About $300 million in federal coronavirus aid will go to small businesses in Louisiana, after Democratic Gov. John Bel Edwards signed legislation put forth by Republicans to use a portion of the $1.8 billion in aid for state and local governments for a business grant program.
Edwards spokeswoman Christina Stephens confirmed Monday the governor signed the bill, Senate Bill 189, by Sen. Bodi White. The bill was backed by Senate President Page Cortez and House Speaker Clay Schexnadyer, both Republicans.
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Edwards agreed to the legislation despite publicly arguing that after using $1 billion to plug state budget holes, the other $811 million should go to local governments to offset coronavirus expenses.
Instead, $300 million of that money will now go to small businesses through a program managed by Republican Treasurer John Schroder, who has frequently butted heads with Edwards. The other $511 million will still be available for local governments.
Senate President Page Cortez, R-Lafayette, said he’s not surprised the governor signed the bill, calling it “good policy.” Cortez said he spoke with the governor about the bill and Edwards indicated he saw value in it.
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Cortez noted the governor has the authority to veto legislation and lawmakers have the ability to override it – a rare action that is receiving more attention this year with a more conservative Legislature.
“I don’t think either of us want to be in that arena consistently,” Cortez said.
The new carve-out is a victory for Republican lawmakers, who successfully put their stamp on how the state will spend the windfall of federal aid money.
For businesses to qualify, they must be domiciled in Louisiana as of March 1, 2020, have suffered an interruption of business, have a controlling interest by a Louisiana resident, have customers or employees coming to its physical premises, have no more than 50 full-time employees as of March 1 and not be a subsidiary of a larger business, among other requirements.
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Legislative leaders have said they expect the program to get off the ground quickly to send money to businesses. Schroder’s office is required to submit a proposal for distributing grants to lawmakers by June 20, and to announce the date the program will begin on July 1. Schroder is also allowed to use up to 5%, or $15 million, of the fund for administrative expenses, a sticking point for opponents. Backers of the bill argued he would not end up using that much.
Edwards’ administration has said repeatedly it is unlikely local governments will be able to tap into all $811 million the governor wanted to set aside for them. That’s because the money can’t be used to offset lost revenue, only to pay for coronavirus-related expenses. The state has footed most of the bill for those expenses, though the feds did give states wide latitude in deciding what is considered a coronavirus-related expense. For instance, all public safety payroll expenses qualify.
Republicans argued that businesses, which were hammered by the pandemic and in many cases shuttered by state decree, should get a slice of the money, especially if local governments couldn’t use up the whole pot of funds anyway.
The governor, backed by New Orleans Mayor LaToya Cantrell, has criticized the legislation. Congress might come back and allow local governments to use the funds for lost revenue, in which case they may need the money, he said. Cantrell said the bill was political.
"While the governor is concerned about making sure that local governments have access to the resources they need, he is also very aware of the plight of small business owners, especially those who didn't qualify for (Paycheck Protection Program) loans," Stephens, Edwards' spokeswoman, said in a statement.
"He is committed to working with the Legislature to get aid to both groups as we work to recover from this crisis, which this bill does."
In the meantime, Edwards’ administration has moved forward with its plan to dole out funding to local governments. Monday was the deadline for local governments to apply, and state records show dozens of local governmental entities – including the East Baton Rouge Parish Sheriff’s Office, 19th Judicial District Court and the cities of Baton Rouge, Lafayette, New Orleans and a host of others – had applied as of Monday. The amount of funding requested was not available.
Also on Monday, House Democrats filed legislation to carve $50 million – and up to $75 million if more is left over – from the $300 million pot currently slated for small business. Instead of going to businesses, the funds would be sent to certain front-line workers in the form of $250 checks. Recipients would need to work in health care, child care or be first responders, have interacted with the public during the pandemic and make less than $70,000.
Rep. Sam Jenkins, a Shreveport Democrat who chairs the party’s caucus in the House, said Monday the bill could get a hearing this week, and lawmakers were considering adding the legislation to a House bill currently awaiting passage in the Senate, a move that would allow the legislation to skip several steps. The special session that began June 1 must end by June 30.
Rep. Jerome “Zee” Zeringue, R-Houma, said Monday he was interested in helping front-line workers and that he would take a look at the bill. Zeringue ushered through the House the original piece of legislation to carve out $300 million for businesses.