ABL Updates: March 2021
By John Bodnovich, ABL Executive Director
BL Federal Policy & Legal Briefing (Virtual)
Join American Beverage Licensees on Tuesday, March 30 at 2:00pm for a briefing on federal policy and legal issues for beer, wine and spirits retailers. This briefing is for ABL Members Only. Register.
Restaurants Revitalization Fund
Congress has approved the American Rescue Plan, which President Joe Biden signed into law on March 11. Included in the bill is the “Restaurant Revitalization Fund” (RRF), which creates a $28.6 billion grant program for restaurants, bars and other on-premise businesses through the U.S. Small Business Administration (SBA). The SBA is currently working to implement the program, and there will be more information coming as SBA guidance is developed. A few things to keep in mind:
• Who is eligible? "Eligible entities" are businesses that can demonstrate that “the uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations of the eligible entity” and "in which the public or patrons assemble for the primary purpose of being served food or drink" that were open on February 15, 2020 and include:
◦ Food stands, food trucks and food carts
◦ Saloons, inns, taverns, bars and lounges,
◦ Brewpubs, tasting rooms and taprooms
• How much can an eligible business receive? Grants will equal the amount by which the recipient’s gross receipts decreased in 2020 as compared to 2019, less the amount of first and second draw PPP loans received by the business. There is a $10 million cap.
• What can Restaurant Revitalization Funds be used for? Payroll costs; Payments on any mortgage obligation; Rent payments; Utilities; Maintenance expenses that could include construction to accommodate outdoor seating; Supplies, including PPE and cleaning materials; Food and beverage expenses within the scope of normal business practice before the covered period; Operational expenses; Paid sick leave; Any other expenses that the SBA Administrator determines to be essential to maintaining the eligible business.
• How do I apply? So far, the SBA has not released an application or guidance, or set up an online portal for applications. The first 21 days will be limited to women-owned, veteran-owned, and socially or economically-disadvantaged businesses. During the first 60 days after the Act becomes law, $5 billion of the RRF is reserved for grants to eligible entities with gross receipts in 2019 of not more than $500,000. All eligible businesses have until December 31st to apply.
$15 Minimum Wage Fails; Looms for Future Legislation
During the American Rescue Act legislative process, the Senate Parliamentarian ruled that language in the “American Rescue Plan” to increase the federal minimum wage to $15 per hour did not qualify for action under budget reconciliation. While there was some discussion that Senate Democrats would introduce an amendment to remove tax breaks for companies that do not pay employees $15 per hour, that approach was abandoned as Democratic Senate leadership sought to quickly pass its version of the rescue plan for the bill to become law before March 14. While the $15 minimum wage fight is over for this legislation, it remains a priority for Democratic leadership and is likely to return in future policy negotiations.
In a Senate letter in February, ABL wrote:
“More than doubling the current federal minimum wage for non-tipped employees would have a drastically negative effect on hospitality businesses that have been hardest hit during the pandemic and can least afford another increased cost on their business that could put them out of business. Phasing out the minimum cash wage for tipped employees, which is currently utilized in some form in 43 states, would also have a devastating impact on bars and restaurants whose narrow margins have been wiped-out by the coronavirus pandemic. If these family owned and operated businesses can’t afford to open their doors, they won’t be able to pay employees any wages – minimum or otherwise.”
“While such a significant minimum wage increase would lead to tough choices for small beverage business owners in any year, an increase of this size this year would undoubtedly result in staff reductions and higher menu prices for customers. Unfortunately, it is unlikely those business changes would be enough to offset increased labor costs at a time when many of these local businesses are limited to just 25-50% capacity and face reduced hours of service.”
“At a time when most everyone is rooting for their favorite bars and restaurants to survive the pandemic, Congress should be working to identify programs and policies to help hospitality businesses stay alive so they can provide jobs that lead an economic recovery, not passing legislation that would inhibit local beverage businesses from hiring more workers. Please support your local bars, restaurants and beverage businesses by opposing efforts to increase the minimum wage to $15 per hour.”
Other Provisions in the American Rescue Plan
While the Restaurant Revitalization Fund is the most significant policy item in the American Rescue Plan for bars and taverns, there are a few other provisions in the legislation that can help hospitality industry businesses:
• ERTC Extension – The law extends the Employee Retention Tax Credit through 12/31/21.
• PPP Funding – The law adds $7.25 billion to the pool of funds for PPP loans.
• EIDL Funding – The law adds $15 billion more in funds for Economic Injury Disaster Loans.
• SBA Grants – The law adds $1.25 billion for SBA grants to live venues & cultural institutions.
RESTAURANTS Act Reintroduced; ABL Lends Support
Introduced in February, the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act of 2021 (H. R. 793; S. 255) would create a $120 billion Restaurant Revitalization Fund to provide relief to food service or drinking establishments that are part of a group of up to 20 facilities. Owners could apply for grants of up to $10 million to cover eligible expenses retroactively to February 15, 2020, and ending eight months after the legislation is signed into law. Grants could be used to support payroll, benefits, mortgage, rent, utilities, building maintenance and construction of outdoor facilities, supplies (including protective equipment and cleaning materials), food, operational expenses, paid sick leave, debt obligations to suppliers, and any other essential expenses. As of today, there are 149 House cosponsors and 31 Senate cosponsors. ABL supports this legislation and is working with members of Congress and Congressional staff, as well as aligned industry associations, to secure its passage.
Extending the Paycheck Protection Program
ABL has joined a group of trade associations supporting legislation that would add two additional months for small businesses to seek loans through the Paycheck Protection Program. Under the PPP Extension Act (H.R. 1799), the Small Business Administration would have until May 31 to approve funding for PPP loans, which can be forgiven for borrowers that keep employees on the payroll during the Covid-19 pandemic. Currently, the SBA only has until March 31 to approve PPP loans. (The recently-passed $1.9 trillion COVID relief bill provided additional funding for PPP first and second-draw loans, but did not extend the deadline for PPP applications.) The legislation was introduced on March 11 by Rep. Carolyn Bourdeaux (D-Ga.) with House Small Business Committee Chair Nydia Velázquez (D-N.Y.) and ranking member Blaine Luetkemeyer (R-Mo.). A companion Senate bill, S. 723, was also introduced on March 11 by Sens. Ben Cardin (D-Md.) and Susan Collins (R-Maine.)
Hospitality & Commerce Job Recovery Act Introduced
On February 25, the Hospitality and Commerce Job Recovery Act of 2021 (H.R. 1346; S. 477) was introduced by Senators Catherine Cortez Masto (D-Nev.) and Kevin Cramer (R-N.D.). The House version was introduced by Representatives Steven Horsford (D-Nev.-04), Darin LaHood (R-Ill.-04), and Jimmy Panetta (D-Calif.-20). This legislation would…“create a perishable food and beverage credit to help small businesses cover costs of inventory lost during COVID closures.” Specifically, the bill “Provides a temporary credit for unmerchantable inventory between March 13, 2020 and September 30, 2020 at 90 percent of the qualified unmerchantable food and beverage costs for any taxpayer engaged in active trade of sale of food or beverage as a manufacturer, importer, wholesale distributer, or retailer.” ABL is working with the Perishable Food & Beverage Coalition to support this bill.
Some Alcohol Tariffs Suspended for Four Months
On March 4, the U.S. and UK issued a joint statement announcing a four-month suspension of tariffs related to the ongoing large civilian aircraft dispute. This means that tariffs on Single Malt Scotch, Single Malt Irish Whiskey from Northern Ireland, liqueurs and cordials, and certain wines will be suspended until July 4, 2021. The UK is, however, maintaining its current tariff on American Whiskey in response to U.S. steel and aluminum tariffs. Then on March 11, the U.S. Trade Representative (USTR) issued a notice that it would suspend tariffs on goods from the EU for four-months in connection to Boeing/Airbus dispute. The EU’s tariff on American Whiskey remains scheduled to double to 50% on June 1, 2021. ABL is working with a coalition of alcohol industry partners seeking the removal of EU, UK, and U.S. tariffs on beverage alcohol products in connection to the steel and aluminum and WTO Boeing/Airbus disputes.
Estate Tax Repeal Bill Re-Introduced
The Death Tax Repeal Act (S. 617 & H.R. 1712) has been reintroduced by Congressmen Jason Smith (R-Mo.) and Sanford Bishop (D-Ga.) in the House and Senate Minority Whip John Thune (R-S.D.) in the Senate. ABL joined other members of the Family Business Coalition in a letter supporting the legislation. ABL plans to sign-on to an additional letter from the Family Business Estate Tax Coalition supporting these bills. While there is not an expectation that a repeal bill will pass under the Biden Administration, with the possibility of another reconciliation bill year, changes to the estate tax may be considered as pay-fors. The House bill currently has 121 cosponsors, and the Senate has 25.
ABL has joined with the American Distilled Spirits Alliance, National Beer Wholesalers Association and Wine & Spirits Wholesalers of America on a letter to Congress expressing the groups’ “opposition to legislation that would allow the USPS to ship beverage alcohol.” The letter states, “Allowing the USPS to ship beverage alcohol – as was set forth in H.R. 2517, The United States Postal Service Shipping Equity Act,” introduced in the 116th Congress by Representative Jackie Speier – will compromise the public health and safety priorities established by existing law, including increasing the risk of tainted and bootleg alcohol in the marketplace; undermining over 85 years of effective state-based alcohol regulation; adversely affecting excise tax collection and much-needed revenue; undoing long-standing coordination of federal and state alcohol policy; and creating USPS costs, without offering a meaningful solution to the significant financial needs of the USPS.”
Save the Date: ABL Annual Meeting – October 17-18, 2021 – New Orleans
ABL will hold its 2021 Annual Meeting on October 17-18 at the Hilton New Orleans – St. Charles Ave in New Orleans, Louisiana. More details to follow…