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How federal emergency aid and ‘the mother of invention’ underwrite Utah recovery plan

Deseret News logo Deseret News 3/27/2020 Matthew Brown
a close up of a reptile: In this image from video, members of the House practice social distancing as they sit on the floor and in the public gallery above during debate on the coronavirus stimulus package on the floor of the House of Representatives at the U.S. Capitol in Washington, Friday, March 27, 2020. © House Television via Associated Press In this image from video, members of the House practice social distancing as they sit on the floor and in the public gallery above during debate on the coronavirus stimulus package on the floor of the House of Representatives at the U.S. Capitol in Washington, Friday, March 27, 2020.

SALT LAKE CITY — Much like the abruptly unemployed, Utah officials are anxiously waiting for the federal government to enact a historic $2 trillion emergency aid package. The state’s plan to weather the coronavirus pandemic depends on it.

Congress passed the package Friday to stem the economic and public health fallout as states shut down key parts of their economies to slow the spread of COVID-19. The president signed the bill shortly after the vote.

That would be good news for Utah, since massive federal aid is a key component to making sure the state’s hopeful recovery plan unveiled this week actually works.

“All of it is absolutely necessary, absolutely part of our recovery,” Natalie Gochnour, director of the Kem C. Gardner Public Policy Institute, said of the personal checks, grants and loans the federal aid will provide.

Federal “fiscal policy” is mentioned as a top factor in all three phases of the “Utah Leads Together” health and economic recovery plan. During the second “stabilization phase,” the plan calls for “aggressive fiscal policy” to get the state’s economic engine out of idle and moving again.

But the plan pulled together by state and private sector leaders on the Utah Economic Response Task Force also anticipates the state tapping into its own reserves, and businesses and individuals adapting and innovating their way to recovery in the coming months that the virus is expected to take an unknown toll on Utah workers and their employers.

That piece of the plan is also falling into place.

On Thursday, the same day the number of confirmed COVID-19 cases in Utah climbed to 402, members of the task force heard from a southern Utah distillery that has transitioned from producing booze to alcohol-based cleaning products.

“We’re seeing it happen in a lot of places,” said Derek Miller, task force chairman and president of the Salt Lake Chamber.

Government intervention

On Tuesday, Gov. Gary Herbert unveiled a 16-page plan he hopes will help the state to weather the devastating public health and economic impacts of the coronavirus pandemic.

The document charts an urgent phase, followed by stabilization and finally, recovery. Each phase anticipates action taken by government, business and individuals to fund, adapt and innovate to overcome the economic setbacks caused by the outbreak.

For example, during the urgent phase that the state is now in, federal and state assistance is essential to helping businesses and individuals survive compliance with public health restrictions designed to slow the spread of the virus. But those restrictions also slow the economy as consumers stay home and businesses cut back hours, furlough employees and make other costly and inconvenient adjustments to protect customers and workers.

The state plan relies on the $230 billion the federal government approved earlier this month to supplement vaccine development, unemployment insurance and sick leave benefits to offset the virus’ swift, devastating blow to Utah’s workforce, which saw a record 19,591 jobless claims filed in Utah last week.

The plan also anticipates House approval of the largest economic aid package in the nation’s history and President Donald Trump signing it before this week is out. In addition to direct payments to help individuals and families, the $2 trillion bailout provides billions in loans and grants for state and local governments, businesses small and large, transportation systems, health care systems, and for the arts and other nonprofits critical to a community’s social safety net.

Under the plan, the state could repurpose more than $800 million targeted for “shovel-ready” projects to address more immediate needs before tapping into more than $900 million in rainy day funds. The state’s Unemployment Insurance Trust Fund has a record $1.2 billion to pay off claims and fund other workforce programs.

“One of the most important tools we have for our recovery is that government act to provide aid,” Gochnour said. “It’s really the only entity that we have that can do this. You can’t count on corporations that are in trouble, you can’t count on foundations, they’re in trouble, too.”

‘Mother of invention’

During Thursday’s virtual town hall convened by the state’s Economic Response Task Force, Utah employers statewide were eager to know how to tap into the federal aid as a lifeline during what could be months of combating the spread of coronavirus.

Miller said representatives from the Utah banking industry advised business owners to seek federal Small Business Administration loans. He said loans that cover essential needs like utilities would actually be treated like grants that wouldn’t have to be repaid.

Employees were advised to apply immediately for unemployment benefits, which for the first time will also be available to “gig economy” workers, such as ride-share drivers, Miller said.

While the state’s plan leans heavily on federal aid, it also anticipates employers and employees getting creative and seeking out opportunities in an economy that has been nearly shuttered by necessary compliance to public health mandates.

As one hopeful example, Miller cited David Moody, owner of Silver Reef Brewing Co., who opened St. George’s first microbrewery earlier this year. When his primary market of restaurants began to dry up as COVID-19 hit, Moody told the task force he quickly retooled to switch from producing alcoholic beverages to alcohol-based cleaning products.

“I think it’s it’s partly humanitarian and partly a way to stay in business. So it’s kind of a nice confluence of those two things,” Miller said.

And a week earlier, the task force heard from Matt Caputo, chief executive of the longtime Italian food establishment Caputo’s Market and Deli in downtown Salt Lake City, who said the compliance to virus restrictions forced him to ramp up online sales — something he’d intended to do for while.

“He said this was just the impetus, the necessity that was the mother of invention,” Miller recalled.

Juliette Tennert, chief economist at the Gardner Policy Institute, said economic theory holds that crisis and challenge can spur innovation and long-term productivity.

“It’s just kind of textbook economics that innovation increases productivity,” she said. “As this crisis has taken hold and has caused companies to be innovative and to adapt, coming out of that should be additional productivity.”

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