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Member Update
June 21, 2021
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What's inside:
Session Summary
In the News
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While not all final bills have passed, we are providing this analysis on how we believe the session will play out based on the bipartisan publicly-posted agreements. Read on or
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We identified 7 top policy objectives this session that included a phased reopening -- Roadmap to Recovery -- and 6 financial supports for Hospitality Industry Recovery , (PPP Tax-Free, Property Tax Relief, Sales Tax Relief on Restaurant Equipment, ProStart/HTMP Workforce Assistance, a Grant Program and No-Interest Loan Relief). |
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In February, we worked with a bipartisan group of lawmakers led by Rep. Baker to set forth a phased re-opening plan based on data to re-open hospitality businesses at 100% in May. Our media and policy push put pressure on the State to do the right thing and acknowledge that we could re-open safely, culminating in the governor’s announcements in March and May.
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Ensuring that PPP assistance our members received is free from state tax was a top priority for HM going into the session. Working with coalition partners, we secured a win that makes both PPP tax-free and expensable. Given that MN hospitality businesses received a projected $1.5 billion in PPP, this is a major victory. |
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ProStart/HTMP Workforce Grant |
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Workforce is one of the biggest challenges facing our industry. For the last two years, HM has sought a state grant to support the growth and expansion of the ProStart and Hospitality Tourism Management Program in high schools to help develop the workforce of the future. We’ve already expanded the programs to 100 high schools throughout Minnesota and with this public “match,” we hope to grow the programs further.
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Hospitality Minnesota advocated for legislation that would have frozen the state levy portion of the property tax for hospitality businesses for two years (with a price tag of $60M). Unfortunately, the legislature did not agree to this investment, and we have put our disappointment on the record in public comments. The tax bill does, however, include modest property tax relief to businesses by expanding the market value exemption to $150,000 ($40M in tax relief per biennium).
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The Jobs bill includes a $70M grant program for businesses impacted directly and indirectly (overnight accommodations and others) by the governor’s shutdown orders. While HM has been promoting a grant program all session, we grade this as only a partial victory, because we believe the total investment and grant amounts should be much higher. Nevertheless, members in-need will be eligible to apply for some grant relief.
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No-Interest Loan Assistance |
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Partial Victory
Missed Opportunity
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HM supported a $200M No-interest, partially forgivable loan program. Unfortunately, the legislature did not pass this proposal. The Jobs bill does include, however, an $80M Main Street Economic Revitalization Program that uses loan guarantees and leveraged grants to fund projects for:
“…the development, redevelopment, demolition, site preparation, predesign, design, engineering, repair, or renovation of real property or capital improvements. Eligible projects must be designed to address the greatest economic development and redevelopment needs that have arisen in the community surrounding that real property since March 15, 2020.”
While the program is not hospitality specific, we do believe hospitality businesses damaged last year in Minneapolis and St. Paul could be beneficiaries of this program. It is also possible other hospitality businesses around the state could be part of eligible projects. We will continue to advocate to help our members with access to capital and liquidity as our industry recovers.
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Sales Tax Exemption on Restaurant Equipment |
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Despite excellent testimony from several members and HM staff, the tax committee did not accept our proposal to exempt restaurant equipment from the sales tax. We believe the legislature is missing an opportunity here to aid and speed recovery (see HM public comments), and we will continue to advocate for this.
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What counts as success because it is NOT in the deal? |
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Sometimes success comes from what did not make it into a bill. HM was successful in blocking a variety of mandates and other restrictive policies that would be especially problematic in the current economic climate. Due to our advocacy and work with coalition partners, the following items are NOT in the final deal:
- Statewide Right to Recall mandate re hotel and event workers;
- Mandated paid family leave program with tax/fee increases
- Mandated and prescriptive earned sick time program
- Ban on sharing credit card fees on tips
- Redirection of lodging taxes for municipal capital projects
- Increased taxes to fund Street Improvement Districts
- Carbon monoxide detectors in all hotel rooms
- Increases to boat fees
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Other provisions of note. |
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We believe the final deal will include three other items that Hospitality Minnesota supported through the session, including:
- funding for Explore Minnesota Tourism recovery grants
- provisions on invasive species management and prevention, and
- expansion of broadband.
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Unfortunately, the final deal does not include any alcohol to-go provisions despite our coalition work on the Drink Local MN package. Finally, the legislature is likely to pass a provision that will allows 16 and 17-year-olds to qualify for unemployment benefits in 2022. We are watching this closely as our industry employs a disproportionately high volume of 16 and 17-year-olds and increased claims can impact that rate an employer pays into the system.
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Next steps on relief.
While there are positive elements to the budget, we believe the state can and should do more. We are petitioning Governor Walz to use some of the $500M in discretionary funding he’s been allotted in the deal on hospitality relief. We will also continue to push for more financial relief in any July or August special sessions, as well as:
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Passage of a proposal that creates incentives for workers to return now, rather than September when federal benefits run out; and
- Passage of alcohol to-go provisions that have now been passed permanently in 18 states and temporarily in 25.
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Our Member Updates are generally sent to members only. In the interest of public health and the health of our industry, we encourage you to share this update widely. Additional resources can be found on our website and through our social media posts on Facebook, LinkedIn and Twitter.
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