Legislative Update

 
Stimulus and Relief Bill Passes the House:  On Friday (February 26), the House passed the $1.9 trillion omnibus stimulus and relief bill, also known as the “American Rescue Plan Act of 2021,” by a largely party-line vote of 219-212.  There were no Republican votes for the measure and two Democrats also voted against it. The House version of the bill contains the $15 per hour minimum wage provision that was recently ruled impermissible under reconciliation rules by the Senate parliamentarian. When the Senate takes up the measure this week, the provision will likely be stricken from the bill as there are not enough votes to overrule the parliamentarian. 
 
An alternative plan was floated by some Senate Democrats to impose tax penalties on large companies which do not pay at least $15 per hour. Given the timeframe in which Congress is seeking to pass the bill, and the probable lack of the votes to include the measure, the proposal has been set aside. 
 
Background on Reconciliation
In early February, the U.S. House and Senate passed a resolution allowing for the $1.9 trillion Biden stimulus plan, also known as the American Rescue Plan Act, to proceed via a budgetary mechanism known as reconciliation.  By doing so, the bill will only require 51 votes in the Senate, rather than the 60 required to break a filibuster. 
 
Reconciliation is authorized under the Congressional Budget Act. Each year Congress is supposed to pass a budget resolution which sets forth a plan for taxes and spending. It does not always do so. A budget resolution requires a simple majority in both houses. The Act permits the use of reconciliation provided that House and Senate pass a budget resolution that includes “reconciliation instructions.”  Those instructions include targets for raising or lowering spending or revenues for a specific fiscal year or period of fiscal years. 
 
Budget resolutions do not detail what legislative changes a committee should undertake in order to meet the targets included in the reconciliation instructions. Once the committees complete their work in drafting the budget committees in the House and Senate combine their recommendations into a single omnibus bill for consideration by both houses. The budget resolution and the ultimate omnibus bill are subject to a simple majority vote in both Houses.  On the budget resolution, Vice President Kamala Harris cast her first tie-breaking vote as president of the Senate. 
 
The omnibus bill is still subject to requirements set forth in the Congressional Budget Act as well as the rules of the House and Senate.
 
First Round of Budget Hearings Finished: The Joint Finance Committee has concluded the initial round of hearings wherein they hear budget presentations from state agencies. In the coming months, as update revenue projections are released in March, May and June, work begins on assembling the final operating budget and grant-in-aid budget. The Joint Committee on Capital Improvement, also known as the Bond Bill Committee, is responsible for crafting the capital budget. Both committees use the Governor’s recommended budget package as a starting point. 

Jobless Claims Down: For the week ending February 19, initial unemployment claims fell by 111,000 to a seasonally adjusted 730,000. This is the lowest level of jobless claims since November. However, it is still higher than the pre-pandemic record of 695,000 set in 1982. 

Changes to PPP: The Biden Administration is making some changes to the Paycheck Protection Program to increase access to business with fewer than 20 employees.  The changes will also increase scrutiny of large borrowers under the program. 

On December 27, 2020, Congress passed, and then President Donald Trump signed into law, the Economic Aid to Hard-Hit Small Business, Nonprofits, and Venues Act which authorized an additional $284 billion for PPP. The new funding is for first-time borrowers and businesses who received a PPP loan during the first rounds and saw a decrease in gross receipts of 25% or more in any quarter of 2020 compared to the same quarter in 2019.
 
According to Forbes, the intent behind the PPP changes is to give the smallest businesses time to apply before larger firms, perhaps, take the largest portion of this round of funding, which is currently open until March 31, 2021. The administration instituted a 14-day period starting Wednesday, February 24, 2021, during which only small businesses with 20 or fewer employees can apply, giving them time to compile the necessary paperwork and for lenders to focus on them. The White House noted that 98% of American small businesses have fewer than 20 employees.