On April 30, WBA President and CEO Rose Oswald Poels testified before the Assembly Committee on State Affairs during a hearing focused on the “Back to Business” plan for reopening Wisconsin.
WBA was invited to testify because of the association’s unmatched ability to provide the committee with information, context, and insight related to the Paycheck Protection Program. Specifically, WBA was asked to provide a summary of the program and discuss the impact of PPP on Wisconsin as well as identify issues and challenges.
Leading off the hearing, Committee Chair Rob Swearingen (R-Rhinelander) set the tone by calling the informational hearing a “first attempt” to vet ideas for how to get businesses open again. He requested both Republicans and Democrats “lower their defense shields” in order to assess the impact of the virus and identify ways to move forward.
The first to testify, Scott Manley, executive vice president of government affairs at Wisconsin Manufacturers and Commerce (WMC), walked the committee members through the details of the Back to Business plan and why the WMC and many of its business members feel reopening prior to May 26 is imperative. Manley said that Wisconsin has successfully “flattened the curve,” so now is the time to begin reopening. In fact, according to WMC, four of the seven regions of the state (divided by healthcare readiness) have more hospitals than infected patients.
The Back to Business plan would require all businesses to use a formula to determine their risk level, which would prescribe the mitigation requirements (such as social distancing, frequent cleaning/disinfection, PPE requirements for workers, etc.) that specific business would need to observe in order to open. Manley concluded by requesting legislative support for the plan from the committee. “We think the Back to Business plan represents the best model for safely reopening our economy and giving ppl a chance to rescue their livelihoods and their businesses,” he said. “It’s tactical and provides businesses with very specific steps they can take to protect their employees and their customers.”
In response to a question about why the plan does not contain information about testing and contact tracing, Manley said those are the “blocking and tackling” of a good response to a pandemic, and that WMC sees the Back to Business plan “working in conjunction with the efforts that the Governor Evers Administration is putting in place.”
The committee then heard from several business owners, including Tim Metcalfe of Metcalfe’s Market, Troy Berg of Dane Manufacturing, and Mike Nikolai of Waupaca Foundry. Each of them told the committee how the virus and closures have impacted their operations and explained what steps they’ve taken to protect their employees and customers.
Next, Secretary-Designee of the Wisconsin Economic Development Corporation Missy Hughes opened her remarks by emphasizing the points of agreement about reopening Wisconsin: that public health is important, this will be a phased approach, and data is essential. She also emphasized the speed at which this virus has upended life and business. In her remarks and in answering questions from the committee, Hughes complimented Wisconsin’s banks and credit unions on their dedication. “Wisconsin has punched above its class” with regard to PPP loans, she said, “a testament to community banks and credit unions working tirelessly to process applications on behalf of their borrowers.” Hughes answered several questions from the committee, particularly related to the decision-making process and criteria for designating businesses as “essential” or “non-essential.”
Over the next few hours, committee members heard stories and perspectives from restaurant and tavern owners, farmers and dairy operators, hotels, a salon sole-proprietor, a doctor, and a UW economist. Each business sector explained the impact the coronavirus shutdown has had on their industry, discussed their specific needs during a phased reopening, and urged lawmakers to act quickly to provide certainty for employers.
Representatives from the Wisconsin Restaurant Association: Joanne Palzkill (Draganetti’s Ristorante in Altoona), Bob Prosser (Ishnala in Wisconsin Dells), and Kristine Hillmer, association president and CEO all emphasized the thin margins restaurants run under and the pressure owners and operators feel to take care of their employees, both with regard to their health and their financial wellness. They also told the committee that the PPP is designed for businesses that can operate at full capacity, leaving restaurants to fend for themselves. Hillmer called COVID-19 an “extinction-level event” and requested the legislature consider treating different parts of the state differently. The WRA estimates if closures go on long-term (past May 26), 50% of the restaurants in the state could close forever.
From the Tavern League of Wisconsin, president Chris Marsicano and director of government affairs Scott Stenger urged the committee to take action to address their members’ dire need. “The real tell [of the impact due to extended closures] will be in November and December, when the businesses who didn’t make enough money over a slow summer will close in droves,” said Marsicano. “We’ll lose a third to half of our members.”
From the Wisconsin Dairy Alliance, Grant Grinstead (Vir-Clar Farms in Fond du Lac), told the committee that after several years of tough challenges, this year was the year the industry was going to get ahead. COVID-19 changed that. He explained that approximately 90% of milk from Wisconsin goes to make cheese, and over half of that cheese is sold to restaurants and other food service. So, that ecosystem being closed is devastating to the dairy operations of the state. “A fair price that comes from a healthy economy is what is needed here in Wisconsin,” he said. “We need to get our state moving again, in the right direction, to save us all. We need your support more than ever.” Jim Ostrom (Milk Source, LLC, Kaukauna) and Kim Kroll (Gaedtke Rolling Hills Dairy Farm, Luxemburg) also provided perspective from the ag sector.
From the Wisconsin Hotel and Lodging Association, president/CEO Trisha Pugal and Greg Stillman (association chair and president of Foremost Management Services in Fish Creek) informed the committee of the devastating impact on the lodging industry, a sector that has felt the impact of the pandemic longer than most, they said.
Next, Donna Fowler (New Creations Salon, Lodi) gave the perspective of a sole proprietor. As of the hearing, she had not received any of the aid money she had applied for (or even whether she qualifies for some of it). Then, former representative Dr. Erik Severson (Osceola) gave his perspective as a physician in a more rural portion of the state. He said his hospital’s revenue and patient capacity has been down to as low as 40% and informed the committee that one of the largest hurdles for healthcare providers is the lack of materials to do more testing.
Finally, after over six hours of testimony, Oswald Poels was recognized by Swearingen and took the floor. In her remarks about PPP, she emphasized the dedication of Wisconsin’s banks to their communities, even amid uncertainty. “I am so proud of how quickly Wisconsin financial institutions jumped into this program to help customers despite the rules not being fully written and continually evolving even to this day,” she said. “And because the volume of lenders across the country participating in this program was so high, our bankers worked late nights and over weekends to ensure that small businesses in Wisconsin could participate in this program because the systems were open virtually 24/7.” Oswald Poels informed the committee that over 43,000 Wisconsin businesses received PPP loans in the first round.
Discussing current and future challenges related to PPP, Oswald Poels explained that loan forgiveness is a primary concern. “At this point, many of the outstanding issues are focused on the forgiveness phase of the program,” she said. In addition, Oswald Poels provided the committee with the PPP Loan Forgiveness Guide and Forgiveness Calculation Tool from FIPCO.
Oswald Poels then fielded several questions from committee members. She provided detailed responses to multiple technical questions regarding the forgiveness requirements for PPP loans. When asked what one of the biggest issues with PPP is, she explained: “Once Congress tied the 8-week period to the 10-day disbursement, that placed non-essential businesses at a disadvantage in any state with a stay at home order.”
Another question was whether the banking industry has seen a spike in foreclosures and bankruptcies. Oswald Poels explained that those proceedings have been stayed for the time being. “As we open things up more, we’ll see the economic impact of this is very long-term, just like the health impact,” she said. “That will be a great question six or nine months from now.”
“Banks are the cornerstones of their communities, driving Wisconsin’s economy,” Oswald Poels told the committee as she concluded her testimony. “The trusted advisor role our bankers serve for their customers has never been more important than it is now to help ensure their financial wellbeing through this health crisis.”
Noah Williams, an economist with UW-Madison, was the last to testify. As the author of a special report on the impact of COVID-19, he provided the committee with an economic perspective on the impact of the state-at-home order. “We need to weigh both the economic consequences and the health consequences,” he said, emphasizing that the impact of the pandemic varies in different regions of the state. The UW Center for Research on the Wisconsin Economy (CROWE) estimates the COVID-19 pandemic is costing the state roughly $1.7 billion in economic activity per week. “This is unprecedented both in scale and in the speed of the decline,” Williams said.
Serving on the Assembly Committee on State Affairs for the 2019-2020 Legislative Session:
- Chair: Rep. Rob Swearingen (R-Rhinelander)
- Vice-Chair: Rep. Gary Tauchen (R-Bonduel)
- Rep. John Jagler (R-Watertown)
- Rep. Michael Schraa (R-Oshkosh)
- Rep. Daniel Knodl (R-Germantown)
- Rep. Mike Kuglitsch (R-New Berlin)
- Rep. Rob Summerfield (R-Bloomer)
- Rep. Bob Kulp (R-Stratford)
- Rep. Tyler Vorpagel (R-Plymouth)
- Rep. Christine Sinicki (D-Milwaukee)
- Rep. Tip McGuire (D-Kenosha)
- Rep. Tod Ohnstad (D-Kenosha)
- Rep. David Crowley (D-Milwaukee)
- Rep. Shelia Stubbs (D-Madison)
- Rep. Marisabel Cabrera (D-Milwaukee)