The Hutchinson administration moved to quiet controversy over its botched rollout of the Ready for Business grant program by expanding the fund from $15 million to $85 million and adding preferences for small businesses and women- and minority-owned enterprises.
The proposal was put before the governor’s CARES Act Steering Committee today by Hutchinson’s Commerce secretary and the executive-dominated committee approved it, but not before strong pushback from the Arkansas Senate, which faulted a lack of clear strategy in handling more than $1 billion in federal relief money and numerous problems with the initial grant program.
Gov. Asa Hutchinson announced Wednesday a $15 million grant program to help businesses cover reopening costs (and also pay for costs incurred by ongoing businesses in making changes to encourage distance guidelines). A website was opened for applications 3.5 hours later (a day earlier than planned and with no general notice to legislators) and more than 2,000 applications poured in seeking a total of $36 million in an hour.
Economic development officials around the state got advance word. Paid lobbyists who monitor the governor’s briefings got the word out. But many businesses were in the dark and knew nothing before the money was overcommitted.
Several legislators, including Republicans in both House and Senate, have complained the process was unfair and rushed.
The governor acknowledged the flubs at a news conference yesterday and his makeup came in a specially called teleconference meeting of the steering committee.
Preston explained that $85 million more would be made available.
- At least 15 percent of the money would go to women and minority-owned businesses, as defined by statute.
- 75 percent would go to businesses with 50 employees or less. In the original program, 50 percent was set aside for businesses that could claim up to $1,000 for 100 employees. Questioning by Rep. Lane Jean (R-Magnolia) revealed that 94 businesses had sought the maximum $100,000, or more than $9 million of the available money. Preston emphasized the number of small businesses that applied, the largest number with nine or fewer employees.
Preston emphasized the money in the first round wasn’t yet committed and that all applications would be evaluated and spread to as many applicants as possible. In response to a remark by Jean, who said restaurants in his hometown of Magnolia wouldn’t need more than $500 per employee to cover their costs, Preston agreed. But he said some businesses, such as manufacturers that have remained opened and made product line changes, might need higher amounts.
Preston’s proposal was approved over objections from Sens. Will Bond (D-Little Rock) and Missy Irvin (R-Mountain View). They backed a proposal that they said represented the thinking of the Senate: That the amount should be increased to $50 million, rather than $100 million, and that there should be advance notice of a two-day application period Monday and Tuesday. The response could be re-evaluated and then more money added if needed.
Bond’s substitution motion on that failed. The committee includes four Hutchinson employees so defeat was a foregone conclusion. But the proposal now goes to the emergency committee of Legislative Council leadership for approval this afternoon. If the Senate side doesn’t approve? It might be back before this committee again.
Jean attempted to compromise with Bond on a total of $60 million, but that went nowhere. Rep. Michelle Gray (R-Melbourne) said the House leadership backed the full $100 million.
Rep. Fred Allen (D-Little Rock) wanted to be sure the proposal covered independent contractor businesses and Preston said it would.
In the course of the debate, senators and Allen raised questions about whether this was a first-come-first-served program. It was identified that way. But Preston seemed to indicate otherwise today in saying all applications, though time-stamped, would be reviewed and an effort made to get money into the hands of as many applicants as possible.
Preston insisted no one got advance notice, but then he immediately acknowledged his call with some 100 economic development officials around the state at 3 p.m. That was a notice that had results for some if not all.
Preston said there’d be effort this time to get the word out. “We have our fingers crossed our system will be able to handle that amount of applications,” he said.
Allen said he’d been led to understand the maximum grant was going to be reduced from $100,000. Preston said, no, only the percentage that would go to people who could qualify for that amount.
Sen. Irvin pressed Preston for a defined time for applications. She said she hadn’t been aware of last Wednesday’s 5 p.m. rollout. It came before legislative approval, she noted.
Sen. Bond also pressed Preston on the first-come rule. Preston said the time-stamp would be used just to judge the time period when applications were accepted. “Everyone will have an opportunity to get something. That is the intention,” he said.
Bond the legislature had approved $15 million and got $36 million worth of requesting. Why go $85 million more? he asked. Why not just go to $50 million and if demand is much greater, the committee can act quickly to increase the amount?
Bond also outlined larger problems with state handling of the relief money. He said the state is spending it without guidelines or guardrails. Hospitals have needs. Schools must reopen in the fall. “I don’t want to just willy nilly put this money out there. Why did we have to have $85 million approved right this second?”
Preston said the needs were great and the state also had an interest in seeing that operating businesses were meeting safety guidelines. “To me, the need is there,” he said.
“I just think we need to slow down a little bit and get our feet under us,” Bond said.
Bond said there was “frustration” that the program was begun before it was fully announced and before legislative approval.
Irvin said the same. Leadership believed, she said, that a time frame for applications should be announced, businesses would be considered on a pro-rata basis and was “comfortable” for now with $50 million in authorization. If more is needed, it could be addressed within a week, she said.
“This task force needs a strategic vision for the entire amount of the money,” she said. She said it should be attentive to needs, but the process also needed to be “fair, accountable and transparent.”
Preston’s proposal was moved by Hutchinson’s finance chief, Larry Walther, and seconded by his office staff member Bill Gossage. The strongest non-executive supporter was Rep. Gray, who said if Bond’s smaller amount was approved and applicants overwhelmed it would be on the Senate’s recommendation, not the House.
“This is exactly what this money was intended for,” she said.
Surgeon General Greg Bledsoe brought out that the proposal was headed for special legislative approval today and the legislature ultimately had control over the funds.
So now we wait for that action. The Senate leadership seems, based on comments this morning, unlikely to vote for the full amount. Rep. Jean seems open to compromise. The Hutchinson administration gave no support to that idea in the morning meeting.
I think the morning activity reflects the recent Senate leadership vote, where Hutchinson’s candidate, Bart Hester, was defeated by Sen. Jimmy Hickey (R-Texarkana), who promised a return to more Senate influence in decision-making.
UPDATE: At 5 p.m. today, there’d still been no meeting and decision from the four-member committee (two House and two Senate) that gives emergency appropriation approval to requests such as these. I think the Senate may still be pushing back.