Connecticut businesses reeling from COVID-19 eagerly await $900B federal lifeline that excludes states and municipalities

Stephen Singer, Hartford Courant

Small businesses, the unemployed and others struggling financially because of the raging coronavirus are set to benefit from a long-awaited federal aid bill agreed to this weekend by Democratic and Republican leaders in Congress.

But states and municipalities looking for help making up for lost tax revenue fell short in negotiations that resulted in the $900 billion relief measure. As of Monday, the legislation had not been voted on by the House or Senate, and President Donald Trump must sign it to become law.

For Connecticut businesses, the share could be as much as $3.2 billion, Gov. Ned Lamont said Monday at his coronavirus news briefing. However, the absence of funding for states and municipalities makes crafting a 2021 state budget “a little more complicated,” he said.

Brian Phelps, owner of Toad’s Place, a New Haven concert venue that’s been shut by the coronavirus since March 8, said the small business aid is huge.

“We’ve been treading water, basically,” he said.

The business, which can accommodate 1,000 customers, received $106,000 with the first round of federal money early this year that Phelps spent on payroll, employee medical costs and building renovations. “It goes fast,” he said.

Toad’s Place will benefit from a provision in the legislation earmarking $15 billion for live event venues. The package also includes an extension of the small business Paycheck Protection Program, which expanded eligibility to local newspapers, broadcasters and nonprofits. And it will direct $20 billion to small business grants.

The stimulus bill ends a standoff that began last summer when $600 weekly federal unemployment aid ended. The measure agreed to Sunday includes a $300 weekly boost to unemployment benefits and a $600 direct payment to most Americans. Both payments are half what was included in the CARES Act approved in March.

The measure will be tied to a $1.4 trillion spending bill funding agencies and programs through Sept. 30, the end of the federal government’s fiscal year.

Tim Adams, co-owner of J. Timothy’s Taverne in Plainville, said he’s been struggling to keep employees that have been reduced to 65 from about 150. The restaurant, like others in the industry, has been hit hard by the virus and forced to restrict its number of customers after being closed for weeks in the spring.

The Paycheck Protection Program, a forgivable loan program intended to keep workers employed, was “truly huge,” he said.

“Restaurants don’t operate near a profit. Every day we open it costs us to be open,” Adams said.

Bryan Lagas, owner of Speedsport Tuning, a Danbury automotive business, said the first round of federal aid was “hugely helpful” and he expects the same with the next flow of money from Washington.

Federal funding of $235,000 helped avoid laying off any of his 21 employees, he said. Revenue was down 20% from before the pandemic, but “creative marketing and customer outreach” helped keep workers busy, Lagas said.

The part of his business that supports race drivers at the track and fixes and builds race cars, “went away” as racing halted during the pandemic, he said.

Two other departments, servicing European cars and restoration of vintage Porsches, were consistent, Lagas said. And the work fixing and maintaining Porsches were “up a couple of percent” as motorists escaped lockdowns.

The spending measure does not send money to states and municipalities, which was a sticking point between Democrats who wanted the aid and Senate Majority Leader Mitch McConnell who opposed it. The Kentucky Republican called for a liability shield for companies against employees who claimed they were vulnerable to COVID-19 and were unsafe.

Both provisions were dropped from the legislation.

Incoming House Speaker Matt Ritter said he was not immediately concerned about the stimulus package because Connecticut’s projected deficit for the current fiscal year of $854 million will fall as the vaccine becomes more widespread and the economy strengthens. Another stimulus package after President-elect Joe Biden takes office Jan. 20 could be helpful to Connecticut.

“I still feel pretty optimistic,” he said in an interview. “I’m hopeful they will work it out. The good news is we don’t need it for the current fiscal year.”

Connecticut also has a rainy day fund of $3.1 billion that can be tapped.

House Republican leader Vincent Candelora of North Branford said Congress was right to not send money to states.

“Connecticut always needs to look long term and stop focusing on the short-term deficits. That’s all that money would have done,” he said. “I frankly think the feds got it right by focusing on economic relief and unemployment relief versus more money for the states and towns.”

The Yankee Institute, a conservative think tank in Hartford, said pay raises this year to Connecticut state employees totaling as much as $150 million should not be financed by money from Washington.

“We continue to provide these lavish benefits on state employees paid for by middle class and affluent taxpayers,” said Carol Platt Liebau, president of the Yankee Institute. “A bailout would only enable more of these destructive and irresponsible policies that created this problem.”

Courant staff writer Christopher Keating contributed to this report.

Stephen Singer can be reached at ssinger@courant.com.