Arkansas House and Senate leaders said they tried but couldn't agree by late Friday afternoon on how much to boost the spending authority of a fledgling grant program aimed at helping businesses affected by the coronavirus pandemic.
Gov. Asa Hutchinson's administration decided Friday to seek legislative approval for authority to spend $100 million in federal funds through the Arkansas Ready for Business program. The program is designed to provide grants of up to $100,000 each to companies for expenses associated with ensuring the health and safety of employees and patrons. The administration originally intended for the program to have $15 million, but demand spurred discussions of increasing the level of funding.
"I'm optimistic we can get something done to provide these needed funds for Arkansans," said House Speaker Matthew Shepherd, R-El Dorado. "I hope to get it done sooner rather than later."
"We are still working on it," Senate President Pro Tempore Jim Hendren, R-Sulphur Springs, said late Friday afternoon.
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Friday morning, a steering committee appointed by the governor recommended providing $85 million more in federal funds for the program. Hutchinson created the steering committee to recommend the best uses of federal funds that come to Arkansas because of the pandemic.
The Arkansas Coronavirus Aid, Relief and Economic Security Act Steering Committee is made up of eight of Hutchinson's department heads, one of his aides, three senators and three representatives. The committee is named after the federal law that provides coronavirus-related aid.
Hutchinson announced the Arkansas Ready for Business program on Wednesday. Thursday, Hutchinson acknowledged that the grant program was rolled out prematurely on a state website Wednesday afternoon without the required approval of certain legislative leaders.
The governor said he was surprised that less than an hour after the website went live, more than 2,300 businesses applied for aid topping $36 million.
Hutchinson said Friday that his administration's request for $85 million more in funding "is in response to discussions with the General Assembly to make sure that everybody had a good opportunity to apply for these small-business grants, that they could have the assistance that this grant is designed for.
"It's up to the Legislature now as to whether they want to give the appropriation to accomplish that or not or at what level.
"We are working with them. Hopefully, we'll have a good outcome for all the small businesses that are struggling in Arkansas that need this assistance," he said.
The Hutchinson administration seeks emergency approval from the Legislative Council co-chairmen, Sen. Cecile Bledsoe, R-Rogers, and Rep. Jeff Wardlaw, R-Heritage, and the Performance Evaluation and Expenditure Review Committee co-chairmen, Sen. Bruce Maloch, D-Magnolia, and Rep. DeAnn Vaught, R-Horatio.
Hendren said the consensus of the 35-member Senate, including Bledsoe and Maloch, is that the chamber is willing to provide up to $50 million in spending authority.
In a voice vote Friday morning, the steering committee rejected a proposal by a member, Sen. Will Bond, D-Little Rock, to provide $35 million more in federal funds, which would raise the total to $50 million.
But Hendren -- whose uncle is the governor -- said senators aren't willing to provide up to $100 million in spending authority without changes such as a strategic plan for the state's use of the federal funds and a fair process so that a barbershop or gym owner with a few employees has as much of an opportunity to get a grant as a corporation with 75 employees.
Shepherd said he favors the full $100 million in spending authority but the 100-member House "is open to a lesser amount."
He noted that Rep. Lane Jean, R-Magnolia, also on the steering committee, floated a compromise Friday morning of $75 million in spending authority.
Shepherd said the House wants to provide enough so the program helps businesses that urgently need it.
PENDING APPLICATIONS
Earlier in the day, state Commerce Secretary Mike Preston told the steering committee that the department hasn't approved any of the initial grant applications and "nothing has been committed to."
He said 94 applications requested the maximum $100,000, and he hopes to be able to fund a majority of the 2,300-plus initial applications based on the initial $15 million in funding.
Preston said at least 75% of the additional $85 million would go to businesses of up to 50 employees. At least 15% of recipients will be women and minority-group businesses, as defined under Arkansas law.
"Funding will be determined based on need and will allow for up to $1,000 per full-time employee and a maximum award of no more than $100,000," he said in a letter dated Friday to Larry Walther, secretary of the state Department of Finance and Administration.
Applications will be considered in the order in which they are received and an application will be considered only when a complete one is submitted, Preston said.
Businesses will be required to verify they used the funds for eligible expenditures and will be required to repay all or part of a grant if the business doesn't comply with requirements.
Bond, the senator from Little Rock, told the steering committee that "my big issue with the steering committee is that we haven't laid out what our big goals are for the CARES Act funding.
"We are not operating with any guidelines or guardrails," he said. "No. 1, we have got to make sure our hospitals don't go bankrupt, people have [personal protective equipment]. Two, we have got to get schools and higher ed back open in the fall and plan for that.
"I don't want to just willy-nilly put this money out there," Bond said. "I know people need it. We can have another meeting again next week. Why do we have to have [$85 million] approved right this second?"
Preston responded that businesses such as gyms, restaurants and salons that will be opening soon with certain limitations "are in desperate need of trying to get back open, so [if] we sit around and wait any longer, we're not going to be able to get funds out to them as they try to safely reopen and operate.
"Additionally, you have the businesses who were able to remain open, and they are looking to make sure that they are hitting all the requirements and guidelines," he said.
"To me, the need is there and that was clearly demonstrated by the other night by putting [the website] up for an hour and getting 2,300 applications," Preston said. "I hate for us to sit around and wait while these businesses are trying to incur these costs and not be able to open back up in a safe and secure manner to give confidence to their employees and obviously confidence to their customers that it is safe to come back in there.
"We want to get our economy to get back to work in a safe and secure manner and this signifies our willingness to offer and assist to make that happen," he said.
ALTERNATIVE PROPOSAL
Bond said the steering committee could recommend $35 million more for the program and the program could be rolled out early next week, and "if we need more we can meet again Tuesday or Wednesday and make another recommendation.
"I think we need to slow down just a little bit, get our feet under us, get a good plan and then go forward," he said. He said he doesn't believe there is any reason to recommend $85 million more now.
But Preston said, "We clearly saw the demand is there."
"I think you are going to get more frustration if you open it up and then close it back down because we only have a certain amount and then we'll have to go back to the committee and do this all over again. We want to cover as many businesses in a quick amount of time as we can possibly can," he said.
Bond said he appreciates "we are working fast," but there is a lot of frustration over the program being rolled out for applications without legislative approval.
Sen. Missy Irvin, R-Mountain View, who is on the steering committee, said, "If we approved $100 million, that's 8% of the total $1.25 billion [in federal funding designated] for this one program."
She said, "I think this task force needs a strategic vision for the entire amount of the money."
Irvin also said the committee must make sure the process is fair, transparent and accountable.
Jean said the program needs at least $60 million more for a total of $75 million.
"The first go around the first day was $35 million in requests. If you do just $50 million total, I think when word is getting out, that is going to be sucked up very quickly," he said.
Rep. Michelle Gray, R-Melbourne, another lawmaker on the committee, said, "If we approve $50 million and it runs out within three, four, five hours, this was the Senate's recommendation and not the recommendation of the House.
"What the speaker agreed to do yesterday was a total of $100 million, which doesn't have to be all spent," she said, referring to Shepherd. "In my opinion, this is exactly what this money was intended for, was to help our constituents at the base level get back to normal."
Irvin pressed Preston: "Will the website be live during normal business hours this time?
"Can you describe your rollout because ... I want to make sure that we have legislative appropriation authority before we open up the website back up and ... I want to make sure it is during business hours and not 5 o'clock at night," she said.
Preston said he will "definitely" secure legislative appropriation authority before the website is put back up, adding that he "learned that the hard way."
He said the website will "absolutely" open up during business hours.
"We'll give advance notice and have that set in the normal business hour for a specific amount of time and give advance notice to the Legislature, so you all can contact whoever you feel you want to be privy to the information," Preston said.
Irvin said most lawmakers will put that information on Facebook.
REVIEW SUGGESTED
Meanwhile, state Democratic Party Chairman Michael John Gray said the premature rollout of the program without required legislative approval, coupled with certain select groups having advance knowledge about the rollout, may warrant further review from Republican Attorney General Leslie Rutledge's public integrity division and the Pulaski County prosecuting attorney's office.
"This behavior is unethical at best and criminal at worst," Gray said in a news release. "This fiasco has revealed that this process, even if it had been carried out as intended, is stacked against small business owners, who don't have a CPA or lobbyist at their fingertips to fill out a surprise grant announcement in the first hour of its opening."
Hutchinson responded that "the attack news release from the Democratic Party today does not sound like the Democratic Party that I have known through my political career.
He said in a written statement that "92% of the loan applicants have fewer than 50 employees and it is surprising that the Democratic Party opposes providing financial assistance to the small businesses of Arkansas who have struggled during this covid-19 pandemic. This is not a time to play politics, but to work together to get the much needed funding to hurting Arkansans."
Rutledge's spokeswoman, Amanda Priest, said the Democratic Party's call for an investigation "is nothing more than a premature accusation."
A Section on 05/02/2020