The latest round of pandemic-driven business closures and restrictions announced last week by Gov. Tim Walz is needed to help bring down a raging rate of infection, but no one should underestimate the economic blow this represents, particularly for small restaurants and bars.
Along with a mounting death and illness toll, COVID-19 has done untold damage to the economy, mitigated in part by federal and state relief during the first wave of the pandemic. But much of that funding has run out, just as Minnesota and other states face record case levels.
Congress must act now to provide a fresh round of relief that can serve as a bridge between the grim winter months to come and, hopefully, a spring that brings widespread distribution of an effective vaccine.
This would be no "blue state bailout," as President Donald Trump so cynically tried to frame it in the run-up to the election. Unlike the federal government, states are obliged to balance their budgets.
Minnesota went into the pandemic in better economic shape than most, with $2.37 billion in reserves. But plummeting revenue now mean the state faces a $2.3 billion deficit in the period that ends June 30, 2021.
Worse, the deficit is projected to grow to $4.7 billion in the next biennium, according to state Management and Budget Director James Schowalter. Minnesota still has borrowing capacity, but Schowalter told an editorial writer that there are state constitutional restrictions on bonding.
The $1.87 billion Minnesota received from the feds in the CARES Act is nearly gone, and that spending authority expires at the end of next month. The Legislature wisely appropriated $200 million at the outset of the pandemic, but only $18.5 million remains. Even with that help, needs abound. More than 17,000 Minnesota small businesses are on a waiting list for aid.
Walz and others have appealed to the lame-duck Congress to act, and President-elect Joe Biden is working on a federal pandemic strategy. But he can't act until he takes office in January.
Minnesota should consider some temporary measures, however painful, to support businesses and their workers. Dipping into the reserves — knowing that could add to a projected deficit — is one possibility. State Rep. Dave Baker, R-Willmar, said independently owned restaurants and bars face some unique pressures from the one-month restrictions ordered by Walz.
"They want to do what's needed," said Baker, a small-business owner himself, "but they need help badly."
Baker said he is looking at other measures that would let bars, restaurants and distilleries sell alcoholic beverages in large containers, similar to takeout food; get tax breaks for donating perishables; and benefit from a suspension of utility payments and the sales tax. "Anything that gives them a little more cash flow for the next month or two," he said.
Minnesota House Speaker Melissa Hortman said she and other leaders are searching for creative ways to help those hit hardest and will know more when the state's economic forecast is released in a few weeks.
"The problem is, this is a disaster of epic proportions," Hortman told an editorial writer. "States don't have the financial resources to make people whole from any disaster that could befall them. That doesn't make it any easier to hear."
The sad reality is that Congress and Trump have so far failed to provide adequate federal aid. That means each state — including Minnesota — must do what it can to help businesses and their workers survive the storm.
