Business virus-relief fund boosted to $147.7M

The Arkansas Legislative Council on Friday authorized spending up to $92.7 million more in federal funds for the fledgling Arkansas Ready for Business grant program, which will help businesses with purchases related to the coronavirus pandemic.

The boost — the second this week — will increase the program’s spending authority to $147.7 million. Just last week, it started up with $15 million available, but demand led to discussions about adding more. Legislative leaders on Sunday agreed to increase the amount to $55 million.

On another matter related to the pandemic, the council authorized spending authority of $148.4 million in federal funds for the Department of Human Services to disburse, including $80 million to provide bonus payments to workers in hospitals as well as nonclinical staff members, such as janitors and cafeteria workers, in hospitals, nursing homes and other facilities.

The federal funds are part of the $1.25 billion that Arkansas

received under the federal Coronavirus Aid, Relief, and Economic Security Act approved in March.

The state Ready for Business Program will provide grants of up to $100,000 to companies for expenses as

sociated with ensuring the health and safety of employees and patrons.

State officials still must verify that the applicants qualify before the grants are distributed.

The first checks may go out by the end of this month, lawmakers learned Friday.

Gov. Asa Hutchinson announced the program April 29 and it went online that afternoon. It received 2,392 applications seeking more than $36 million within about an hour. Some businesses received word that the money would be available, but many did not.

The Republican governor subsequently acknowledged that the program was prematurely rolled out on a state website without legislative approval for its spending authority.

LEGISLATIVE DISCUSSION

The Legislative Council on Friday authorized the program’s additional spending authority in a voice vote, with a handful of lawmakers audibly dissenting.

Senate President Pro Tempore Jim Hendren, R-Sulphur Springs, told his colleagues that he is not normally known as a big spender, but “we are in unprecedented times.

“My biggest concern with the program was not that it was sending money to small businesses, but it was done in a way that most of them did not know what was happening before the window closed,” he said. “I got a call from one of the barbers … in little Gravette on Main Street who had no idea about the program and has been shut down for a month and is just about done.

“And for us to say we are going to dilly-dally around for a month while we figure out how to make this program perfect, while these entities just disappear, I think is a failure of us to do our job,” said Hendren, who is Hutchinson’s nephew.

“Is there going to be some money wasted? Probably. But are there going to be some businesses saved and some jobs retained? Definitely. And hopefully with the audit function and so on, we can go

back and recoup any of the money that was improperly spent,” he said.

Sen. Jonathan Dismang, R-Searcy, who proposed the $92.7 million increase, told lawmakers that “this is a pretty unique situation because we have a program that was developed [and] the policy was developed prior to the approval” of the Legislative Council.

“I think that state agencies and other individuals that have been involved with this or even not involved have seen what’s happened and seen the folly, so hopefully this is not something that will be repeated, and I don’t think it is anything that these committee members or any of us would stand for if it is to be repeated,” he said.

But Rep. Robin Lundstrom, R-Elm Springs, said, “We have embarrassed the citizens of Arkansas by just throwing money up in the air and saying, ‘Oh, catch it if you can, catch if you can.’

“These businesses are hurting, and this program is insulting. This is our tax dollars and your tax dollars,” she said. “Throwing more money at it is not going to solve the problem. Maybe we need to go back and correctly run the program before we give them more money to be misused. I am at a complete loss. Can somebody please help me?”

Dismang said Lundstrom’s question is a good one and he’s struggled with the same thing.

He said an attorney with five employees has much different needs than a restaurant with five employees.

“However, there has been significant pushback to change that policy, and I have not gotten any path that anyone is willing to change the priority to make prioritization based on need,” Dismang said. “What I do not want to do is negatively impact those that do need the full amount of funding, and that’s why I pushed forward with the motion.”

The program accepted more applications Tuesday and Wednesday, and it ended up receiving 12,233 applications for a total of $147.7 million, nearly three times the amount of funding available at the time.

SMALL-BUSINESS NEEDS

At least 75% of the grants will go to small businesses of up to 50 employees. At least 15% of the money will be set aside for women- and minority-owned businesses.

Department of Commerce Secretary Mike Preston told lawmakers that 94.5% of the applications came from companies with up to 50 employees and 70% came from companies with 10 or fewer employees.

Businesses owned by women, members of minority groups and disabled veterans represented 46% of the applications and about $40.6 million of the funds requested, he said.

“To me, this shows the need is there. We hit our sweet spot,” he said. “Almost 95% of the requests came from the small side of the businesses.”

The 12,233 applications represent companies with about 196,000 full-time workers and about 50,000 parttime employees, and that’s about 25% of the state’s work force that would benefit from this program to protect employees and patrons of these businesses, Preston said.

He said about 300 companies submitted applications for the maximum $100,000 grant.

“I know there was concerns and accusations that there was insider information, that people were tipped off that this was coming” before the governor’s news conference announcing the program April 29, Preston said.

“That’s not the case. I can get up here and gladly share that information with you,” he said.

Preston said many people paid attention to the governor’s news conference at which it was announced that applications would be accepted starting at 5 p.m. that day. The daily coronavirus updates are available for public viewing.

He said he told the state’s economic development partners, representing each community and county, about the program in a telephone call between the 1:30 p.m. news conference and the 5 p.m. launch.

“Whether it was a miscommunication, and I will take full responsibility … we

started [accepting] applications” before the Legislative Council authorized spending authority for the program, Preston said.

“We apologize for that. It was just a miscommunication. We weren’t planning on approving anything, just going to start taking applications and make sure that we knew what was coming in. We were under the impression that [the Legislative Council] was getting to ready to meet and this was going to move forward. We’ll not take that for granted ever again.”

At his covid-19 news conference Friday afternoon, Hutchinson said, “I wanted to thank the Arkansas General Assembly and the Legislative Council today for their quick action and approval of the Arkansas Ready for Business

grant program, so this will be a welcome opportunity for Arkansas small businesses that took advantage of that grant program and applied for it.”

BONUSES FOR WORKERS

Hutchinson also noted that the Legislative Council approved the Department of Human Services’ request for $80 million in spending authority for bonus payments to covid-19 direct care workers at hospitals and some indirect workers as well.

In mid-April, Arkansas received federal approval to use $55 million in Medicaid funds to give bonuses of up to $500 a week to workers in nursing homes and other long-termcare settings, as well as to workers who care for elderly or disabled people at home.

At the governor’s request, the CARES Act steering committee created by Hutchinson recommended using up to $80 million in federal coronavirus relief funds to provide similar payments to workers in hospitals and nonclinical staff members, such as janitors and cafeteria workers, in hospitals, nursing homes and other facilities.

The Legislative Council’s approval of the total $148.4 million in spending authority for the Department of Human Services also included $45 million to reimburse nursing homes for their expenses associated with the pandemic and $23.4 million for other providers including independent physicians, ambulance services, mental health agencies and providers that serve the developmentally disabled.