Legislature(2019 - 2020)ADAMS 519
03/20/2020 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Informational Meeting on Resources Available for Economic Relief During the Covid-19 Pandemic | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 207 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 137 | TELECONFERENCED | |
| += | SB 120 | TELECONFERENCED | |
| += | HB 290 | TELECONFERENCED | |
| += | HB 247 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 20, 2020
1:36 p.m.
1:36:17 PM
CALL TO ORDER
Co-Chair Johnston called the House Finance Committee
meeting to order at 1:36 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick (via teleconference)
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
Representative Adam Wool
MEMBERS ABSENT
None
PRESENT VIA TELECONFERENCE
Jon Bitner, Executive Director, Alaska Small Business
Development Center; Joe Schierhorn, President and CEO,
Northrim Bank; Todd MacManus, President and CEO, First Bank
of Ketchikan; Jim Dodson, Fairbanks Economic Development
Corporation; Robert Venables, Executive Director, Southeast
Conference; Julie Saupe, President and CEO, Visit
Anchorage; Bill Popp, President and CEO, Anchorage Economic
Development Corporation.
SUMMARY
INFORMATIONAL MEETING ON RESOURCES AVAILABLE FOR ECONOMIC
RELIEF DURING THE COVID-19 PANDEMIC
Co-Chair Johnston reviewed the meeting agenda.
^INFORMATIONAL MEETING ON RESOURCES AVAILABLE FOR ECONOMIC
RELIEF DURING THE COVID-19 PANDEMIC
1:38:15 PM
JON BITNER, EXECUTIVE DIRECTOR, ALASKA SMALL BUSINESS
DEVELOPMENT CENTER (via teleconference), introduced himself
and provided detail about the Small Business Development
Center (SBDC). The center was funded partly through the
Small Business Administration (SBA), the State of Alaska,
local governments, and private sector investors, to provide
free one-on-one confidential counseling and advising to
businesses across the state. The center also provided a
series of trainings and workshops. On an average year SBDC
worked with about 1,700 entrepreneurs and businesses and
provided training for another 1,600 to 1,700. The center
had offices across the state with locations in Anchorage,
Fairbanks, Juneau, Ketchikan, Soldotna, Seward, and the
Mat-Su Valley.
Mr. Bitner reported a huge surge in outreach from existing
and new clients asking for help, guidance, and information.
He characterized the situation as extremely fluid. He would
tell the committee what he could about what was happening,
what resources were available, and what SBDC was doing to
try to stay ahead of the situation. However, the reality
was that everything could change over the next 48 hours.
Mr. Bitner shared that SBDC had been tracking all of the
businesses that had reached out due to the COVID-19 virus
and the impacts it was having across the economy. He stated
that the stories were gruesome. The smallest businesses
were getting hit hardest and fastest - many were reporting
their funding would last a week or two at best before
having to close their doors. Medium sized small businesses
were a little better off but were still projecting two to
three weeks out. Even some of the largest small businesses
were concerned they would have to close their doors if the
situation continued for several weeks to a month without
any assistance provided.
Representative Sullivan-Leonard asked if the committee
would take questions during the presentation.
1:41:05 PM
Mr. Bitner was happy to entertain questions during or after
his testimony.
Representative Sullivan-Leonard remarked that the Mat-Su
Valley and Wasilla were home to many small businesses. She
asked what was considered a small, medium, and large
business in terms of the number of employees. For example,
she wondered if a small business had under 100 employees.
Mr. Bitner answered that 500 businesses [employees] or less
was the general rule from the SBA. He elaborated that
99.3 or 99.4 percent of all businesses in the state were
considered small businesses.
Mr. Bitner continued to provide his testimony. He reported
that the current situation [with COVID-19] had already
translated into job losses. He detailed that the Matanuska
Brewing Company had been forced to release 147 employees.
The owners of the Spenard Roadhouse, Crush, and Snow City
had released 223 of their employees. The Sheraton Hotel
released 80 employees, the Fifth Avenue Mall in Anchorage
had closed down, and Chena Hot Springs had released 100
employees. He noted the businesses listed only represented
large small businesses that had made the news. The smaller
mom and pop businesses did not get the same media coverage
because they were harder to notice, but they were faced
with the same layoff decisions.
Mr. Bitner addressed the global scope of the problem and
cited a video released by Marriott International where the
CEO reported the impacts of the COVID-19 virus on their
revenue were worse than 9/11 and the 2009 financial crises
combined. He detailed that between 9/11 and the 2009
financial crisis the company had seen a 25 percent
reduction in revenues globally. The company was currently
seeing a 75 percent reduction in revenues for all of its
hotels. He elaborated that the company was in the process
of closing hundreds of its hotels and was furloughing as
many employees as possible.
1:43:27 PM
Mr. Bitner addressed actions being taken to stem the losses
in Alaska. The biggest need the SBDC was hearing about was
funding. He explained when a business relied on daily and
weekly infusions of customer cash, it was difficult to
overcome in the short-term when the cash dried up. The
federal government was doing what it could. The SBA had a
disaster loan program that the State of Alaska had applied
for, but all 50 states had applied and only several had
been approved thus far (Alaska was not included). The
center was poised to help businesses with the applications
and get them in as quickly as possible. He believed it was
a phenomenal program that would do much good, but it was
not a silver bullet. There would be many businesses the
program would not help. Once Alaska was approved for the
program, it would take the SBA two to three weeks on
average to turn around the loan applications. He
highlighted that many of the eligible businesses did not
have that kind of time.
Mr. Bitner highlighted a $1 trillion federal relief package
currently working its way through Congress. The package had
a wide variety of funding mechanisms that would be very
helpful; however, on a statewide level there was need for
some type of intermediary assistance to help businesses
survive the next few weeks or however long it took for
federal dollars to arrive.
1:45:11 PM
Representative Tilton had heard from a small business owner
earlier in the day that fortunately had funds to keep
employees on for another month or so. She detailed that the
person indicated that to get some of the SBA loan funding
at a zero percent interest rate, businesses had to keep
employees employed. She did not know that all businesses
were able to do so. She asked if the information was
accurate.
Mr. Bitner answered that the SBA disaster assistance loan
the state had applied for had an interest rate of
3.75 percent for small businesses and 2.75 percent for
certain nonprofit organizations. He was not aware of any
zero percent APR [annual percentage rate] loans currently
available. He noted a zero percent loan may be included in
the federal relief bill, but he was not certain.
Representative Tilton asked if the loans were only
available to employers who were able to keep their
employees working. The business owner who had contacted her
was fortunate to have enough cash on hand to keep his
employees working until they could access the federal
funds. She highlighted there were numerous small businesses
that did not have enough cash on hand to do so.
Mr. Bitner replied that the loan program was meant for
operational funding, meaning that once a business received
the funding it would be presumed the business would
continue operating and employing. He did not believe there
were restrictions on how many employees a business had
maintained. He suggested that the SBA may be a better
information source for detailed questions on the program.
1:47:26 PM
Mr. Bitner continued with his testimony. He informed the
committee that the SBDC was working as hard as possible to
stay ahead of the situation. He detailed that the center
had moved all of its offices online - all eight of its
locations were working remotely. Additionally, as many of
its trainings as possible were online and on demand. All of
the trainings were being offered for free - previously
trainings had a nominal fee to cover costs, which did not
seem appropriate in the current economic climate. The
center developed a series of tools and templates to help
people with specific issues coming up, particularly the
food industry transitioning from onsite dining to delivery.
There were certain things restaurants needed to consider
such as insurance implications.
Mr. Bitner shared that as late as the following morning,
SBDC would launch a website dedicated to all things
COVID-19 related for small businesses and small business
assistance. The website would have links to as many local
government pages, SBA resources, and SBDC tools and
templates as SBDC could come up with. The center had been
working closely with the state, local governments, regional
EDOs, and anyone else it could in order to try to ensure
needs were met and voice of small business was heard and
that the SBDC resources were used as fully as possible.
Mr. Bitner relayed that the SBDC was looking at a variety
of issues in addition to the COVID-19 virus and the
implications that would have an impact on the state going
forward. The drop in oil prices was problematic for the
state's budget. He suspected the reduction in tourism would
take longer to turn around than the quarantine protocols
would be engaged, which would be a major blow, especially
to Southeast communities. The center was anticipating an
increase in unemployment across the board, but the
magnitude was hard to discern at present. He stated that it
was not all gloom and doom, but it was an economic and
social crisis at a level SBDCs had never witnessed. The
SBDC was still working to determine how to address the
problem and the best way to provide services, but he hoped
the takeaway was that the SBDC was still working and
meeting the capacity needs of the businesses in the state
and it would continue to do so as long as it could.
1:50:13 PM
Representative Josephson appreciated Mr. Bitner's attitude
that the situation was not all gloom and doom, which he
thought was a generous statement. He asked about gaps and
what the legislature could do to help small businesses.
Mr. Bitner replied that in the short-term it came down to a
question of money. He stressed the importance of providing
funding to businesses that were currently in desperate need
to get them through the short-term until more robust
programs were brought online. He stated that the decision
on the mechanics of the short-term funding was above his
pay grade. He suggested leveraging some type of existing
infrastructure, program, division, or department to provide
the loans in order to avoid having to create something from
scratch. He did not believe the individual dollar amount
had to be enormously high, depending on how long the
situation persisted. He suggested that treating the funding
as a regular loan program may not be the best option for
the current scenario. He referenced Representative Tilton's
mention of a zero percent APR. He did not know of any
current zero percent loans, but he suspected it would go a
long way toward helping businesses. The important thing was
finding a way to get resources to businesses to allow them
to continue to operate and pay their employees.
1:52:01 PM
Representative Wool asked if Mr. Bitner had talked to
utility companies, particularly electric companies, that
would give business customers any leeway on paying their
bills.
Mr. Bitner responded that the SBDC had spoken to many, but
not all of the utility companies. He reported that the
companies were fairly universally stepping up their efforts
to ensure no one had their lights turned off or late fees
charged. He noted that he did not know whether it was the
case for all utility companies.
Co-Chair Johnston noted that Congress had passed
legislation to provide paid leave to employees during the
COVID-19 emergency for companies with up to 500 employees.
She asked if Mr. Bitner knew any details.
Mr. Bitner answered that HR 6201 signed by the president
two days earlier included sections related to emergency
paid sick leave and emergency family and medical leave.
Both of the provisions applied to businesses with less than
500 employees. He noted there were good cause exemptions
for employers with fewer than 50 employees. Under the
emergency paid sick leave provision, an employer was
required to provide two weeks of paid sick leave for full-
time covered employees (there was a special rule for part-
time employees that he was not as familiar with). He
detailed that sick leave was at an employee's regular rate
of pay capped at $511 per day and $5,110 total.
Mr. Bitner explained that the emergency family medical
leave was for individuals unable to work or telework due to
a need to care for a son or daughter under 18 years of age
under certain circumstances. He detailed that the medical
leave ran for a longer period of time and was not less than
two-thirds of the regular rate of pay based on the number
of hours an employee had worked, capped at $200 per day and
$10,000 total. He added that it looked like the money spent
would be paid back through tax credits, but he was unsure
on the details.
Co-Chair Johnston surmised that the federal government was
frontloading funds to assist businesses.
Mr. Bitner replied that it looked like an attempt to stem
the number of employees being lost. He explained that the
employer would recoup the cost later on when they filed
their taxes.
Co-Chair Johnston thanked Mr. Bitner for taking the time to
present to the committee.
1:55:41 PM
JOE SCHIERHORN, PRESIDENT AND CEO, NORTHRIM BANK (via
teleconference), thanked the committee for the opportunity
to testify. He detailed that Northrim Bank had been in
operation for almost 30 years with 16 branches spread
across the state from the Interior to Ketchikan. The bank
also had offices in the Seattle area. The bank had a
mortgage company, Residential Mortgage, which was the
largest mortgage originator in the state. Between the bank
and the mortgage company, the business had a total of 440
employees (just under the 500 employee level discussed
earlier in the meeting).
Mr. Schierhorn reported that every one of the bank's
customers was being impacted by the COVID-19 crisis. The
bank's customers had seen significant layoffs at a level
close to 100 percent of the workforce encompassing tourism,
restaurants, bars, and amusement centers. He noted that
tourism was a broad category, particularly impacting
Southeast Alaska and operations catering to Denali National
Park. The situation was beginning to trickle down to impact
customers reliant on the businesses for revenue. The bank
was also seeing an impact in the medical field for
customers providing nonessential medical services,
including dental office closures. Some customers were
seeing no revenue for at least 45 days and potentially up
to six months. Businesses dependent on summer tourism
expected to lose most of the season, immediately followed
by the difficult winter season. Impacts for several
customers were expected to last into May 2021.
Mr. Schierhorn reported there was uncertainty for
businesses in regard to making future plans, which also had
a trickle down effect due to the lack of capital investment
and other projects. However, there were stronger customers
currently looking to purchase businesses and/or make
minority investments, which could help stabilize some of
the businesses going forward.
1:59:04 PM
Mr. Schierhorn shared that Northrim had proactively reached
out to customers in a variety of ways including personally,
via phone, and electronically. The bank had a robust
electronic banking system, as did all other financial
institutions in Alaska. He detailed that the system
provided electronic banking, online services, and remote
deposit capture. The bank's 24-hour call center was seeing
significant volume. He reported that the mortgage
origination company was currently seeing record volume due
to the drop in interest rates and customers seeking to
refinance their mortgages.
Mr. Schierhorn stressed the importance of keeping the state
Recorder's Office open and operational during this time. He
explained that the large volume of mortgage activity
running through the banking institutions needed to be
recorded in order for the mortgage refinances to take
place. Another need was a streamlined approach to small
business loans, particularly for tourism businesses, bars,
restaurants, and amusement centers.
Mr. Schierhorn was aware the governor was working on a
program to provide state guaranteed loans, which Northrim
was supportive of. To the degree that the process required
legislative action, it would be another way the legislature
could assist with. He believed the program was envisioned
to be similar to the SBA disaster relief program currently
underway. He relayed that it would require underwriting by
all financial institutions as well as a streamlined review
from the state, assuming it would be guaranteed by the
state. He noted it would also require a fund of money to
back the guarantee, which may require separate legislative
action. He believed the program would be very helpful for
many businesses that would be undergoing severe shortages
in working capital and their ability to pay their
employees.
Mr. Shierhorn stated that Mr. Bitner had given an accurate
description of the recent federal legislation put in place
for sick leave and paid family leave. He agreed that it
would be funded via a tax credit to the business employing
less than 500 employees. There would be a lag time on the
payment. Additionally, the program assumed a business was
making money and had taxes it could get a credit against,
which may not be the case. He thought the program needed to
be viewed within that context regarding the impact.
2:03:11 PM
Mr. Schierhorn believed it was critical to get more
liquidity and money into the economy through various means
including the SBA disaster relief program and the state
backed guarantee program. He underscored that the financial
institutions in Alaska were sound and strong. He elaborated
that financial institutions had built up significant levels
of capital since the financial crisis in 2009.
Additionally, the financial system had substantial
liquidity within the state and on a national basis that
could be utilized to provide resources to the state's
businesses in particular. He knew the financial
institutions were all working hard to continue operations
during the current time. He detailed that Northrim had a
number of employees working remotely, but its branch system
was open to customers with the intention of remaining open.
Some financial institutions had closed or restricted lobby
access and maintained service at their drive-throughs,
which he believed would be a continuing trend.
Mr. Shierhorn emphasized that the banking system would
continue to provide services for individuals and
businesses, including deposit and loan services. He relayed
that Northrim was reaching out aggressively to customers to
provide access to credit and to provide needed services for
customers to make it through the current situation. He
stated that all financial institutions in the state were
actively engaged. He was available for any questions.
2:05:45 PM
Representative LeBon thanked Mr. Shierhorn for calling in.
He asked if Northrim had heard from regulators about loan
modifications, possible forbearance agreements, or any
direction on how much flexibility the bank could have
around working with borrowers.
Mr. Schierhorn answered that Northrim had not received
direct correspondence from the FDIC [Federal Deposit
Insurance Corporation]; however, he had seen correspondence
between the FDIC and the Financial Accounting Standards
Board (FASB) the previous day. He explained that FASB
regulated how financial institutions accounted for loan
modifications. He was aware there was a request to provide
more accounting flexibility for the modifications to enable
financial institutions to provide greater flexibility to
borrowers. He noted it would not constrain Northrim's
activities with regards to regulatory accounting standards.
The bank would make every effort to work with its customers
on what made sense for customers' financial situations. The
bank accounting would follow the requirements of the FDIC
and FASB combined. Based on correspondence from both
entities, he believed they were trying to provide more
regulatory flexibility with regard to the specific issue.
2:08:35 PM
Representative LeBon highlighted the importance of the
issue. He asked about the type of mortgage refinancing. He
asked if it was more about requests from borrowers for
mortgage modifications.
Mr. Schierhorn answered that the large amount of
refinancing was due to the very rapid drop in mortgage
interest rates by around 1 percent or 100 basis points.
There were many customers paying 4 percent or more on a
loan, which historically was a low rate, but now customers
could save close to 100 basis points or more on that rate.
There was a large pipeline of requests to refinance
mortgages, which would save a significant amount for
individuals. Currently, the activity was more about saving
on monthly loan payments versus requests to defer payments.
He expected to see more requests for deferments of payments
going forward, but it had not taken place yet.
2:10:31 PM
Representative LeBon expected there may be some borrowers
who had started a refinancing process that would need
significant flexibility from the bank in regard to their
current employment status. He appreciated Northrim's
participation.
Mr. Schierhorn recognized the point. He noted that
virtually all residential mortgage loans were under the
guidance of a variety of agency programs including Fannie
Mae, Freddie Mac, and the Alaska Housing Finance
Corporation (AHFC). Each financial institution was in
constant contact with their associated agencies the
mortgages were provided under; therefore, it was a matter
of working with those entities for the flexibility as well.
He clarified it was not an independent decision by a
mortgage originator; the decision was made under the
guidelines of each associated program.
Representative LeBon thought the committee should hear from
those programs too.
2:12:00 PM
Representative Carpenter was trying to get a picture of
what a 90-day exposure would be for the state's financial
institutions in terms of people who were unable to pay
their mortgages. He asked for a ballpark figure.
Mr. Schierhorn asked for clarity on the question. He asked
if Representative Carpenter was referring to the number of
loans that may become past due within the next 90 days.
Representative Carpenter replied affirmatively.
Mr. Schierhorn answered that at present the banking system
was not experiencing a great number of delinquencies
through the end of March. However, he believed the number
of past due loans would increase significantly over the
90-day period from March 31 to June 30. He hesitated to put
a number on it. The bank was dealing with each situation as
it came. He referenced businesses experiencing layoffs
including tourism, restaurants, bars, amusement centers,
and medical office buildings with no patients such as
dental offices. He elaborated that many of the businesses
would have cash resources on hand for 30 to 60 days, but
many would not. He relayed there could be a significant
increase in delinquent payments through June 30. He assumed
a semi or total lockdown situation for the next several
months. He could not provide a more specific number, but he
believed it would be significant.
2:14:41 PM
Representative Carpenter understood that it may be the
wrong forum to talk about the numbers; however, he thought
the conversation was necessary at some point if the
legislature was going to be proactive. He did not believe
anyone in the legislature disagreed that something
significant was coming, but they did not currently have a
way to measure what significant actually meant. He stated
it would be helpful to get some numbers and he understood
the numbers could not be guaranteed. He wondered how many
zeros they were talking about.
Mr. Schierhorn responded that he would give the question
some thought and would be happy to have an offline
conversation with the committee chair.
Representative Wool referenced Mr. Schierhorn's comments
that some customers would seek new residential loans, and
some would have cash. He noted that individuals who
refinanced would still have to make [mortgage] payments.
asked at what point they looked at foreclosure policies. He
noted that Mr. Schierhorn had mentioned that any loan may
be affiliated with more than one institution. He asked at
what point the bank looked at making changes to its
foreclosure policies.
Mr. Schierhorn replied that all of the mortgage programs
were originated under guidelines and requirements of the
sponsoring agencies including AHFC, Fannie Mae, Freddie
Mac, the Veterans Administration, and more. He detailed
that each organization providing a mortgage originated by
local and national financial institutions had its own
requirements. The policies on foreclosure and collection
were set at that level with regards to residential
financing. Whereas, consumer loans (e.g. a car loan or
unsecured loan to an individual) and business loans were
set by in large by individual financial institutions. He
knew that all financial institutions were actively engaged
in working on their approach to modifications with regard
to borrowers that may be in financial difficulty. The home
mortgage industry and the requirements for working with
borrowers was largely set at the national level and
implemented according to those guidelines.
2:18:29 PM
Representative Wool provided a scenario where a person had
recently purchased a lodge or restaurant and had a sizeable
monthly payment. He detailed that the individual was
depending on the upcoming summer season to bring in money
to augment the limited remaining funds from the previous
year. He asked what kind of a relief a person could get if
they missed their summer season. He understood they could
get a new loan or line of credit. He wondered about a
solution.
Mr. Schierhorn replied there was not a short answer. He
stated it was a case by case situation, which would take
considerable time for all financial institutions to be
working with individuals. He elaborated it would be a
matter of modifying terms of existing loans. For example,
the modification could be to an interest only situation or
skipping a series of payments and adding them on to the end
of a loan because there was no current revenue for the
payments. He projected that many people would need
additional short-term working capital without significant
collateral to back a loan; therefore, a guaranteed loan
program to provide the backing would be incredibly
important. There would have to be a loan to a business with
the prospect of getting paid back in the future - there may
be a gap in the payback process but there needed to be a
viable cashflow history and source of repayment for the
loan.
Mr. Schierhorn did not believe there was a proposal by the
governor for any grants. He detailed that the governor was
proposing a loan guaranteed by the state as the federal
government had proposed guaranteed loans. The loans all
needed to eventually get paid back; therefore, some type of
historical cashflow was needed in order for the loan to be
put into place. There would be some kind of combination of
a working capital loan with a guarantee and modification of
existing loan structures (e.g. interest only, holiday skip
payments for three to six sets of payments) would need to
be implemented for many borrowers.
Co-Chair Johnston thanked Mr. Schierhorn for taking time to
call in.
2:22:10 PM
TODD MACMANUS, PRESIDENT AND CEO, FIRST BANK OF KETCHIKAN
(via teleconference), shared that the First Bank of
Ketchikan was headquartered in Ketchikan and had branches
located in Southeast Alaska only including Juneau,
Ketchikan, Petersburg, Wrangell, Prince of Wales, and
Sitka. The bank was taking a variety of measures to promote
a message of safety and security for its employees and
customers, particularly to deposit customers with regard to
the safety of the bank. He shared that unfortunately there
had been social media and irresponsible reports that there
was a shortage of cash, which had created some concern from
customers. The bank was reiterating to people that the
safest place to keep money was in an FDIC insured
institution, particularly in safe and sound institutions in
Alaska.
Mr. MacManus shared that First Bank of Ketchikan was
actively working with each customer. He detailed that the
bank had loan extension modification agreements available
and was actively reaching out to customers in the tourism
and hospitality industry with offers for emergency lines of
credit. He explained that each situation and borrower's
needs were unique. Some customers had resources to get them
through and others were month-to-month and were trying to
figure out how to make things work.
Mr. MacManus referenced a governor's press conference
earlier in the day where the governor had mentioned a
100 percent state guarantee for bridge loans. He suggested
that one possible way the state could help was to offer
guarantee programs to the financial institutions in Alaska.
He believed it was the fastest and easiest way to get funds
to people who would need it in the short-term. He
recommended cutting as much red tape as possible because
decisions would be needed in the hours and days rather than
in weeks. He reported that the bank had started closing its
bank lobbies to protect its staff and the community.
2:26:12 PM
Mr. MacManus continued to review actions First Bank of
Ketchikan was taking. The bank had drive-through facilities
in each of its communities, full service online banking
tools, and was taking appointments for in-person meetings.
The bank had closed its Ketchikan lobbies and was working
on a plan to close the rest of its lobbies beginning the
following week. He stated that the economic impact to
Southeast Alaska would be enormous. He elaborated that the
impact of the cruise industry on the Southeast economy was
unparalleled. He considered that it may bring in revenue
somewhat similar to what the logging industry had generated
in the past. He detailed that the impact was not limited to
tour operators and retailers. Municipalities would not
receive the typical tax revenue or head tax and they would
have trouble making bond payments and meeting debt
obligations. The impacts filtered down through tour
companies and retailers to cab drivers trying to make rent
who depended on the busy summer season.
2:27:49 PM
Mr. MacManus addressed what the state could do. He believed
some of the items included in the governor's press
conference earlier in the day would be helpful. He stated
that some people would need cash in their hands soon. For
small businesses and people in the communities who would
see the biggest cuts and the potential loss of a season,
loan guarantee programs were a good way to start. He
suggested some potential long-term financial options as
well.
Mr. MacManus observed there was nothing to compare the
current situation to. He noted there had been disaster
declarations in the past for various things. He highlighted
that the loss of a pink salmon run had been declared a
disaster and some federal funding had been received. He
reported that the time it had taken to get the money into
the hands of the impacted fishermen was almost laughable as
far as helping them out. The funds had come possibly the
following season if the fishermen were lucky after they got
on the list and went through the paperwork. He pointed out
that it would not work for the current situation. Anything
that could be done to expedite the funding would be helpful
for the bank's customers.
Mr. MacManus echoed Mr. Schierhorn's comments about the
Recorder's Office. First Bank of Ketchikan was also seeing
record volume in its mortgage department and it was vital
to keep the Recorder's Office open. He cautioned that
without the Recorder's Office, commerce would decline
significantly. He believed programs would materialize in
the state's Division of Investments and possibly the Alaska
Industrial Development and Export Authority (AIDEA). He
thought the fastest way to get funds into the hands of
impacted people was through the local financial
institutions. He stated that guarantee programs or any way
to expedite funds would be helpful. The bank could react in
minutes or hours when a request was made, and he hoped a
similar response would come from the state.
2:30:50 PM
Representative Wool asked if Mr. MacManus was concerned
about the health of banks in general. He noted that the
state had lost numerous banks in the 1980s. He remarked
that to put it mildly, the news was not very uplifting. He
asked if banks were concerned about their own financial
health.
Mr. MacManus answered that he could not speak for all of
the banks nationally or in the state. However, he reported
that banks in general were in a much healthier position
currently than they were during the financial crisis and
some of the previous banking crises in the past. He
elaborated that capital requirements and levels were higher
than they had ever been. He reported that First Bank was
highly liquid and could withstand significant shock.
Representative Wool was happy to hear some good news.
Representative LeBon reported that the Alaskan banking
community was in very good financial condition. He
elaborated that all of the banks were highly rated. The
existing banks were the survivors from the mid-1980s. The
banks had ample opportunity to build up capital and
leadership had learned valuable lessons from the 1980s. He
reported that the management of Alaska's banks was sound,
proven, and seasoned. He advised that they could take
comfort in that aspect.
Vice-Chair Ortiz thanked Mr. MacManus for his testimony. He
asked if there were already signs of business failures.
Mr. MacManus replied that he would not say there had been
business failures. The bank was working proactively with
customers. He highlighted the "double barrel attack" that
included the closure of restaurants, dental offices, and
bars (which he thought was probably the right course of
action), in combination with not knowing when or if cruise
ships would arrive during the coming season. Those
individuals were anxious; however, they were all being
proactive. He detailed that people were coming into the
bank daily to make plans to weather the storm and get
through the season if there was no season. Some of the
businesses were making plans to start again the following
year. He reiterated that he had not seen business failures.
2:34:32 PM
Vice-Chair Ortiz asked if banks had seen increased
communication from individuals working in the fishing
industry due to concerns over the upcoming season.
Mr. MacManus responded in the affirmative. He noted the
high number of things tied in together and impacted by the
problem. He explained that typically one industry was hit,
but the current crisis was all encompassing worldwide. He
reported that the Southeast dive fishery for geoducks did
not take place because its primary buyer was China. The
Southeast herring seine fishery in Sitka had experienced
its own issues; however, one of the main reasons it had not
been successful in the current year was because of the
market in Japan. The salmon season was coming up and much
of the salmon industry had turned into export to China and
Korea for processing prior to being returned to shelves.
The big question was what the price would be, which could
have a significant impact on fishermen. He had heard that
the Trident Seafoods plant in Wrangell may not open in the
current season, which would have an impact due to the
absence of seasonal workers spending money in the
community.
Vice-Chair Ortiz thanked Mr. MacManus for participating in
the conversation.
Representative LeBon suggested that the banks speak with
the SBA about resurrecting its low-doc [loan] program. He
detailed that the program had ended 15 or 20 years back. He
shared that it had been a single page application that
allowed for a quick process and counted on the banks for
proper underwriting. There had been minimal documentation
and the turnaround time had been a couple of days.
2:37:42 PM
Co-Chair Johnston stated it was her understanding there was
a significant amount of other capital as the state was
starting to make its way out of recovery. She asked the
banks to provide follow up information about the depth of
existing capital in communities.
Mr. MacManus answered that he would follow up with the
information.
Co-Chair Johnston thanked the testifiers for their time.
She stated, "We're all in this together."
Mr. MacManus thanked the committee and noted he did not
mean to paint a picture of doom. He believed the state
would pull through, but it would be a joint effort.
Co-Chair Johnston stated that many had been through
difficult times in Alaska in the past and the state would
get through the current situation.
2:38:43 PM
JIM DODSON, FAIRBANKS ECONOMIC DEVELOPMENT CORPORATION (via
teleconference), agreed with prior testimony that the
current situation was unprecedented, and that Alaska had
the ability to pull through. He thought there would be some
economic impacts on Alaska, particularly as it was narrowly
coming out of a recession. He believed the state would be
quickly driven back into recession. He had listened to the
governor's plan presented earlier in the day on the state's
COVID-19 stabilization plan. He shared that the Fairbanks
Economic Development Corporation was supportive of the
plan. He reasoned it was not the time to stand their ground
for perfect and he believed there was a lot of good in the
governor's plan that could help Alaska and Alaskans. He
highlighted the importance of getting the corporation's
information out. He knew the committee had asked the
corporation for a list of things the government could do to
help the state get through the situation.
Mr. Dodson remarked that everything was in a state of
transition. He discussed that the U.S. Senate had passed an
economic stabilization plan that had yet to pass Congress.
He understood there was criticism of the plan by the House
as may be suspected. He believed it was necessary for
Alaska's leaders to take the politics out of the situation.
He pointed out that at the end of the day, the state would
be looked at for how it dealt with the crisis. He believed
the state would be driven into tough economic times. He
reasoned that how they got Alaskans through the crisis
would be defined not by their political parties but by the
action taken. He remarked that the governor's appointment
of a taskforce headed by former Governor Sean Parnell and
former Senator Mark Begich was a great step. He knew
Anchorage had put together a team. He wanted to see the
legislature ask all municipalities to pull together a team.
He envisioned a collective resource page to keep Alaskans
informed about the economy and ensure that all existing
resources were available to Alaskans.
2:42:55 PM
Mr. Dodson remarked that businesses were vitally important
to the future economy; however, it was also important to
remember that the businesses' employees were the consumers
supporting those businesses. He highlighted the importance
of sustaining the Alaskan workforce in addition to
sustaining its businesses. What the state's future looked
like hinged upon the plans the state's leaders put together
at present and in the near future.
Mr. Dodson reported that he would like to see the
legislature consider fees and payments including mortgages
through AHFC and student loans. He underscored that it was
not a good time to take cash out of the economy. He asked
the legislature to consider finding a way to give relief to
Alaskans. He stated that the red tape that slowed down the
system needed to be cut through in order to make things
happen. He encouraged the legislature to do whatever it
could to insist that state agencies get their jobs done as
quickly as possible. He recognized it was not an easy time
to do that.
Mr. Dodson asked the legislature to consider wage and hour
regulations. He thought it may be a good time to suspend or
ease the regulations to ensure employers could do whatever
possible to retain employees. He stressed that payroll was
largely what drove the state's economy.
Mr. Dodson agreed that the fisheries industry and the
tourism industry in Southeast would take a tremendous hit.
He encouraged putting specific teams in place to monitor
the industries and how they were being impacted. A recent
briefing from JBER [Joint Base Elmendorf-Richardson]
estimated that the impact would be 12 to 18 months. He
highlighted that the economic impact would be longer than
the health impact. He addressed the need to determine how
to sustain the economy in order to be on a path to recover
once the situation was over. He hoped an economic triage
team could be formed that would make sure all federal,
state, and municipal information was available to
consumers, allowing them to get to the resources as quickly
as possible.
2:47:30 PM
Mr. Dodson stated that legislators were a large part of the
state's leadership and he hoped the legislature would step
up to the plate. He thanked the committee for the
opportunity to provide comments.
Co-Chair Johnston thanked the presenter.
2:47:57 PM
ROBERT VENABLES, EXECUTIVE DIRECTOR, SOUTHEAST CONFERENCE
(via teleconference), relayed that Southeast Conference was
Alaska's regional development organization for Southeast
Alaska and one of the many economic development
corporations working in concert to understand and address
concerns caused by the COVID-19 virus. One of the
organization's primary responsibilities in the region was
the development of a regional comprehensive economic
development strategy, which included an annual business
climate survey.
Mr. Venables highlighted the Southeast Conference annual
report in members' packets ["Southeast Conference 2019 in
Review"] (copy on file) that outlined the various economic
sectors the organization was engaged with. The organization
had over 200 members including businesses, municipalities,
and tribes. The board was evenly split between private
sector and public sector members. He emphasized that no
matter how badly its business members had been impacted,
the businesses had consistently stated they consider the
personal health of the community, their families, and their
customers to be the number one priority. He thanked the
public sector for addressing the concerns. He noted
everyone was making adjustments to how they lived and
conducted business.
Mr. Venables relayed that the Southeast region had been
struggling economically for many years. Tourism had been a
lone bright spot and mining had been a stabilizing backbone
in northern Southeast. He detailed that fisheries had
experienced a tough time with low harvest levels, but the
price had been high enough to give good support in
otherwise bad years. However, in the current year, seafood
markets had been closing and prices had dropped. He
elaborated that if the season resulted in another dismal
harvest, the sector would have an extremely difficult time.
Mr. Venables discussed that the tourism industry had
anticipated nearly 1.5 million cruise ship passengers
coming into the region, the loss of which would be a
gamechanger for the region and state. He stressed that the
impact to the 45,642 [tourism] jobs in the region could be
catastrophic. Many of the businesses in Southeast were
small and locally owned and many had already leveraged
their assets and livelihood to get through the winter and
gear up for a summer season that may not happen. He
referenced an earlier question from a committee member
about the definition of a small business. He reported that
the average number of workers was about 29, which close to
doubled in the summer season.
2:51:16 PM
Mr. Venables addressed actions taken by Southeast
Conference. First, the organization wanted to ensure it did
not perpetuate the panic, which was often a primary
impulse. He stressed that Alaskans were resilient people
and the state would make it through, but its economic
health was at risk and the damage could be years in the
repair. He considered actions that could be taken by the
state. Some of the early concerns Southeast Conference had
heard about was the lack of working capital to keep
businesses afloat until cashflow started back up.
Mr. Venables shared that Southeast Conference had also been
hearing about impacts on infrastructure, particularly
internet access, bandwidth, and even phone capacity in some
cases, as businesses were struggling to find ways to reach
their customers outside their shutdown businesses. He
reported that businesses were finding that internet was not
reliable enough to hold the meetings they were striving
for, especially in rural communities. He stated that the
problem was exacerbated by the influx of students trying to
conduct studies online. He believed it was an area that
needed addressing.
Mr. Venables shared that there had been discussion on
whether or not there should be a waiver requested from the
federal government for the Passenger Vessel Services Act
that would allow cruise ships to salvage part of the season
on the backend of the summer. He noted it was an area where
the legislature's support would be greatly appreciated.
Southeast Conference was still working to determine the
impacts, which were in the early stages. The organization
was reaching out to the business community to gather the
data to define the needs and impacts more accurately. He
elaborated that the organization was using a survey
formatted by the Anchorage Economic Development Corporation
and was working to ensure there was consistency in the
collected data. The goal was to use the information to help
guide efforts that policy makers and state and federal
agencies undertake to meet the needs of the region.
Mr. Venables shared that in early February, Southeast
Conference had its legislative fly-in and had met with the
House Finance Committee co-chairs. The organization had
surveyed a handful of legislators on issues they were
thinking about and only 4 percent had been concerned by the
Coronavirus. He observed how times had changed since that
meeting. The early responses for the survey showed that 96
percent of businesses felt they were already impacted, and
26 percent were not operating. He reported that revenue was
down 36 percent compared to the previous year and each
company had already laid off five workers on average. He
elaborated that 20 percent of businesses had specified they
were at risk of closing for good and another 12 percent
reported there was a significant risk of closing for good.
Mr. Venables relayed that the organization was concerned
about what the long-term impacts would be. He noted that
the group of testifiers during the current meeting
reflected a wide group of local and regional grassroots
organizations statewide that could provide an effective and
efficient conduit for supporting Southeast Conference's
mission of strong economies and healthy communities. The
organization would continue to be a resource going forward.
He thanked the committee for the opportunity to be a part
of the conversation and solution set in the face of
daunting times.
2:55:07 PM
Vice-Chair Ortiz mentioned a letter by the Ketchikan
Visitors Bureau requesting a waiver related to passenger
vessels. He asked for additional detail on what the impact
of the waiver would be.
Mr. Venables explained that the Passenger Vessel Services
Act (PVSA) of 1886 was part of the Jones Act and required
foreign vessels call into another country. He detailed that
vessels leaving Seattle, Washington were required to stop
in Canada - typically Victoria or Vancouver - prior to
coming to Alaska. He elaborated that the closure of
Canadian ports to vessels exceeding 500 passengers
effectively shut down the ability for cruise lines to come
north to Alaska. The impact to Southeast, Southcentral, and
Denali was huge. The discussion was about whether or not to
request a waiver to allow ships go directly from Seattle to
Alaska. He clarified that the scenario was not guaranteed
to happen if the waiver was granted. There were numerous
concerns about the timing. He explained that if they waited
until summer to request the waiver it would be too late to
salvage the summer season. He elaborated that requesting
the waiver at present would preserve the ability to
exercise the option later on if it was the right thing to
do.
Vice-Chair Ortiz asked if the waiver would be granted at
the federal administration level.
Mr. Venables replied it was his understanding it had been
done previously by presidential order. He believed Congress
could grant the waiver as well.
Co-Chair Johnston thanked Mr. Venables for calling in.
2:57:51 PM
JULIE SAUPE, PRESIDENT AND CEO, VISIT ANCHORAGE (via
teleconference), thanked the committee for taking the
testimony. She relayed that Visit Anchorage was the
convention and visitors bureau for Anchorage and
Southcentral. She was also co-chair with Bill Popp of
Anchorage's Economic Resiliency Task Force. She noted that
Mr. Popp would speak about the taskforce work. She
expressed appreciation for the testimony by previous
callers, particularly from bankers and lenders recognizing
what the industry was experiencing. She recognized that
health needs and human costs came first, as did the
industry. She stated that Visit Anchorage supported the
procedures and restrictions that had been implemented to
minimize the health impacts and maximize the ability of
communities to protect citizens and services
infrastructure. She was speaking about the long-game. She
communicated that Visit Anchorage was playing its part to
achieve the best result for the community and state.
Ms. Saupe shared how the situation was playing out for
Anchorage businesses. The virus was impacting all sectors
with substantial negative effects. Tourism was the first
sector to feel the economic strain. She elaborated that the
effects of COVID-19 were immediate for businesses relying
on visitation from overseas markets, businesses reliant on
winter visits, and businesses getting ready to open for
peak summer season. She stated it was unlikely the damage
would lift. She shared that in a span of several days the
industry had shifted from what it would market and what it
was doing to market to how they could save their summer
season and whether their businesses would survive. The bulk
of the questions at a recent member webinar hosted by Visit
Anchorage had been directed to toward the representative
from the Small Business Administration. She explained that
the businesses were already in need of loans and cash
assistance to make it through.
Ms. Saupe believed committee members were all aware of the
concerns of the industry internationally. She believed Mr.
Schierhorn had painted a picture of Marriott
[International] all the way down.
3:00:50 PM
Ms. Saupe relayed there were several factors in Alaska that
exacerbated the issue for tourism businesses. She
highlighted timing as the first issue. She detailed that it
was a lean time of year for most businesses. She stated
that summer was "king" for most of the leisure travel in
Alaska. For example, 63 percent of hotel revenues were
earned from May to September in Anchorage. The other seven
months accounted for one-third of the revenues. Most
tourism businesses were most financially stable in the fall
and most were at their most financially vulnerable position
at the current time of year.
Ms. Saupe continued that many businesses were operating on
fumes at the current time of year and were just beginning
to receive deposits and bookings. Bookings had dropped to
zero and cancelations had been a real challenge for the
industry in the past couple of weeks. The current time of
year was typically a vital time for future bookings. She
shared that a couple of weeks back she began hearing the
first reports of businesses having a day where cancelations
outnumbered bookings. She believed the situation was 100
percent true for all of the [tourism] businesses she knew.
Ms. Saupe identified the state's location as the second
exacerbating factor. The state was a long-haul destination
with a small population, which meant Alaska was unlikely to
see travel related business rebound until travel
restrictions were lifted (i.e. flights, cruises, Alcan
Highway access). She pointed out that once travel resumed,
the national economic effects would damage visitation if
people were saving, had been laid off, were worried about
their retirement accounts, and/or were still worried about
losing their own jobs. Alaska's distance meant the state
could not rely solely on residents to fill in the gaps for
short-term travel (weekend getaways) once it was safe to
travel again. She explained there were other locations that
were great drive locations and would have an advantage on
how quickly they could rebound.
Ms. Saupe reported that a recent national survey suggested
58 percent of people planning to travel in the next six
months would change their travel plans due to COVID-19.
Trips would either be canceled, reduced, or delayed.
Additionally, travel destinations may be changed, and
people may take drive trips instead of a trip requiring air
travel. All of which were alarm bells for Alaska travel.
She highlighted the unique challenge for Alaska cruises.
She mentioned previous testimony that the Canadian ports
were closed until July 1. She elaborated that without a
waiver to the PVSA, at best for Southcentral Alaska, the
season would start with 48 percent of its cruise passengers
not able to travel.
3:03:56 PM
Ms. Saupe addressed the meetings business in Anchorage. She
detailed that the Anchorage convention centers had been
closed. She reported that since March 10 there had been
$1.1 million in lost business. The Visit Anchorage
organization was doing all it could to preserve late summer
and fall conventions that would be coming into the state.
There was no sense that the current closure and travel
conditions would be resolved by that time. She noted that
the impact trickled to all sectors. She expounded that
history showed the meetings and corporate and business
travel were slower to rebound after a crisis. She
highlighted 9/11 and the 2008/2009 global financial crisis
as examples.
Ms. Saupe communicated that Mr. Popp would provide detail
at the tactical level regarding needs and programs that
could help. She asked the legislature to support any
Coronavirus emergency aid. She stressed that the PVSA
waiver was critical to the industry, so that once it was
safe and appropriate to travel again, the option was left
open for businesses to save at least the first half of the
summer. The situation would also impact local revenues in
the form of tax collections for many communities throughout
the state. She urged looking at ways to support local
communities as well. She appreciated the lenders' comments
and hearing that banks were figuring out ways to work with
the state's small businesses. She encouraged anything the
legislature could do to support assistance, particularly
bridge loans in the very near term. She relayed that people
were well aware of the SBA grants, but they were worried
their businesses may not last that long.
3:06:16 PM
Co-Chair Johnston highlighted the tourism industry had many
seasonal employees. She detailed that the legislature had
moved quickly on legislation to make unemployment insurance
available as quickly as possible. She was interested in the
employee pool for the tourism season. She wondered how much
of the pool was comprised of returning students, people
from outside Alaska, and long-term Alaskan residents who
did other work during the winter.
Ms. Saupe replied that she was happy to pull together
information. She relayed that one in nine year-round
full-time jobs was supported by tourism in Anchorage. She
would have to do some digging for seasonal numbers.
Co-Chair Johnston realized many jobs were affiliated with
tourism including the food service industry. She was
interested in the seasonal aspect of tourism.
3:08:15 PM
BILL POPP, PRESIDENT AND CEO, ANCHORAGE ECONOMIC
DEVELOPMENT CORPORATION (via teleconference), thanked the
committee for the invitation to speak. He relayed his
intent to speak about the effort put together by
[Anchorage] Mayor Ethan Burkowitz and his team to start the
Economic Resiliency Task Force the past Monday. The effort
had begun at about 6:30 a.m. and by 9:00 a.m. the first
meeting had taken place. The second meeting had taken place
on Thursday. The group of local business organizations and
businesses was growing with new members almost daily. The
job of the task force was to seek to develop advice and
tactical advice strategies to the municipality in ways it
could respond to mitigate the significant and devastating
damage the pandemic was causing to Anchorage. The task
force was also designed to help develop tactics the
business community and community as a whole could use to
mitigate the significant damage being done to several
sectors of the economy.
Mr. Popp relayed that the task force was focusing on the
devastating cash flow and liquidity crunch in local
businesses that had been either forced to shut down or
seriously curtail business activities. The crunch rippled
through the workforce and was creating a parallel front of
ever exponentially growing damage to the economy. The task
force was looking to find ways to advocate and support
efforts at the federal, state, and local levels to improve
cash flow by coming up with strategies to get cash
available to businesses to help carry them over the next
several months to one year to ensure there were as many
businesses as possible still standing when 2021 began. The
task force would look at where it could focus ideas and
strategies that would help with deferral or waiver of
expenses related to government services at the local,
federal, and state levels.
Mr. Popp elaborated that the task force would work to
develop ideas on collaborating between different government
entities and the private sector in public-private
partnerships on the initiatives. He emphasized that time
was of the essence. The task force recognized clearly that
the old ways of doing things where government relief could
take years, would not work in the current circumstance.
3:11:39 PM
Mr. Popp discouraged against a strategy that would take
months to deploy because it would likely not have a real
effect. The task force was meeting twice a week and
collaborating daily. They were forming policy working
groups to advise at the local, state, and federal levels.
Additionally, the task force would develop tactical working
groups and a group of the whole to start to deploy initial
efforts.
Mr. Popp shared that the task force recognized the
tremendous damage done to the restaurant community and had
been working with community players including Edible Alaska
and AEDC, to develop a list of restaurants that were still
open for takeout or home delivery. He noted the importance
of the list because many of the restaurants had not
previously been known for take out and delivery services.
The task force was getting out lists and webpages to spread
the word to the consuming public. He characterized the
alternative to restaurant dining as a band aid on a large
wound; however, it was something. Members of the task force
understood there were much bigger lifts left to do and they
were working as rapidly as possible to develop strategy
proposals for all three levels of government to consider.
Mr. Popp stated that many of the ideas discussed by the
task force had already been addressed to varying degrees,
from the recent announcement of the embargo on evictions
and foreclosures to the federal announcement earlier in the
day where Fannie Mae and Freddie Mac were looking to help
forego mortgage payments by providing a year's grace time
(essentially adding one year to the end of the mortgage).
He reported that new solutions were happening almost hourly
- strategies were developing, recommendations were
occurring, and action was taking place. He explained that
the task force was trying to keep up and ahead and was
working to come up with strategies that would help benefit
the entire economy.
Mr. Popp reported that impacts were occurring in the
tourism industry, the professional business service sector,
the oil and gas sector in Anchorage, and the airport was
feeling the pinch in terms of the impact to passenger
travel and cargo. He detailed that the airport accounted
for one out of ten jobs in Anchorage. Impacts were also
occurring in the government sector.
3:15:56 PM
Mr. Popp addressed the impacts to the school district and
University. The school district was currently in a hold
mode - the impacts to the school year and workforce were
not yet known. The same was true for the University of
Alaska, which was already dealing with significant cuts due
to state fiscal issues and was likely facing additional
significant challenges due to the epidemic.
Mr. Popp shared that the task force had put out a survey
the past Tuesday that had been closed earlier in the
current afternoon. There had been 530 responses, which was
far more than they had expected to receive in a short
timeframe. He noted that they had not yet dissected the
survey responses in detail. He communicated that 90 percent
of the responders had reported experiencing disruption in
business due to COVID-19. Additionally, 70 percent reported
a decline in revenue in the past 30 days due to COVID-19.
He elaborated that 1 percent of responders anticipated a
significant increase in revenue in the first half of 2020
compared to 2019, 3 percent anticipated an increase, and 7
percent anticipated no change. He expounded that 33 percent
anticipated a decrease in revenue and 55 percent expected a
significant decrease in revenue. He shared that 60 percent
of respondents reported making employee reductions due to
COVID-19.
Mr. Popp relayed that responses represented a good cross
section of the business community, although it was more
heavily weighted towards the restaurant, tourism, and
entertainment sector as they were at the front lines of the
losses. He believed the numbers reflected a good
representation of the community overall. When asked if
businesses anticipated making employment cuts in the future
due to COVID-19, 39 percent responded affirmatively, 20
percent responded in the negative, and 41 percent were
uncertain. He shared that 18 percent of respondents
reported their business was at risk of closing permanently
because of impacts caused by COVID-19 (nearly 1 out of 5
businesses that responded). He underscored that it was a
serious situation that surpassed anything the state had
experienced in the past.
3:18:49 PM
Mr. Popp stressed the critical nature of a timely and rapid
response in order to mitigate the damage created by the
pandemic, to the extent possible.
Representative Sullivan-Leonard thanked the presenters. She
discussed that the situation was stressful for many. She
asked if there were businesses rising to the top to fill
needs of homebound individuals. She listed the delivery of
groceries, supplies, and medications as examples.
Mr. Popp replied that Carrs Safeway had announced it would
be hiring 400 individuals statewide due to the increased
demand. He had heard indirectly that other grocery
retailers including warehouse retailers were stepping up
with additional hire because of increased volumes. He
highlighted that the restaurant industry was dealing with
the incredibly devastating challenge of closing for
in-house meals. He stated that the innovation and spirit
from many restauranteurs in working with the SBDC to pivot
their business model to a home delivery model had been
amazing to watch. The task force was doing its best to
support them by getting marketing out through social media
and other means to ensure the public was aware of the
services being provided. He believed there were many
businesses working to find a new way to maintain operations
at least to a modest degree to serve the public in the
social distancing world that was the current reality.
Mr. Popp stated the efforts were heartening, showed
community spirit, and a can do attitude. He believed it was
a silver lining that the business community was coming
together to help each other out.
Representative Sullivan-Leonard thanked Mr. Popp for the
bit of positive news amidst the very difficult news.
3:22:27 PM
Representative Wool shared that he had experience in the
restaurant/bar/entertainment business, and he felt for the
people in the business, especially the ones that were
forced to close. He applauded the effort and ingenuity of
restaurants able to do take out, but he believed part of
the reason people went out to eat was to go out. He
believed many people staying home would end up cooking
more. He remarked that people staying home was just
beginning. He asked if there had been discussion of putting
the businesses on cold storage where they could shut down
and alleviate their debt and try to reopen in six months.
He asked if the restaurant owners were entitled to the same
unemployment insurance that wage and hour employees were.
Mr. Popp answered that he was not certain about the ability
to collect unemployment for a sole proprietor or business
owner. He stated that putting the businesses into stasis
was a complicated question, especially when trying to keep
employees on payroll. He did not have a good answer yet. He
spoke to the challenge of trying to figure out how all of
the parts and pieces put together at the federal and state
level would all fit together. He relayed it was one of the
things the Economic Resiliency Task Force and the statewide
rapid response team (an ad hoc group of economic
development organizations) would look into. He spoke to the
need to determine how the overall need was being filled and
where the gaps were. He thought Representative Wool had
likely identified two or three gaps via his question. He
stated that everything was happening very rapidly. He
highlighted there were numerous moving parts that were not
yet fully understood and that had not yet happened. He
noted that the situation was changing daily.
Co-Chair Johnston understood and stated, "We're all in the
same place." She thanked all of the presenters for their
time and help. She recessed the meeting until the following
morning at 9:00 a.m. She reviewed the schedule for the
following morning.
RECESSED
3:27:18 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| SEC Annual Report 2020 HFIN 032020.pdf |
HFIN 3/20/2020 1:30:00 PM |
HFIN Discussion Covid 19 Resources |