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Gov. requests reallocation of $175M in unspent Main Street Recovery money

Suspends solvency tax
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Posted at 10:31 AM, Sep 25, 2020
and last updated 2020-09-25 17:46:23-04

Governor John Bel Edwards has requested that the Louisiana Legislature reallocate $175 million in unspent Main Street Recovery Grant Program money to help those impacted by the ongoing COVID-19 pandemic.

In a Letter to the Senate President and Speaker of the House, Edwards asked that during the special session, $75 million in funding be allocated to the state’s unemployment trust fund, $75 million to local governments most impacted by the COVID-19 crisis and $25 million in grants for businesses closed in Phase 2 and Phase 3 of Louisiana’s COVID response, such as bars.

“One of the most important things the Legislature can do in this upcoming session is to fix the Main Street program and to re-allocate the CARES Act funding to where it is needed,” Gov. Edwards in his letter. “While this reallocation will not meet all of the needs that we have for local governments and the Unemployment Trust Fund, it will go a long way towards providing for stability in the local governments most affected by COVID-19 and helping to prevent crippling tax increases on businesses because of the likely insolvency of the trust fund.”

Funds from the Main Street Recovery Grant Program are administered by the Louisiana Department of Treasury

In addition, the governor's office says that under his executive authority, Governor Edwards has amended his Public Health Emergency to suspend the solvency tax levied on employers under law when the Unemployment Trust Fund reaches a certain level.

Currently, Louisiana’s trust fund balance is $49.4 million.

According to the Governor's Office, prior to the COVID-19 crisis, Louisiana had the 17th healthiest trust fund in the country, with a balance of over $1 billion.

“While we will have to work together and with our Congressional delegation to address the long-term need to replenish our trust fund balance, I am confident that we can all agree that we need additional time to recover from this emergency before there should be any consideration of the solvency tax.” Gov. Edwards wrote.

There is push back from State Treasurer John M. Schroder who says the proposal will devastate small businesses by moving money from the Main Street Recovery Program .

The following statement was issued by Treasurer Schroder:

“If the governor removes $175 million from the Main Street Recovery Program, 79% of eligible businesses who have already applied won’t receive the grant they are entitled to. This would be catastrophic to thousands of small businesses across this state.

The governor wants you to believe the program’s not working. He’s wrong. The program is doing exactly what it was intended to do. It is helping small businesses survive during a pandemic.

In the next few days, we will stop taking applications because all of the $275 million will be obligated. We’re not even at the halfway mark for this program. The average grant is $11,500. For our small businesses, that’s a lot of money. It’s the difference between closing down or keeping their doors open.

The governor and I agree on one thing. The balance of the Unemployment Trust Fund is a huge problem. Yet, once again, the governor wants to resolve a financial problem with a short-sighted solution. At the rate the trust fund is dwindling, shifting money from Main Street to the trust fund would only raise the balance for a few weeks.

Our small businesses need our help – not short-term budget tricks designed to save the governor from making hard decisions. Make no mistake. Taking $175 million from this program would be an insult to every small business owner who had the guts to build a business from scratch. The governor needs to help our businesses stay in business, not shut them down.
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Click here to read the letter to the Senate President and the Speaker of the House.

Click here to read the proclamation suspending the solvency tax.

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