Stay solvent

By Steve Woodward
The North Carolina General Assembly unanimously allocated $1.6 billion to fund Wuhan Virus relief programs two weeks ago. The money was sourced out of a pot of $4 billion sent down from Washington through the federal CARES Act.
Although no explanation as to the timing was offered, two bills were filed in the state Senate only last Thursday to tap into those federal funds in an effort to rescue state restaurants crippled by dine-in restrictions.
Return America
A Return America rally in Raleigh, Jones Street, May 14, 2020, coincided with a lawsuit filing that later overturned Gov. Cooper’s ban on worship service gatherings.

The Save Our Restaurants Act proposes the appropriation of $125 million, with $50 million targeting “restaurant stabilization”, and $75 million targeting “hotel stabilization”. The bill for whatever reason proclaims compassion for restaurants but allocates more money to hotels, many of which never have closed. In fact hotels are open while churches subsequently were ordered to close by Democrat Gov. Roy Cooper. (Saturday, a federal judge issued a temporary restraining order overturning church closures after a lawsuit was filed by Return America with the support of Republican state Rep. Keith Kidwell, D-79).

The genesis of the hotel-restaurant bill, and a parallel bill to support expansion of mixed beverage sales to take-out and delivery orders, will come as a surprise to Republicans, the party of small business and free-market capitalism. The two bills’ sponsors are Senate Democrats, Jay Chaudhuri (D-15, Wake County) and first-termer Harper Peterson (D-9, New Hanover), himself a restaurant owner.
Upon closer inspection, the Save bill is not likely to be a game changer for independent restaurants relegated to take-out service the past two months and facing deeply felt uncertainty going forward. If there is a forward. The most any restaurant will be loaned under the bill’s current language is $50,000. That’s right, it’s not even a typical Democrat bailout. It’s a loan at 3.5% interest. The bill is so weak that it gives Republicans an opening to counter it with a bill that actually sustains restaurants. It’s a no-brainer.
“I wish more of our (state) officials would get out and the realize the damage, and stop looking to the federal branch to fix things,” a Moore County chef told me. “They seem to think we will just bounce back.”
A glimmer of optimism was delivered Monday by Gov. Cooper, who described himself as “hopeful” that his incremental re-opening plan for small business will move into a long awaited Phase 2 this Saturday. Cooper also, for the first time, said he would consider regional re-openings as he stated the obvious, that “it’s important to cushion the blow to the economy.”
The blow was struck weeks ago, in reality, and will only come into sharper view as state tax revenues begin to crater. Furthermore, Cooper continues to insist that Phase 2 would extend four to six weeks, leaving already suffocating restaurants, salons and fitness clubs operating at reduced capacity. For eateries, dine-in or patio seating at 50% for an excruciating month or longer will hardly launch a turnaround and will keep employment way down.
The worst case scenario is not that people will die indefinitely from complications from the Wuhan Virus. Even the most extreme doomsayers are not pushing that narrative. Worst case is that businesses of longstanding close, never to return, even as the state sits on billions of federal relief that has not been allocated, and even as state lawmakers flirt with crushing debt by the temptation of receiving another round. The Democrats in Washington have created a new bailout monstrosity carrying a $3 trillion price tag (but it never will clear the Senate).
“When considering how best to structure federal aid, I think the best image to keep in mind is a shock absorber,” wrote John Hood, chairman of the Raleigh-based John Locke Foundation. “As a condition for accepting any new round of federal funds, (state) governments should be required to restate their unfunded liabilities using honest accounting and then submit a clear plan for discharging the debt.”
This is essentially what legitimately small businesses are required to do if they were among those who managed to apply for and receive funds under the bungled Paycheck Protection Program via the original $2.2 trillion CARES Act. If it turns out they do not have enough employees left to use 75% of the PPP for payroll, the money received converts from a grant to a loan. For many, it’s not a matter of staying safe but staying solvent.

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