With the passage of a $1.9 trillion COVID relief package and promise of a historic multi-trillion- dollar infrastructure package, Arizona is poised to experience a rapid influx of federal funds.

Arizona economist Jim Rounds is optimistic about this investment, and believes that it could give Arizona lawmakers and policy minds the opportunity to chart a more positive post-pandemic economy. 

鈥淲e can hedge against the bad and take advantage of the good with solid economic policies,鈥� Rounds said . 鈥淲e stepped it up after the Great Recession. We need to take another giant step post-COVID.鈥�

The American Rescue Plan $4.3 billion in state fiscal relief, $3 billion in local fiscal relief, and $2.6 billion in relief for education.

Despite from prominent national economists like Larry Summers, former U.S. Treasury Secretary and President Emeritus of Harvard University, about economic overheat, Rounds is more concerned about the 鈥渞idiculous鈥� amounts of debt being piled on,. 鈥淭he biggest issue with borrowing so much is that we have to pay it back eventually,鈥� he said.

Indeed, American debt as a percentage of GDP from 107% at the beginning of 2020 to approximately 130% today. This figure was around 118% at .

鈥淚鈥檓 not overly concerned, yet, about inflation,鈥� Rounds said. He predicts that the inflationary pressures applied by the expansion of federal spending will result in higher mortgage costs in Arizona and higher interest rates across the nation. These forces would counteract rising inflation.

Overall, he is disheartened by the perceived lack of empirical evidence guiding the American Rescue Plan. 鈥淚鈥檓 more disappointed in the lack of research into the needed scale of the stimulus package. The best economic stimulus package continues to be COVID-19 vaccines.鈥�

He argues that the expansion of vaccine availability will increase demand, naturally stimulating the economy. Arizona has been on vaccine distribution and recently to everyone above the age of 16. Cases and hospitalizations have .

Incoming infrastructure and climate investment

President Biden and congressional Democrats are now eyeing a federal infrastructure and climate package, as Biden promised on the campaign trail. While the details are still being hammered out, it is likely to amount to several trillion dollars in spending.

Rounds is very optimistic about the possibilities for Arizona鈥檚 growth if a package passes and is signed into law. 

鈥淭he climate package needs to be well considered. There鈥檚 a difference between heavy regulation and finding a balance between public and private sector preferences,鈥� he said. 鈥淚n fact, many larger businesses have started listing environmental issues as a key in their strategic plans.鈥�

According to Rounds, Arizona can help lead the next generation of clean power generation. 鈥淧roper planning can actually generate jobs in states that take the lead in being the producers of related environmental technology goods and services. Arizona can be such a state if we can draft some form of a strategic plan in this area.鈥�

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Restaurants, bars and other food service providers in Arizona could see more relief to carry them through the final throes of the pandemic that has negatively impacted almost every dining and drinking establishment here. 

On Saturday, the U.S. House worked into the wee hours to pass the $1.9 trillion that includes $25 billion in restaurant relief. Now, the package is  in the Senate for consideration. While there are disagreements over some sections, a provision to help restaurants and bars that are still struggling has strong support. 

Relief for small and mid-sized restaurants

Included in the package is the Restaurant Revitalization Fund (RRF) to provide $25 billion in relief for small and mid-sized restaurants. It is based on an amendment overwhelmingly approved by Congress last month that added a dedicated restaurant relief fund to the plan.The amendment was introduced as a bipartisan, bicameral effort from four senators and representatives including Arizona U.S. Senator Kyrsten Sinema (D).

鈥淎rizona restaurants fuel jobs across our state, and these employers need support now more than ever,鈥� Sinema said. 鈥淓stablishing a restaurant rescue plan will get Arizonans back to work and ensure local Arizona restaurants can keep their doors open as we continue to fight the ongoing pandemic and lay the groundwork for a full economic recovery.鈥� 

Forgivable grants would provide aid for payroll, mortgage, utilities and more 

Restaurants, bars and other food service businesses that receive grants through the relief package would not need to pay them back as long as they use the funds for essential operating expenses such as payroll, mortgages, rent, utilities, and personal protection equipment. 

鈥淪enator Sinema鈥檚 bill is a game-changer for an industry that is a critical jobs and economic driver for Arizona. Almost 90 percent of restaurants have furloughed or laid off employees, and that number is on track to only get worse as this pandemic wrecks the industry,鈥� said Steve Chucri, president and CEO of the Arizona Restaurant Association. 

Food trucks, caterers, food stands and brew pubs included in aid package 

In addition to restaurants and bars, other entities eligible for support from the RRF include food stands, food trucks, food carts, caterers, saloons, inns, taverns, lounges, brewpubs, tasting rooms, taprooms, and any licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products.

The act allows for grants equal to a pandemic-related revenue loss of up to $10 million per entity or $5 million per physical location. The grants are calculated by subtracting 2020 revenue from 2019 revenue. Entities are limited to 20 locations.

Restaurant relief grants could be used for a variety of expenses including:

• Payroll costs
• Principal and interest payments on a mortgage, not including any prepayments on principal
• Rent payments, not including prepayments
• Utilities
• Maintenance expenses including construction to accommodate outdoor seating and walls, floods, deck surfaces, furniture, fixtures, and equipment
• Supplies including personal protective equipment and cleaning materials
• Food and beverage expenses within the eligible entity’s scope of normal business practice before the covered period, which runs from Feb. 15, 2020, through Dec. 31, 2021, or another date as determined by the Small Business Administration (SBA)
• Covered supplier costs
• Operational expenses
• Paid sick leave

Economically disadvantaged, women and veterans would receive priority 

During the first 21 days of the grants, the SBA will prioritize applications from restaurants owned and operated or controlled by women, veterans, or socially and economically disadvantaged individuals.

The plan requires applicants to make a good-faith certification that the uncertainty of current economic conditions makes the grant request necessary to support the applicant’s ongoing operations and that the applicant has not also applied for or received a grant.

The plan sets aside $5 billion for eligible applicants with 2019 gross receipts of $500,000 or less. The bill also charges the SBA with awarding the other $20 billion in grants in “an equitable manner to eligible entities of different sizes based on annual gross receipts.”

Concern over $15 an hour mandate in the bill 

Many restaurant owners and small businesses in Arizona expressed concern over a provision that sought to raise the federal minimum wage from $7.25 to $15 an hour over four years. It also proposes to eliminate tip credits. The changes would mean that employers would have to pay every worker at least $15 an hour, even if they receive tips. 

Flagstaff, Ariz. already has a $15 an hour minimum wage. If Congress were to approve a federal wage hike, Flagstaff would automatically see its minimum wage raise to $17 an hour due to a measure approved by the Flagstaff City Council. 

For now, the controversial provision is unlikely to appear in a final deal. The Senate parliamentarian, a neutral arbiter of the chamber鈥檚 rules, issued guidance saying she thought it didn鈥檛 meet the guidelines for a budget reconciliation package. Under reconciliation, bills can pass with a simple majority, rather than the 60 votes required to invoke cloture, which ends a filibuster on a bill.

What else is in the American Rescue Plan 

Other measures included in the rescue plan are:

• An extension of federal unemployment benefits from $300 to $400 per week through the end of September
• A new $15 billion grant program for struggling small business owners, separate from the existing Paycheck Protection Program, along with a $35 billion investment in local financing programs that provide businesses with low-interest loans
• An extension of eviction and foreclosure moratoriums until the end of September, with $5 billion set aside to help tenants struggling to pay rent.
• Restoration of emergency paid sick leave through the end of September
• $350 billion in aid for state and local governments
• $170 billion in aid for K-12 schools and higher education
• $50 billion for Covid-19 testing
• 15 percent increase in SNAP benefits through September
• $20 billion toward a national vaccine program, in partnership with state and local governments
• Increasing the Child Tax Credit to $3,000 per child ($3,600 for children under 6) and making it refundable for the year

Read the full text of the proposal at:  

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Attracting high paying jobs and new industry and securing funding for infrastructure projects are top priorities for Arizona鈥檚 new U.S. senator, Mark Kelly, who spoke to the real estate community Friday. 

At the top of his list, however, is helping to quickly advance a new federal stimulus package to help families and small businesses still struggling from the effects of the pandemic, said Kelly (D), who laid out his priorities at a virtual breakfast meeting of the nonprofit , the voice of the real estate community in the Phoenix region. 

鈥淭here鈥檚 still a lot or work ahead to beat this virus and rebuild our economy. That鈥檚 my focus,鈥� Kelly said. 鈥淲e need to pass this relief bill quickly. Not only to tackle the virus but also to get our economy back on track. That is critical. We need to do that now.鈥�

The U.S. House approved a $1.9 trillion stimulus package Saturday and now it goes to the Senate where there is pressure to approve a package before enhanced unemployment benefits run out on March 14. But its fate clearly is in question. The House proposal was voted mostly along party lines. The bill would provide funds for vaccine distribution, manufacturing, public health, direct payments to families, relief for small businesses, and resources for schools so they can safely reopen. 

Help for seniors in crisis   

Many of Arizona鈥檚 seniors need immediate help as well, Kelly said. They are struggling with severe isolation and an inability to schedule and get to Covid vaccine appointments. Mobile meal services are overwhelmed. 

To address the crisis, Kelly co-sponsored to provide $1.5 billion to the aging network for meal delivery, vaccine outreach, programming, and caregiver support.

Looking ahead  

More than 180 attendees tuned in to hear Kelly list his goals for the coming year. In addition to Covid relief, Kelly listed a number of priorities to further economic recovery in Arizona including: 

Semiconductor manufacturing, military installations 

Attracting manufacturing jobs and protecting Arizona鈥檚 military installations are near the top of the list, said Kelly, a former NASA Space Shuttle pilot and retired U.S. Navy captain and pilot. 

Kelly said he supported the bipartisan CHIPS for America Act passed by Congress in December as part of the annual defense bill. An important piece of the legislation for Arizona are incentives for the domestic manufacturing of semiconductors to compete on the global stage, he said.

鈥淭his will help bring high paying manufacturing jobs to Arizona,鈥� Kelly said. 鈥淣ot only is this important to rebuilding our economy, it鈥檚 also a national security imperative to grow American leadership in our semiconductor sector.鈥�

Arizona鈥檚 semiconductor industry is an economic engine for the state. In 2020, the industry in Arizona had an $8 billion wage impact and was ranked No. 4 in the U.S. for semiconductor manufacturing jobs, according to the . 

Light rail, freeway to Vegas, border ports of entry 

Kelly listed several transportation infrastructure projects he supports including funding for the modernization of border ports of entry in Arizona, completion of the Interstate-11 freeway from Phoenix to Las Vegas, and infrastructure projects for tribal and rural areas. 

Another goal is to ensure progress stays on track for a project to extend light rail to connect South Phoenix with the downtown corridor. The U.S.  Department of Transportation鈥檚 Federal Transit Administration recently approved a $529.8 million grant to go towards Valley Metro鈥檚 5.5-mile South Central light rail extension and downtown hub project. 

The grant will cover close to a third of the $1.35 billion project, according to , with another $108 million coming from the Federal Highway Administration. The South Central light rail extension and downtown hub project is scheduled to be completed by 2024.

鈥淓xpansion of Valley Metro light rail is going to continue to connect the region with affordable transportation options and it’s going to lead to  greater economic growth as we work to attract more companies to come to Arizona, which is a priority of mine,鈥� he said.

Renewable energy, broadband, drought 

Other important projects include renewable energy infrastructure and jobs, expanded broadband statewide, and protection and infrastructure for Arizona water supplies, Kelly said. 

鈥淲e cannot grow our economy without securing the future of water in Arizona and we want to grow our economy. We want folks to come here. We want business to come here,鈥� Kelly said.

Bipartisanship

Kelly also spoke about his commitment to work with others on Capitol Hill. 

鈥淭he way we are going to tackle these challenges is by finding common ground and working together,鈥� said Kelly, who was elected in a special election Nov. 3 to finish out the last two years of the vacant seat of Sen. John McCain, who died in 2018.  

鈥淭he legacy of this Senate seat, previously held by Senator John McCain, is one of independence and integrity and working across the aisle. He was willing to stand up for his country and do what he believed was in the best interest of Arizona and our nation,鈥� he said. 鈥淭hat legacy of service, I don’t think it will ever be matched, but it is something we should all strive for, especially right now.鈥� 

Kelly said he will be a strong advocate for all Arizonans and that starts with 鈥渓istening and learning.鈥�

Sen. Kelly鈥檚 committee assignments

As a new senator, Kelly received six committee assignments: 

• Armed Services
• SubCommittee on Emerging Threats and Capabilities 
• Special Committee on Aging 
• Energy and Natural Resources 
• Environment and Public Works 
• Joint Economic Committee

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After an abbreviated legislative session last year due to Covid-19, Arizona lawmakers stepped into the 2021 session this week under pressure to enact policies to steer the state to full economic recovery in the coming months. 

Covid relief will be the first order of business, said the incoming chair of the House Commerce Committee, Rep. Jeff Weninger (R-Chandler). 

鈥淐ovid is number one and that’s twofold: rolling out the vaccine and taking care of people, and making sure businesses can survive and thrive and they鈥檙e not damaged and go out of business for something that was completely out of their control,鈥� he said.  

Getting the word out about existing and new federal relief programs to help  companies and individuals affected by the pandemic is also a top priority, Weninger said.

Third term as Commerce Committee chair 

Weninger, a small business owner who operates restaurants across metro Phoenix, is serving his third consecutive term as the chair of the Commerce Committee, which oversees regulatory activities that impact industries. 

During his tenure, Weninger has sponsored and co-sponsored numerous business-related bills. Among them, bills to create tax credits to spur affordable housing, expand telemedicine coverage, attract high-tech industry, and institute crowd-funding legislation to give small companies greater access to capital.

Weninger spoke to 番茄社区 about what he foresees as top priorities for the 2021 session. 

Adopt business-friendly policies to attract industry, jobs 

In addition to COVID relief, maintaining Arizona鈥檚 reputation as a 鈥渢ax friendly and regulatory friendly鈥� state will be a high priority to continue to attract a diversity of industry and high paying jobs, Weninger said.

鈥淭hat is why we have been so successful for the past six years. We鈥檝e had a renaissance of businesses moving here and expanding here and growing here and that is why our budget is in the incredible shape it is in today,鈥� he said, referring to the state鈥檚 $1 billion rainy day fund. 

Lessen negative impact from Prop. 208 tax hike 

The passage of Proposition 208 moved Arizona up to one of the highest income tax states for certain earners and small business owners, Weninger said. 

The intent was to provide new funding for education. But tens of thousands of small businesses that file their taxes under the individual tax code could be affected as well. That threatens to severely hamper the state鈥檚 ability to retain and attract investment, he said.   

Lawmakers are brainstorming solutions to mitigate some of the impacts, particularly for small companies with 500 or fewer employees. Expect to see some tax reforms to help.  

鈥淭he voters voted it in, so how do we keep our budget in a safe place and make us attractive for this mass exodus from California and other states,鈥� Weninger said. 鈥淲e want to make sure we have policies in place that won鈥檛 have them just driving right by Arizona on their way to Texas. 

鈥淲e鈥檝e done a great job for a while making sure that doesn鈥檛 happen, but we need to find a way to make sure that doesn鈥檛 happen with Prop. 208.鈥�

Protection from frivolous lawsuits, regulatory reform, telemedicine

Others goals this session will be to enact legislation to protect responsible companies and organizations from frivolous COVID-19 lawsuits, promote expansion of virtual and digital services like telemedicine, and implement regulatory reforms to reduce costs on companies and individuals. 

Expect bills to close student achievement gaps, fund workforce initiatives, and improve water and transportation infrastructure, he said.  

Alcohol-to-go compromise to push up restaurant, bar profits

As a restaurant owner who had to adapt to survive the pandemic disruptions, Weninger is seeking solutions to aid the struggling bar and restaurant industry as well. One proposal is to expand alcohol-to-go for a variety of establishments. 

鈥淲e鈥檙e talking about a compromise, a new right for restaurants, bars, grocery stores that don鈥檛 have the option right now,鈥� he said. 鈥淭he bars have been hit very, very hard and they were actually completely shut down for a while, so we don鈥檛 want to take a privilege outright that they have had already — and their licenses cost a lot more.鈥�

Federal relief programs for individuals, businesses 

For individuals and businesses financially struggling because of Covid-19, Weninger is strongly encouraging them to apply for existing and new federal relief programs including the Paycheck Protection Program and Employee Retention Tax Credit.   

For more information about these and other programs, go to: . 

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This holiday season the country should have a renewed sense of hope as our frontline workers continue receiving the first round of COVID-19 vaccinations and now with the passage of an additional round of COVID relief, the second largest relief package in our nation鈥檚 history following the CARES Act.  

After months of delay, Congress late Monday overwhelmingly passed containing $900 billion in COVID relief and $1.4 trillion to fund the government through September 30, 2021.  

The COVID relief package delivers needed relief for American businesses, nonprofits, and families hit hard by the pandemic. 

Learn more about what this relief means for you and/or your business with a few significant highlights of the package below.  

• RELIEF FOR INDIVIDUALS AND FAMILIES:

1. Direct payments to individuals
   Individual adults will receive $600 for those making up to $75,000 a year on their 2019 tax returns, $1,200 for couples making up to $150,000, and $600 for each dependent child. Individuals earning between $75,000 and $99,000 would receive a partial payment.听

2. Extended aid for unemployed workers
   Extends unemployment benefits for jobless workers, who will receive up to $300 per week through March 14^th. 鈥疶his includes the Pandemic Unemployment Assistance (PUA) which provides UI benefits to workers who traditionally are ineligible.听
   听
3. Rental Assistance
   Provides $25 billion in rental assistance to help pay past due rent, future rent, and utility bills. Extends the existing CDC eviction moratorium through January 31, 2021. The Treasury Department will disperse the rental assistance to states via a formula based on population.听听

• CONTINUED LIFELINE FOR SMALL BUSINESSES: 听

4. Extends and expands the Paycheck Protection Program (PPP)
   Provides renewed funding of $284 billion and extends the program to March 31. Will provide forgivable loans to both first- and second-time small business borrowers. The bill expands eligibility of the program for 501(c)(6) nonprofit and destination marketing organizations. It authorizes hard-hit small businesses with fewer than 300 employees and at least a 25% drop in gross receipts over a specified period to receive a second loan. The bill dedicates a portion of the funding specifically for low-income communities and sets money aside for loans from community-based and minority-owned lenders.
   
   The bill makes some changes to the program to reduce the maximum loan amount from $10 million to $2 million and expands how funds can be used. While the requirement that 60% of the PPP loan must be used for payroll remains in place, Congress added four additional categories for qualified expenses: 1) operations expenses for items such as software and computing, 2) supplier costs for goods essential to the operation of the business, 3) worker protection expenses such as items need to protect workers and customers to comply with CDC guidance i.e. plexiglass, expansion of outdoor dining etc., 4) property damage expenses as result of riots.听
   
   While the CARES Act specified that forgiven PPP loans would not count as taxable income, the new package clarifies that businesses can deduct expenses paid with forgiven PPP loans.听

5. Expands the Economic Injury Disaster Loan (EIDL) Program听
   Provides $40 billion to extend the Small Business Administration EIDL grants through December 31, 2021 and sets aside $20 billion for employers in low-income areas with 300 or less employees who experience at least a 30% economic loss, allowing them to receive a $10,000 grant. Authorizes individuals who previously received a partial EIDL grant to receive an additional payment for a combined total of $10,000. Importantly it removes the requirement for EIDL emergency grants to be deducted from the calculation of PPP loan forgiveness.听

Are you a small business that needs help navigating these new changes and impacts to your existing relief? The to answer your questions that will continue to be updated as more information becomes available.   

• TARGETED BUSINESS SUPPORT:

6. Live venue grant program 听听
   Provides $15 billion for the Small Business Administration to concert venues, independent movie theaters, live entertainment venues, museums, and cultural institutions who demonstrate at least a 25% decline in revenue.
   听
7. Transportation and travel support
   Includes $45 billion for relief to transit agencies, airlines, airports, state departments of transportation, the motorcoach industry and Amtrak. Includes $15 billion to cover airline salaries and benefits through the end of March, $1 billion for airline contractor payrolls, and $2 billion for airports and airport-based business.
   听
8. Support for the agriculture community & food supply
   Provides $12 billion to crop farmers, cattle ranchers, and rural communities.

• TAX PROVISIONS PROVIDE RELIEF AND STIMULATE ECONOMIC RECOVERY

9. Employee Retention Tax Credit (ERTC)
   Extends the ERTC to July 1 and increases the refundable payroll tax credit from a maximum of $5,000 to $14,000 by changing the calculation from 50% of wages paid up to $10,000 to 70% of wages paid up to $10,000 for any quarter.听

10. Low-Income Housing Tax Credit (LIHTC)听
    Increases allocations to states for LIHTC which subsidizes the construction and rehabilitation of housing developments that have strict income limits for eligible tenants and their cost of housing.听听

11. Employer-side Social Security Payroll Tax Credits
    Extends through March 2021 to offset paid sick and family leave related to the coronavirus created Families First Coronavirus Response Act.  

12. Deduction for Business Meals
    Expansion of the deduction for business meals to 100% for 2021 and 2022. 
     
13. Tax Extenders
    The bill included tax extenders for 32 of the 33 tax provisions that were set to expire at the end of 2020 including the permanent extension of lower excise tax rates for beer, wine and spirits, and the 5-year extension of tax incentives for investing in low-income areas and hiring workers from disadvantaged groups.  

• SUPPORT FOR SCHOOLS AND CHILDCARE ORGANIZATIONS TO CONTINUE SAFE OPERATIONS

14. K-12 schools and higher education support 听
    Provides $82 billion in funding for schools and universities to assist with reopening which includes $54.3 billion for K-12 schools and $22.7 billion for higher education.听听

15. 听Safe opening of childcare 听
    $10 billion for childcare centers to help providers safely reopen and $250 million for Head Start providers.听听

• COMBATING THE VIRUS WITH ADDITIONAL HEALTHCARE SUPPORT

16. Vaccines, Testing & Tracing听
    Provides a total of $63 billion for vaccine distribution, testing, tracing and other health-care initiatives. Of this amount, $22.4 billion will go to states for testing, tracing and COVID mitigation programs, of which $2.5 billion is dedicated as grants targeting rural areas and communities of color.听

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