In the closing days of 2020, the federal government finally passed a bi-partisan and bi-cameral Omnibus and COVID-19 funding package. Then-President Trump signed the package that will provide funding for all federal operations for Fiscal Year 2021 and provide – though less than expected – the much-needed $900 billion pandemic relief funding.
As previously reported, three federal COVID-19 relief funding programs of specific importance to the hospitality industry contained in the relief package included:
Payroll Protection Program (PPP)
- Provides $284 billion for PPP and extends the application deadline to March 31.
- Expands eligibility to both nonprofit and quasi-governmental destination marketing organizations (DMOs) with 300 employees or less (full-time and part-time combined), as long as no more than 15% of their activities consist of lobbying efforts and they did not spend more than $1 million on lobbying in 2019.
- Sets aside at least $35 billion for eligible recipients that have not previously received a PPP loan.
- Provides a second round of forgivable loans to businesses with 300 employees or less and had a 25% decline in revenue in any quarter in 2020, compared to the same quarter in 2019.
- Expands the list of PPP-covered expenses to the cost of supplies and inventory, software and cloud-based services, uninsured damages from public disturbances in 2020 and measures to address COVID-19 health and safety guidelines (i.e., Personal Protective Equipment) — in addition to payroll, mortgage debt interest, rent and utilities.
- Allows borrowers to deduct expenses covered by PPP loans from their taxes.
- Continues to require at least 60% of loan proceeds to be used on payroll, capping covered non-payroll expenses to 40% of the loan.
- Going forward, for both first-time and second-time PPP applicants, the loan amount is based on 2.5 times the average monthly payroll, up to $2 million, for each loan.
- However, for lodging and food services businesses, the loan amount is based on 3.5 times the average monthly payroll, up to $2 million.
- Expressly forbids PPP loans to publicly traded companies.
Economic Injury Disaster Loan (EIDL) Program
- Provides $40 billion to extend Small Business Administration (SBA) EIDL grants through Dec. 31.
- Sets aside $20 billion for employers in low-income areas with 300 or less employees, and experiencing at least a 30% economic loss, allowing them to receive a $10,000 grant, or an amount equal to the difference between what they previously received and $10,000.
- Removes the requirement for EIDL advances to be deducted from the calculation of PPP loan forgiveness.
Live Venue Grant Program
- Provides $15 billion for SBA grants to concert venues, performing art centers, theaters and museums with 500 or less full-time equivalent employees. Eligible employers must demonstrate at least a 25% decline in revenue.
- Recipients are ineligible for PPP loans.
- The grant amount is based on 45% of the employer’s gross revenue in 2019, up to $10 million.
- Grants can only be used on payroll costs, rent, utilities, interest on preexisting debt, maintenance, advertising, insurance payments, theatrical productions, state and local taxes, and measures to address COVID-19 health and safety guidelines (i.e., PPE).
Complete information related to the PPP loan/grant program can be found on the U.S. Small Business Administration’s webpage. Additional information related to Covid-19 funding can be found on two of Visit San Antonio’s partner webpages: The Texas Hotel and Lodging Association and The Texas Restaurant Association.
As we move into the New Year with a new Presidential administration and Congress, there will be significant political activity and hopefully legislative and regulatory achievements to help the travel and tourism industry economy recovery and expand. President-elect Joe Biden has indicated, in addition to a significant push to secure new vaccines and PPE, his focus would be on a broad federal infrastructure program and an additional COVID-19 funding package. This signals good news for the U.S. economy generally and the travel and tourism industry, specifically.
Federal legislation and regulatory activity that we will be monitoring include:
- The Hospitality and Commerce Job Recovery Act
- A tax stimulus bill
- Domestic Travel Promotion Grants
- The Visit America Act
- Creation of an Assistant Secretary position within the Department of Transportation – focusing on travel and tourism issues.
- Planning for the Reopening of International Travel, and
- Vaccine and Testing Requirements.
The Visit San Antonio Government Affairs Team will remain engaged with advocating for federal assistance for the travel and tourism industry. We continue to make the case of the importance of our industry to the national, state and local economies as we work with our federal delegation, the U.S. Travel Association and other travel partners and stakeholders to secure federal relief and funding for all of the struggling businesses in our region.
Jan. 12 ushered in the beginning of the 87th Regular Session of the Texas Legislature, which will deliberate for 140 days and will adjourn sine die no later than midnight May 31. The Legislature, which meets in regular session in only odd numbered years, faces numerous challenges brought on by the COVID-19 pandemic. Opening day at the state capitol, normally jam-packed with family and visitors, saw a shortened and subdued start due to COVID-19 tests being required for all members, staff and visitors before entering the building. Additionally, swearing-in proceedings in both the House and Senate were socially distanced and required masks for participants.
To provide some context to better understand the current political climate and gain some additional perspective on how the 87th Regular Session might shape up over the course of the next several weeks and months, here are a few key takeaways from the House and Senate opening day activity:
- As expected, the Texas House on Tuesday elected state Rep. Dade Phelan as the next House speaker by a record vote of 143-3, with three members not casting a vote. The three members voting no were Republicans Kyle Biedermann and freshmen Bryan Slaton and Jeff Cason.
- Speaker Phelan will preside over a chamber that faces some of the toughest legislative problems in years, including:
- An ongoing public health crisis impacting Texas’ economy
- Projected shortfalls to the state budget, and
- Legislative redistricting.
- Speaker Phelan will preside over a Texas House that will have 82 Republicans and 67 Democrats, the same partisan division as in 2019.
- A special election will be held Jan. 23 for House District 68.
- After being sworn in, Speaker Phelan emphasized interests of all Texans. He also stressed the need for unity and working together for the good of the state.
- The House rules are expected to be taken up Jan. 14. This will set the procedural parameters of how the House will conduct its business this session.
- The Senate has 18 Republicans and 13 Democrats.
- As widely reported, Lt. Gov. Dan Patrick and the Republican-led Senate changed the here-fifths “supermajority” rule (required to bring a bill to the Senate floor) to only 14.
- State Sen. Brian Birdwell (R-Granbury), was sworn in as president pro tempore. The president pro tempore serves as lieutenant governor and presides over the Senate in the absence of the Lieutenant Governor.
In other important legislative news, Texas Comptroller Glenn Hegar, as he is required to do, provided his “budget revenue estimate” (BRE), which is the essential building block for developing the state’s 2022-2023 biennial budget. The net result of the Comptroller’s estimate gives lawmakers $112.5 billion in revenue for general governmental spending purposes. The BRE estimate is a 4% decrease from funds available during the 2020-21 biennial budget, which ended up being more robust that initially anticipated despite the COVID-19 pandemic.
It is important to note that Hegar’s BRE does not take into account any supplemental expenditures that the legislature will have to make this year to cover outstanding payments owed during the 2020-21 budget, nor does the estimate include the directed 5% budget cuts by various state agencies. More specifically, the $112.5 billion available for general-purpose spending includes 2022- 23 collections of $119.6 billion in General Revenue-Related (GR-R) funds. However, those collections will be offset by an expected 2020-21 ending GR-R balance of negative $946 million. In addition, $5.8 billion must be reserved from oil and natural gas taxes for 2022-23 transfers to the Economic Stabilization Fund (ESF) and the State Highway Fund (SHF). Another $271 million must be set aside to cover a shortfall in the state’s original prepaid college tuition plan, the Texas Tomorrow Fund.
Sales tax collections make up the state’s largest source (62%) of GR-R revenues in 2022-23 and thanks to a favorable court decision in the “Wayfair” case relating to internet sales tax collections, the BRE projects sales tax revenues will increase by 5.1% from the 2020-21 biennium, reaching $64.1 billion for the 2022-23 biennium after $5 billion is allocated to the State Highway Fund. Other significant sources of GR-R revenues in 2022-23 include:
- Motor vehicle-related taxes, including sales, rental and manufactured housing taxes, which are expected to reach $10.1 billion, up 5.1 percent from 2020-21;
- Oil production tax collections, projected to generate $6.5 billion, up 10.1 percent from 2020-21;
- Natural gas tax collections, expected to raise $3.5 billion, up 66.9 percent from 2020-21; and
- Franchise tax collections, projected to generate $6.3 billion, up 5.1 percent from 2020-21.
For all funds, franchise tax revenue is estimated to generate $9 billion, up 4.4 percent from 2020-21.
The Economic Stabilization Fund (ESF), or “Rainy Day Fund,” currently contains approximately $10.5 billion, not counting currently outstanding spending authority. Absent any legislative appropriations, the ESF balance is expected to total $11.6 billion at the end of 2022-23. While the budget picture appears rosier than expected, Comptroller Hegar warned that his forecast “remains clouded with uncertainty” given how the pandemic impacts behavior of consumers and businesses. Consequently, lawmakers will be cautious with spending and legislation with a state fiscal note will highly scrutinized, complicating passage.
In previous communications, we expect limited access to legislators and their staffs during the 87th Regular Legislative Session. In an effort to help you get your voice heard, the Texas Travel Alliance (TTA) has developed a text notification advocacy system for alerts, notifications and calls to action for the State Legislative Session. The text system is a way for them to get information out to you and for you to contact legislators, when necessary. Please take a few minutes and text to 40649, type in Travel, and then hit send. You will get a confirmation text with the opportunity to fill out your name, address and other contact information.
With no new or amended Executive Orders from Governor Greg Abbott, the current state Executive Order in place is GA-32. On Dec. 28, Bexar County Judge Nelson Wolff issued Executive Order NW-19. This new order lowered the business occupancy limit from 75% down to 50%. This reduction is permissible and outlined in Governor Abbott’s Executive Order GA-32 due to San Antonio’s Trauma Service Area “P” having seven consecutive days in which the number of COVID-19 hospitalized patients as a percentage of total hospital capacity was higher than 15%. The order cited significant increase in the rate of (COVID-19) infections as the reasoning behind the new restrictions. The City of San Antonio has not issued any new or amended Emergency Orders.