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Davis Brown Government Relations Report

May 8 Update - State and Federal COVID-19 Response - May 8, 2020

This week saw more Governors easing restrictions on economic activity in their states as confidence grows that adequate resources have been marshaled by the government and health care systems to be able to respond to a surge in COVID-19 cases. Governor Reynolds visited the White House to update the President and his team on testing efforts in Iowa with a focus on meatpacking plants. As a result of Governor Reynolds’ report and forecasts from other states with a large meatpacking footprint, Secretary of Agriculture Sonny Perdue said he expects U.S. meatpacking plants to resume operations within a week to 10 days. 

Paycheck Protection Program (PP)P Update

  • The Small Business Administration (SBA) announced that as of Thursday, May 8, it had processed $183.5 billion of the $310 billion Congress authorized for the second round of the PPP. Senate Small Business Committee Ranking Member Ben Cardin (D-MD) said he expects the funding for the PPP to be expended in a matter of days and called for additional funding. In an interview with Politico, Senator Cardin stated that additional funding will be needed for the PPP. He said members are looking at giving businesses more flexibility on how they use PPP funds, including on the requirement to spend the funds within eight weeks in order to receive loan forgiveness. 
  • The Justice Department filed its first fraud charges related to the PPP. Two Rhode Island businessmen are charged with falsely claiming to need more than $500,000 to pay dozens of employees. 
  • The Treasury Department issued updated guidance clarifying that companies that return PPP loans before the safe harbor deadline of May 14 will be eligible for the Employee Retention Credit. 
  • Senate Finance Committee Chairman Chuck Grassley (R-IA), Ranking Member Ron Wyden (D-OR) and House Ways & Means Committee Chairman Richard Neal (D-MA) sent a letter to the Treasury Department and the IRS urging them to change their interpretation of the CARES Act, which prevents businesses from deducting expenses associated with PPP loans that are ultimately forgiven. The Senators also introduced a bill to clarify that small businesses can deduct expenses paid with a forgiven PPP loan from their taxes. 

Phase Four Recovery Legislation Update

  • Speaker of the House Nancy Pelosi (D-CA) has urged Republicans not to “draw any lines in the sand” on the inclusion of payroll or capital gains tax cuts in the next stimulus package. Pelosi stated that the next aid bill is “imminent,” and a plan could be out next week. She said she is aiming for the House to reconvene next week. 
  • House Majority Leader Steny Hoyer (D-MD) told reporters that the “hallmark” of their Phase 4 proposal would be aid to state and local governments but added that Democrats are also looking at measures like hazard pay and rent and mortgage relief. He suggested that a bill could come to the floor as soon as next week. 
  • NBC reported that the White House is examining what actions it can take to provide economic relief during the pandemic without legislation from Congress. Proposals being considered include extending the tax filing deadline to as late as December 15 and imposing a moratorium on new federal regulations. 
  • In an interview, Senate Minority Leader Chuck Schumer (D-NY) said he and Speaker Pelosi (D-CA) will soon unveil their coronavirus response package. He stated, “We need Franklin Rooseveltian-type action and we hope to take that in the House and Senate in a very big and bold way.” House Majority Leader Steny Hoyer (D-MD) said the House could vote on a coronavirus response package next week if Democrats can overcome some internal disagreements about what should be included. 

Executive Branch Update

On May 6, Governor Reynolds issued her eleventh State of Public Health Disaster Emergency Declaration. This declaration provides additional measures for reopening the state of Iowa. Specifically, the proclamation permits dental services to resume, opens campgrounds, drive-in movie theaters, tanning facilities, and medical spas statewide, and permits some additional business and establishments to reopen in a limited fashion with appropriate public health measures in place.

We expect to see additional reopening of businesses phased in via proclamation by the Governor over the next week. Additional regulatory relief that was provided in previous Public Health Disaster Emergency Declarations remain in place until May 27 at 11:59 p.m., unless sooner terminated or extended by the Governor.

Here is a summary of the Governor's proclamation.

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