Public Policy Update

WASHINGTON

Update

Tom Cosgrove Executive Vice President for Public Affairs

FEDERAL RESPONSE TO COVID-19 – MORE TO COME?

In response to the COVID-19 pandemic, Congress has passed four major pieces of legislation providing trillions of dollars of support to individuals, businesses and state governments. As states reopen, the question is whether Congress will provide additional funding for recovery, and if so, what it will include.

Following the passage of an $8.3 billion measure with funding for public health, medical supplies and vaccine development, the Families First Coronavirus Response Act (FFCRA) was signed into law on March 18. The primary provisions related to most employers with 50 to 500 employees, providing up to 10 days of expanded paid sick leave and family and medical leave.

The largest and most comprehensive COVID-19 relief legislation thus far has been the Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law on March 27. This $2.2 trillion package is wide ranging, including economic impact payments to taxpayers, enhanced unemployment benefits, individual and business tax relief, support for the health care system, an economic stabilization fund for major industries like the airlines, and funding for state governments.

A key piece of the CARES Act was the $349 billion Small Business Administration (SBA) forgivable loan guarantee program called the Paycheck Protection Program (PPP). Most employers with fewer than 500 employees were eligible for low interest loans equal to 2.5 times monthly payroll. These loans are forgivable if spent on qualified expenses, including 60% spent on payroll, though the SBA is still finalizing some of the rules for forgiveness.

After initial PPP funding ran out on April 16, Congress passed the PPP Enhancement Act to provide an additional $310 billion for PPP as well as additional funding for the SBA’s Economic Injury Disaster Loans (EIDL) and emergency grants. The bill made ag producers eligible for the EIDL and also provided $100 billion in support for hospitals and testing.

USDA also received funding from the CARES Act and on April 17 announced the details for the $19 billion Coronavirus Food Assistance Program (CFAP), including $16 billion in payments to producers and $3 billion for direct food assistance. USDA began taking applications for the CFAP direct payments on May 26. Additionally, the CARES Act provided $150 billion to states for COVID-19 expenses, but many state and local governments in Farm Credit East’s territory are facing major budget deficits with increased COVID-19 costs and revenue shortfalls due to the economic shutdown. This issue was addressed in the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act passed by the House of Representatives which includes $875 billion for state and local governments. Unlike the other four laws, the HEROES Act has not been a bipartisan effort and the Republican-led Senate has indicated it would work on a more narrowly crafted bill.

In addition, many farm organizations are advocating for additional funds for agricultural producers, indicating that the CFAP payments are not sufficient, especially for certain producers such as apple growers who will have difficulty qualifying. The HEROES Act contained several agricultural provisions including additional support for livestock, dairy and specialty crop producers as well as funding for local farmers’ markets. It is unclear if the Senate is considering any of these specific measures.

Certainly, the level of economic assistance that Congress has provided is unprecedented. By the time this issue of Financial Partner arrives, the trillion-dollar question may already be answered as to whether Congress will provide additional funding and if it will include support for state and local governments or additional assistance for agricultural producers.