For many small firms, aid package might be too late
Thousands now are in danger of closing again — and possibly never reopening
NEW YORK — Clay Reynolds is starting to make peace with a gutwrenching reality: He once again might have to close his business, Arrichion Hot Yoga and Circuit Training.
The $900 billion pandemic relief package Congress has just approved contains billions in aid directed specifically at struggling small companies like Reynolds’.
Arrichion received a loan last spring from the government’s earlier economic aid program. But
Reynolds, a co-owner, needs another. Business was down 75 percent in the third quarter. The fourth quarter likely will be worse.
Like other independent fitness studios and gyms, his has lost many longtime members who feared working out alongside others indoors or don’t want to wear a mask while exercising. And after being forced to close during the spring, Reynolds worries the surge in virus cases will bring new government restrictions.
“There’s a good chance this type of business will be shut down
from drivers is used for road upkeep, but electric vehicles aren’t powered by gas.
More than two dozen other states already levy special fees on electric vehicles to account for the difference, although such charges have been criticized as exorbitant in many cases relative to what drivers of conventional vehicles pay in gas taxes.
“With the growing numbers of electric cars on the road, I think it is time that they pay a proportionate share of highway funding,” state Rep. Ken King, a Panhandle Republican, said during a hearing last year regarding the Texas proposal.
“The intent of this legislation is to ensure all vehicles driving in the state of Texas have the opportunity to contribute to the maintenance of our roads,” he said at the time.
A bill to enact the fees and earmark the money for roads that King authored during the 2019 legislative session died without making it to a full vote of the House.
However, he has filed an identical proposal for consideration in the upcoming session that begins Jan. 12 — at a time when many lawmakers are likely to be looking for new sources of funding because state revenue overall has been hammered by the economic impact of the pandemic.
Taxes on motor fuels generated about $2.6 billion for the state’s highway fund during the 2020 fiscal year that ended in August, the state comptroller’s office reports.
The figure represents a decline of about 4.5 percent — or $124 million — compared to fiscal 2019.
Still, with electric vehicles accounting for only about 2 percent of vehicles on roadways nationwide, the proposed new fees — which also would include a $100 annual levy for gas-electric hybrids — aren’t expected to be major revenue contributors for the foreseeable future.
An analysis by the state’s Legislative Budget Board last year found King’s plan would produce no more than about $30 million annually by fiscal 2024.
King, whose newly filed bill would take effect Sept. 1 if it’s approved in the upcoming session, didn’t respond to requests for comment.
At least one group already is lined up behind the proposal, however.
“Our members sell all types of vehicles, and vehicles using the roads should contribute to the maintenance,” said Jennifer Stevens, a spokeswoman for the Texas Automobile Dealers Association.
The organization supported the bill in 2019 as well.
Tesla, which bypasses franchised dealerships in favor of selling its vehicles directly to consumers, didn’t make an executive available for comment.
A number of enthusiasts of electric cars and other advocates for clean energy who turned out during last year’s hearing called the $200 flat annual rate unfair and too high.
Some said they didn’t object to helping pay for highway upkeep, as long as fees are tied to vehicle weight, miles driven or other tangible measures that impact wear and tear.
But Wedbush Securities analyst Daniel Ives said recently that he considers such fees to be counterproductive regardless.
The percentage of electric vehicles currently on the road is tiny, he said, so special fees for those who drive them don’t raise much money and fly in the face of ongoing federal and state efforts to reduce carbon emissions caused by the burning of fossil fuels.
Ives also called it surprising in particular that the levies have been proposed in Texas — which is emerging as a major Tesla hub in the wake of the company’s announcement in July that it’s building the $1.1 billion factory in the Austin area.
Tax breaks from Travis County and the Del Valle school district totaling a minimum of about $60 million combined helped lure the Tesla plant here, although the project hasn’t received state financial incentives.
“With Tesla building one of its most important footprints in Austin’s backyard, it would be very ironic (for state lawmakers) to pass a fee against electric vehicles,” Ives said.
“It almost seems like it would be an April Fools’ Day-type moment,” he said. Tesla “is going to bring billions of dollars to the city and that area.”
Still, Ives characterized the potential blow to Tesla as more symbolic than anything else, saying a $200 annual fee for owners of electric vehicles isn’t likely to “significantly move the needle” in terms of depressing sales by it or other manufacturers.
Matt Holm, president of the Tesla Owners Club of Austin, agreed with that assessment, although he said there doubtless will be many in his 2,000-member group who oppose the levy or consider it too high.
For his own part, however, Holm said he isn’t going to quibble about $200 to help fund roadwork. He said he travels up to 3,000 miles a month as a real estate agent and saves a net of about $10,000 a year driving a Tesla compared to when he had a gaspowered vehicle.
“Can I afford $200 to go to the roads?” he said. “Yes, I think that is something I can afford.”