The $2 trillion economic stabilization package agreed to by Congress and the Trump administration last week in response to the coronavirus is not perfect. Legislation seldom is.
But the package – the largest of its kind in modern American history – provides much-needed assistance to states, the many who have lost their jobs, small businesses in counties like Nassau and large corporations.
The legislation will send direct payments of $1,200 to millions of Americans earning up to $75,000, and an additional $500 per child. It will substantially expand jobless aid, providing an additional 13 weeks and a four-month enhancement of benefits, and will extend the payments for the first time to freelancers and gig workers.
The measure would also offer $377 billion in federally guaranteed loans and grants to small businesses.
Speed is essential in getting the money out for both individuals and small businesses struggling to make ends meet. For many small businesses, delays could mean shutting their doors for good and perhaps altering the face of downtown business districts forever.
In Nassau County, local chambers of commerce have joined the Nassau County Industrial Development in advising businesses on what the federal government is providing and where to obtain it.
Local banks and other lenders, which will be accepting applications on behalf of the U.S. Small Business Administration, are expected to receive details of the process this week.
A strong outreach effort by chambers, the IDA and others will be needed to let business owners know how to navigate this process and strong coordination by banks and government will be needed to get the money out quickly.
The impact of this not happening should not be underestimated.
One of the glaring deficiencies in the economic stabilization approved by Congress is not helping New York state – the epicenter of the coronavirus in this country – cover the cost of tax revenue lost due to the loss of business.
Sales taxes — much of them generated by small business — brought in a whopping $73.6 billion to the state last year.
Gov. Andrew Cuomo has estimated that the “pause” he ordered will cost the state $10 billion to $15 billion in tax revenue. This, he said, will result in steep cuts in state aid to our schools and other vital government services unless New York gets federal aid.
Cuomo said he is now working with the Democratic leadership in the House and Senate to address the loss of tax revenues in subsequent congressional action.
We, along with other newspapers around the state, believe there is a simple proposal that could also help bolster sales tax revenues – and restart local businesses. But swift action is required by Cuomo and the state Legislature.
The good news is that businesses, always the engines of innovation and entrepreneurship, have found new ways to meet customers’ needs.
Local gyms are streaming personal training sessions. Restaurants offer free delivery and online happy hours. Medical practices are expanding their telemedicine capabilities. Car mechanics are making house calls that require no personal contact at all.
What’s missing too often is an effective way of letting potential customers know about the businesses’ services.
There is an obvious way for them to do that – advertising, in all its myriad forms.
But advertising costs money, and the sad truth is that advertising is one of the first things small businesses cut when times are tough.
This is understandable.
Put yourself in the shoes of a local restaurateur with a stack of bills and very little money coming in. By the time he or she finishes paying the most urgent bills — rent, food suppliers, payroll — there’s not much left for advertising.
Whatever stimulus money the owner gets from Washington or Albany will most likely be needed to keep the door open and the lights on. Yet studies show that how well businesses survive a downturn is in large part determined by whether they continue to market and advertise during the hard times.
Fortunately, there is a way for Albany to prime the sales-tax pump to keep revenue flowing to both small businesses and state coffers.
Let businesses use some of the money they would have sent to Albany as sales taxes to market their new offerings. The formula would be simple: Every dollar a small business spends on advertising (up to some reasonable limit) would be a dollar saved off that business’s sales tax bill.
It would be a win-win-win. Local businesses would be healthier because the increased advertising would jump-start sales. The state would get more sales tax revenue because local businesses would be selling more. And media companies (like ours), financially stung alongside our advertisers, would benefit from the additional ad revenue.
We’d like to think that we, too, are vital to the character and strength of our communities, not to mention our democracy. Think for a moment of the critical role that journalists have played in getting vital local information out to your community during this unprecedented crisis.
The Legislature has a lot on its plate right now, and the temptation will be to bury this idea or to take the shortsighted view that we can’t afford to do it right now.
But right now is when it’s needed. We’ve been impressed with Gov. Cuomo’s strong and level-headed leadership in this crisis. We call on him and our state representatives to back this innovative yet simple policy.