testing: All testing and potential vaccines for COVID-19 will be covered at no cost to patients.
The 883-page measure is the largest economic relief bill in U.S. history.
Emergency Loans to Small Businesses
Trump administration officials are vowing to launch its massive new loan program for small businesses as early as April 3, in an effort to prevent them from laying off workers or going out of business as the coronavirus pandemic shuts down large segments of the economy, according to a report by MarketWatch.
The $2 trillion financial-rescue package signed by President Trump includes $350 billion in relief for small-business owners whose sales have plunged or whose businesses have been ordered closed.
The size of the loans are largely conditioned on how many workers a business retains or rehires. Those with fewer than 500 workers can apply for up to $10 million in loans to pay employees, cover rent and meet other costs for up to two months. The loans would be entirely forgiven for small companies that meet government requirements.
The White House is working with the Federal Reserve and the Small Business Administration to set up the program, accelerate the approval process and start doling out the money.
Known as the Paycheck Protection Program, the initiative provides 100 percent federally guaranteed loans to small businesses. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward. The administration soon will release more details, including the list of lenders offering loans under the program. In the meantime, the U.S. Chamber of Commerce has issued some guidelines to help small businesses and self-employed individuals prepare to file for a loan. Here are the questions you may be asking, as well as what you need to know:
Am I eligible?
You are eligible if you are:
- A small business with fewer than 500 employees
- A small business that otherwise meets the SBA’s size standard
- A 501(c)(3) with fewer than 500 employees
- An individual who operates as a sole proprietor
- An individual who operates as an independent contractor
- An individual who is self-employed who regularly carries on any trade or business
- A tribal business concern that meets the SBA size standard
- A 501(c)(19) veterans organization that meets the SBA size standard
In addition, some special rules may make you eligible:
- If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis
- If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply
The 500-employee threshold includes all employees – full-time, part-time and any other status.
What will lenders be looking for?
In evaluating eligibility, lenders are directed to consider whether the borrower was in operation before February 15, 2020, and had employees for whom they paid salaries and payroll taxes or paid independent contractors.
Lenders will also ask you for a good faith certification that:
- The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations.
- The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease and utility payments.
- Borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for here.
- From February 15, 2020, to December 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here.
If you are an independent contractor, sole proprietor or self-employed individual, lenders will also be looking for certain documents, such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.
SBA Provides Disaster Relief
In response to the COVID-19 pandemic, small-business owners in all U.S. states and territories, as well as Washington D.C., are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000, through the Small Business Administration.
The SBA program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they may be experiencing. The loan advance will provide economic relief to businesses that are currently going through a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.
SBA Debt Relief
The SBA Debt Relief program will provide a reprieve to small businesses as they overcome the challenges created by the current health crisis. Under this program:
- The SBA will pay the principal and interest of new 7(a) loans issued prior to September 27, 2020.
- The SBA will pay the principal and interest of current 7(a) loans for a period of six months.
SBA Express Bridge Loans
The Express Bridge Loan Pilot Program allows small businesses that currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for a decision and disbursement on an Economic Injury Disaster Loan, the business owners may qualify for this type of loan. The terms of the load are that it will be repaid in full or in part by proceeds from the EIDL.
States’ Budget Status Could Predict Post-COVID-19 Future
The COVID-19 pandemic will have a colossal impact on states’ fiscal futures. Many state officials are already predicting that their states could run out of money without significant financial interventions, according to MultiState Associates, the Coin Laundry Association’s legislative analyst.
One wrinkle in the timing of states’ response to the fiscal impact of the pandemic is whether lawmakers have already enacted the state’s budget for the coming fiscal year.
Every state is required, either by constitution or statute, to pass a balanced budget every year, using the revenue forecast at the time the budget is enacted. States, such as Virginia or New Mexico, that passed their budgets before the pandemic hit may not be legally required to reckon immediately. Many states will likely return for a special legislative session later in the year, but they have time to evaluate the full extent of the fiscal impact. States with pre-existing biennial budgets, such as Minnesota or New Hampshire, also have more “wiggle room.” Nonetheless, some of these states may choose to act more quickly. For example, Minnesota Governor Walz has released a second supplemental budget, coming only 12 days after his first supplemental budget proposal, to allocate additional funding to combat the pandemic.
But states that have not yet adopted a fiscal year 2020-21 budget may face significant challenges requiring an immediate mix of revenue increases and spending cuts. Why? Because revenue forecasts are already being adjusted radically downward. Thus, budget processes, which in January seemed smooth and easy in a time of robust economic growth, will suddenly be very difficult, made more so by the fact that many legislatures have recessed their legislative session to slow the person-to-person spread of COVID-19.
These factors will put significant pressure on lawmakers to act, and pressure from an impending calamity can lead to dramatic policy changes.
Thus far, states have taken few fiscal actions related to COVID-19. If state officials have taken any action at all, it is to extend tax filing deadlines to alleviate the burden that individuals and businesses are facing at this stage of the crisis. However, in the weeks and months to come, policymakers will need to think seriously about how to balance state budgets in a time of unprecedented economic disruption and uncertainty.
The following states are on a biennial budget cycle: Arkansas, Connecticut, Hawaii, Indiana, Kentucky, Maine, Minnesota, Montana, Nebraska, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oregon, Texas, Virginia, Washington, Wisconsin and Wyoming. Some of these states finished their budgets during the 2019 legislative session, while those biennial states that had budgets due this year will find themselves facing a particularly daunting legislative challenge.
Five States to Face Revenue Shortfalls in 2020
Currently, only five states are confirmed to be in significant deficit, according to legislative analyst MultiState Associates. This is down slightly from the number of states that were in deficit last year and is nowhere near the peaks of 2017 and 2018, when more than half of the states were in the red.
The states facing deficits this year are Alaska, Kentucky, New York, Pennsylvania and Rhode Island.
“Most states saw moderate-to-robust growth in general fund revenues in fiscal 2019, following two years of sluggish growth,” the National Association of State Budget Officials reported.
Here’s a closer look at those five states:
Alaska: $10.65 Billion Annual Budget ($1.5 Billion Shortfall)
Alaska has faced perennial revenue difficulties, with the state confronting deficits in three of the last four years. According to a 2018 government study, 68 percent of the state’s total revenue is subject to appropriation derived from taxes on natural resources, but weakness in global energy markets has put the state’s general fund into a bind. Former Governor Bill Walker attempted to resolve the crisis by reducing payments from the state’s Permanent Fund, but the decision proved so unpopular that he opted not to run for reelection. This year, Governor Mike Dunleavy has yet to unveil any specific plan to close the gap but has said that he intends to issue a Permanent Fund dividend using the traditional formula, holding government spending in check and dipping into savings to get through the fiscal year.
Kentucky: $22 Billion Biennial Budget ($1.1 Billion Shortfall)
Before leaving office, former Governor Matt Bevin announced that his successor would inherit a $1.1 billion shortfall. A transition memo given to Governor Andy Beshear indicated that the deficit was attributed to the rising costs of corrections, pensions, employee health benefits, Medicaid, and the comparatively modest growth of state revenues. Governor Beshear’s executive budget does propose new taxes on gaming and vaping and would increase the minimum tax on certain limited liability entities but, in keeping with Republican statements from last fall, does not make any revolutionary changes to the state tax code.
New York: $175.5 Billion Annual Budget ($6.1 Billion Shortfall)
Driven by ballooning costs in the state’s Medicaid system, lawmakers in New York will have to face a significant budget gap during the 2020 legislative session, and political leaders are at odds about exactly how to close it. In his budget address, Governor Andrew Cuomo made it clear that he would not enact a new broad-based tax to shore up state revenues but would instead seek structural reforms to the state’s Medicaid system, including transferring greater fiscal responsibility to localities. Assembly Speaker Carl Heastie, by contrast, said last December that he was more comfortable with raising revenue than cutting services, particularly healthcare. It’s currently unclear what specific policies progressive leaders might pursue, but a tax on wealthy residences or high-income earners has been mentioned favorably in the past.
Pennsylvania: $34 Billion Annual Budget ($926 Million Shortfall)
Last November, the Pennsylvania Independent Fiscal Office released a report forecasting that the state would face deficits of $409 million in the current fiscal year, $926 million for the upcoming fiscal year, and would continue to swell to $1.33 billion by FY22. The state has faced a number of tough budget years of late, including an acrimonious, months-long standoff in 2017. When he was first elected, Governor Tom Wolf proposed a number of aggressive tax policies, but amid consistent opposition from the Republican-controlled legislature, he has largely abandoned those initiatives. In his 2020 budget address, the governor did not propose any broad-based taxes, he opted instead to renew his call for combined reporting paired with a phase-down of the corporate profits tax rate and a tax on natural gas extracted from the Marcellus Shale. While this year’s relatively small deficit may not necessitate concerted legislative action, lawmakers in Harrisburg will have a more daunting challenge in the years to come if they remain on this course.
Rhode Island: $10 Billion Annual Budget ($180 Million to $200 Million Shortfall)
Rhode Island Governor Gina Raimondo is facing some tough decisions this year as state budget analysts are forecasting a $180 million to $200 million shortfall. While she has said that she does not support the proposal to increase the top individual marginal tax rate to 10.99 percent, she acknowledges that difficult tax and spending decisions must be made. In her recently proposed budget, Raimondo calls for “modernizing” the sales tax to include a specific set of services (including lobbying, certain kinds of software services and interior design), legalizing and taxing marijuana, and establishing new brackets for the real estate conveyance tax. While many of these policies will invite significant pushback and controversy, they are not sweeping changes to the state’s tax code.