The local restaurant industry was among the first casualties of COVID-19, and it remains one of the hardest hit. Local restaurants have been closed to the public for nearly two months, with only takeout and delivery options available.
Gov. Tim Walz is expected to announce on Wednesday whether he plans to extend the state’s Stay at Home Order, which is currently set to expire Monday. Even as the state begins taking tentative steps to reopen, it’s still unclear when local restaurant owners might begin to recover even if legislation now before Minnesota lawmakers gets the governor’s signature
As the unemployment rate reaches heights not seen since the Great Depression, the pandemic has inflicted economic damage that won’t disappear overnight. It’s also unclear how comfortable customers will feel in public spaces until an effective vaccine or treatment is developed.
“A lot of us don’t know what our future looks like right now,” said Janna Viscomi, a Faribault city councilor and co-owner of Bernie’s Grill in the downtown historic district. “Some of the uncertainty we face relates to the state’s actions, some to human behavior. Both of those are challenging to predict.”
The issue is raising concern at the Minnesota legislature. Last week, Sen. John Jasinski, R-Faribault, who has family in the restaurant industry, introduced a bill subsequently co-sponsored by Sen. Rich Draheim, R-Madison Lake, that would create a $20 million fund for restaurants forced to dispose of perishable food or beverages.
Restaurants would need to provide documentation showing when the food or beverages were purchased and when they were donated or disposed of. The bill would be a one-time investment specifically for the current fiscal year.
Due to the shutdown, Viscomi already had to throw away a significant amount of food and expects to throw away more. She hasn’t kept careful track of all of that has been tossed, so she might not be able to get all of it reimbursed, but said it could still be helpful.
Faribault Area Chamber of Commerce and Tourism President Nort Johnson said many local restaurants are in dire straits. Facing daunting cash flow shortfalls in the short term, he said relief now could prove invaluable in the long term.
“Any relief that our businesses that have been totally shut down could get could be very helpful,” he said. “That way, they’ll have a chance to open back up once restrictions are lifted.”
While the state has allowed businesses to remain open for take-out, pickup or delivery, many restaurants have found that model difficult to sustain. Bernie’s tried it briefly after the Stay at Home Order went into effect, then abandoned it. As a result of the pandemic, Viscomi said that Bernie’s is likely to make lasting changes. In the short term, she expressed gratitude that the state’s unemployment insurance system has helped to keep furloughed employees afloat.
As the state approaches summer tourism season, the uncertainty has only grown. According to a recent survey from Hospitality Minnesota, more than 50% of Minnesota hospitality businesses say they’ll face permanent closure if conditions don’t improve in the next two months.
To help save those businesses, Hospitality Minnesota has proposed a sweeping and expensive plan. The centerpiece would be $120 million in grants for small business emergency loans, accompanied by generous relief from taxes and regulatory fees.
Hospitality Minnesota Director of Government Relations Ben Wogsland said that while the situation at the legislature is “fluid,” he remains optimistic that efforts to protect at-risk businesses in the industry will be enacted. He said Jasinski’s proposal could be a sound way to get funding to those who need it most.
“We appreciate any efforts to help the hospitality industries through this crisis,” he said. “(The hospitality industry) is facing a huge challenge, and the industry is very, very important to our state and local economies.”
According to Explore Minnesota, the leisure and hospitality industry adds $16 billion to the state’s GDP and accounts for 11% of all private sector jobs. Industry supporters have effectively argued that the state can’t afford to not save it.
However, the state suddenly finds it cash strapped, with a $1.3 billion projected surplus transformed into a $2.4 billion deficit virtually overnight. The reversal is an abrupt departure from years of economic growth that enabled it to build up a $2 billion rainy day fund.
In contrast to the federal government, local and state governments have strict restrictions on borrowing. The major exception is the state’s bonding bill, through which legislators can finance fund roads, bridges and other infrastructure projects.
Jasinski’s approach enjoyed bipartisan support, with Rep. Mike Sundlin, DFL-Esko, the lead sponsor in the House. With the Senate controlled by Republicans and the House and Governor’s Mansion by DFLers, Minnesota is the only state in the U.S. with a divided government.
However, with funds limited and the clock ticking down on a legislative session scheduled to end May 18, it was rolled into a much larger economic assistance bill authored by Sen. Paul Anderson, R-Plymouth.
Anderson’s bill will provide $60 million in small business relief grants through the Commissioner of Employment and Economic Development. Half of that must go to businesses in the seven-county metro area and half to Greater Minnesota businesses.
In addition, 30% of grant funding is reserved for “microbusinesses,” with fewer than five employees. At least 15% will go to businesses that are majority owned and operated by women minorities, or veterans.
Funds of up to $10,000 per business will be distributed on a first come first served basis. The bill’s primary funding source is the federal government, which provided billions in aid for state and local government authorities through its $2.2 trillion CARES Act.