The Mississippi Legislature passed a $300 million small business relief plan last week and will decide starting this week how to allocate the remaining $950 million in federal funds received for expenses related to the COVID-19 pandemic.
Various government entities have made pitches to legislators for their piece of $1.25 billion in federal funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed in March by Congress. The Mississippi Department of Education (MDE) wants $450 million for distance learning, which could also include money for rural broadband. Municipalities and counties want some of the funds to cover costs such as overtime for first responders but offered no specific funding requests.
House Speaker Philip Gunn said the Legislature could decide to appropriate more of the money (the $300 million amounts to about 25 percent of the CARES Act funds) to help small businesses (50 employees or fewer) affected by the economic shutdown.
Municipalities and counties can ask the Legislature for money to cover COVID-19 related expenses, but lost tax revenue isn’t one of them. CARES ACT funds can only be used for direct costs from mitigation of the virus, according to federal guidelines issued by the U.S. Department of the Treasury. Congress would have to pass the State and Municipal Assistance for Recovery and Transition (SMART) Act, which would provide governments with federal assistance and remove the restrictions on CARES Act funds being used to fill budgetary holes for state and local governments. SMART Act funds would be used by governments to help prevent layoffs, tax hikes and the interruption of services.
Sales tax provides much of the revenue for municipalities and Mississippi’s cities and towns are feeling the effect of the shutdown. Sales tax revenue collected for April, according to the monthly revenue report released by the state Department of Revenue, was already down by $12 million from the same time last year or a 6.25 percent decrease. The DOR collects the 7 percent tax from retailers and disburses 18 percent of it to the municipality where the purchase occurred.
While local governments didn’t offer a specific number on how big of a share of the remaining $950 million, the Mississippi Department of Education has already proposed a plan to the Legislature. State Superintendent Carey Wright wants a total of $450 million for distance learning for the state’s K-12 students on top of $160 million in CARES Act funds received by school districts.
Wright said MDE’s six-part plan includes: computers and tablets for children; broadband improvements to allow them to connect to high-speed internet; professional development for teachers and parents; learning management systems for each school district; cybersecurity and tech support; and telehealth and teletherapy.
One concern shared by the MDE, the state Community College Board and the Institutes of Higher Learning is the lack of high-speed broadband service in more rural areas of the state. There are two bills in the Legislature that deal with broadband funding. House Bill 143 would create a bond program to finance rural broadband infrastructure and another, HB 1239, would extend a tax break on broadband-related infrastructure until 2030. The CARES Act provides an additional $100 million in grants for rural broadband providers nationwide.
In 2019, then-Gov. Phil Bryant signed into law a bill that allowed rural electric power associations to set up broadband subsidiaries to provide broadband to their customers. The bill was expedited early in the session to allow EPAs to start applications for federal funds such as the Rural Digital Opportunity Fund. The FCC will hold an auction in October for providers seeking grants to expedite broadband service to underserved rural areas nationwide.
“Subpar broadband service is throwing good money after bad, throwing Jello on the wall and hoping something sticks,” said Public Service Commission Chairman Brandon Presley. “We will regret in this state in not taking bold action at this time to deliver the best reliable service, the most future-proof service at an affordable rate to our people.”
According to the Federal Communications Commission’s annual broadband report, 78.8 percent of Mississippians have access to some form of broadband, with only 61 percent of rural residents having access. Presley disputes the methodology used in the FCC report and coverage maps and urged the Legislature to use different criteria to find where to best direct funds to enable more broadband service in underserved areas. The accuracy of the maps is important since Rural Digital Opportunity Fund monies are only given to providers building infrastructure for eligible areas without existing service. The PSC sent a letter to Congress critical of the maps’ accuracy.
As for the small business relief package, $60 million of the $300 million is earmarked for $2,000 direct, immediate payments to small businesses, such as nail and hair salons, restaurants and gymnasiums, that were forced to close by the executive order issued by Gov. Tate Reeves.
“Small businesses have been hit hard by this pandemic,” Gunn said. “We believe they needed help and they needed it now.”
The rest of the grants in the program (up to $25,000 for costs incurred due to the virus) will require an application be made with the Mississippi Development Authority, which will administer the program. Minority-owned businesses will have $40 million of the $240 million under the Back to Work Mississippi grant program reserved for them for the first 60 days.
Only businesses that haven’t received any federal funds, such as the Paycheck Protection Program from the CARES Act, would be eligible for the grants for the first 21 days of the program.