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Economic response to COVID19

By Leslee Kulba

Asheville – In a special meeting called by Asheville City Council, two leaders from the Asheville Fire Department were designated to serve as official agents in pursuing and receiving Stafford Act funds from the federal government.

Asheville Fire Chief Scott Burnette explained an emergency meeting had been convened because requests were being processed upon receipt. He said normally it takes 12-18 months to get reimbursement from the federal government, but the city could now see money within weeks.

Burnette said the city had already spent $80,000 out-of-pocket, mostly on personal protective equipment, and a similar amount on additional labor. Applying early would not hurt the city, as Burnette said the city would reapply each month for any balance on its running tab of COVID-19 expenditures. He also reminded the council that the federal government was under no obligation to grant any of the requests the city would submit.

Vice Mayor Gwen Wisler asked if Stafford Act funds could support changes the city is making to its transit system, and Burnette said definitions in the Act were very broad. Anything above and beyond normal equipment and activities, like extra cleaning and new guardrails, could qualify. One thing that was not eligible for reimbursement, however, was lost revenue.

At their last work session, Asheville Council Member Julie Mayfield said the city was going to get $3,800,000 for transit from the CARES Act, plus more to pass through to other transit services in the region. The federal government had been less restrictive about how CARES funding could be used, allowing it to be spent on operations, capital, and/or lost revenue; and Mayfield wanted it to subsidize system expansion, in accordance with the city’s ambitious transit master plan. Asheville transit had been running a $500,000 – $700,000 deficit prior to the COVID-19 crisis, and running the buses less, had actually closed the gap $200,000.

In Other Matters

Additional CARES Act funding reaching Asheville included $14.4 million for the Asheville Regional Airport (AVL). The $2.2 trillion act allocated $50 billion to the airline industry, $10 billion of which went toward airports, with North Carolina’s 70 airports getting a total of $284 million. AVL will use its disbursement for operations and debt service on its capital expansion projects, to preserve the airport’s credit rating.

The CARES Act turned out for many small business owners to be but a pipe dream. The act offered loans that would provide eight weeks of bridge funding, to cover losses from being shut down by the government, and, if executed properly, could be forgivable. However, complaints were lodged about how one needed to hire legal help to navigate the application process, and then that the loans weren’t reaching areas that didn’t have big banks.

The bill was written with only $350 billion appropriated for companies with no more than 500 employees, $500 billion for larger companies, $140 billion for the healthcare system, and the rest for $600 weekly unemployment checks. There was public sentiment that large corporations, which have more tools for raising capital than small businesses, shouldn’t be getting corporate welfare. Activists are now taking credit for businesses like Shake Shack, Ruth’s Chris, and Walmart deciding to return their loans.

Writing for the Washington Examiner, Gary Meltz criticized the act for its removal of normal oversight and accountability measures associated with getting government loans, and he pointed out ways businesses could profit off the loans. He suggested, “It would almost be malpractice for highly sophisticated Chinese or Russian syndicates not to take advantage of the Payroll Protection Program.” Even good people, as Asheville Council Member Vijay Kapoor had previously mentioned, were seeing it was to the advantage of employees to be furloughed.

North Carolina received only about one-third of the PPE it requested from the federal stockpile. New York Governor Andrew Cuomo took demands for ventilators and PPE to national TV daily and never did receive near the levels of supplies experts were predicting would be needed. The strategic national stockpile was depleted, faith-based disaster relief organizations had just shipped what PPE they had to China. Then, New York State paid a vendor recommended by the White House’s Coronavirus Task Force $69 million for ventilators that never arrived.

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