Mystic River, Mystic (Credit: Public Domain/Julian Colton)

As Federal Aid Expires and Businesses are Slow to Reopen, Officials Discuss Changes to the Paycheck Protection Program

With summer fast approaching, Connecticut’s multibillion-dollar tourism industry is still largely shuttered. But as businesses gradually reopen over the next month, increased costs, wary customers and rigid rules on federal aid may make the process more difficult for businesses that have already lost two or three months of revenue.

Possible changes to the troubled federal Paycheck Protection Program may ease some of that burden for tourism-driven businesses, but they will still need to clear one additional hurdle after they are allowed to reopen: convincing customers that it’s safe to come out.

Sen. Richard Blumenthal told industry stakeholders that he’s optimistic about a federal bill that would extend the Paycheck Protection Program and give businesses more flexibility to spend the aid, during a video call Wednesday.

The federal loan program was meant to help businesses keep employees on their payroll even as the state ordered them to close, but the initial rollout of the program left many businesses uncertain whether they would qualify for forgiveness – the original rules haven’t been finalized — even as Congress considers major changes to the program.

“It was good for people who didn’t have to lay people off, because their payroll was consistent and they’ve been able to take the full benefit,” said Stephen Tagliatela, president of the Connecticut Tourism Coalition and owner of Saybrook Point Inn and Spa, to Blumenthal. “But when you have to cut your payroll because you’re shuttered, it doesn’t provide the same benefits.”

A bill currently being considered by the U.S. House of Representatives would extend the period for forgivable expenses beyond the original eight week limit, and eliminate a restriction that at least 75 percent of the loan had to be spent directly on payroll. Blumenthal said the bill is the result of “bipartisan compromise in the Senate,” where it will head for a vote if it passed in the House.

An extension would be key for Connecticut, where most businesses are still weeks away from being allowed to open. Tagliatela said his loan period for the Paycheck Protection Program ends on June 28, only 8 days after restaurants are able to open for indoor dining. 

With the exception of outdoor museums and zoos, arts and cultural organizations have not been allowed to open in phase one. More will be allowed to open with the start of phase two — currently set for June 20 — but many will remain closed given added costs and ongoing limits on capacity, said Wendy Bury, executive director of the Southeastern Connecticut Cultural Coalition.

State Rep. Holly Cheeseman (R-East Lyme), executive director of the Children’s Museum of Southeastern Connecticut in Niantic, said the museum was fortunate to receive a Paycheck Protection Program loan, allowing the nonprofit to retain staff.

Cheeseman expressed concern that the June 20 opening date remains uncertain, and that when the museum and other businesses do open, they will operate at a limited capacity, but with additional staffing and cleaning costs.

Making the loans more flexible, so that businesses don’t have to spend 75 percent on payroll, could help businesses adjust to the higher cleaning costs, Blumenthal said.

Along with federal aid, callers agreed that tourism won’t pick up until people are comfortable going out. Businesses can’t wait for a vaccine, which could be a year away, some said. 

Connecticut’s tourism industry generates billions of dollars in sales and tax revenue each year, including spending on hotels, restaurants and entertainment. Tourism directly supported 84,254 jobs in 2017, according to a 2019 Tourism Economics study

Visitors support over 98 percent of all lodging jobs, spending $1.76 billion on the industry in 2017.  They also spend $2.3 billion on food and beverages – about 17 percent of the industry – and over $2.7 billion on recreation – almost 34 percent, according to the state-commissioned study.

Randy Fiveash, director of the Connecticut Office of Tourism, said the office has done research showing the state is well positioned to be the first place people visit when they can – including people looking to get away from New York City. 

The research also shows that people won’t visit hotels, restaurants or anywhere else until they feel safe. Advertising will play a role, and so will encouraging people to go out safely, emphasizing physical distance instead of social distance, Blumenthal said.

“We can stay connected with each other, not isolated socially, but physically staying six feet apart, wearing masks,” he said. “Until we get a vaccine, that’s going to be absolutely key, but it shouldn’t keep us from making use of the restaurants and museums.”