Today's Three Things to Know: Chambers Ask Locals for Tax Extension, SC Economists Revise State Budget Estimates, SC Chamber Releases COVID-19 Business Survey Results
Email to COVID-19 Mailing List: April 10, 2020
Today is Good Friday. Our Chamber team hopes you all are staying healthy and safe this Easter weekend.
Today’s COVID-19 business information compiled by your SC Chamber Team includes: Chambers Ask Locals for Tax Extension, SC Economists Revise State Budget Estimates, SC Chamber Releases COVID-19 Business Survey Results
ICYMI – Yesterday, the Chamber hosted a webinar in which Ray Beeman, Principal, and Co-leader at the Washington office of Ernst & Young gave an overview of the CARES Act, as it relates to spending, lending, and taxation. View the webinar here.
In letters sent today to the Municipal Association of South Carolina (MASC) and the South Carolina Association of Counties (SCAC), the SC Chamber and 15 local Chamber of Commerce urged the associations to encourage their members to extend tax deadlines for businesses in cities and counties throughout the state in response to the COVID-19 crisis.
The letters state:
“For many businesses, this extension could mean the difference between paying their employees or not over the next few weeks. Moreover, penalties associated with not paying local taxes on time are often high and would add to the already large financial burden facing businesses as they try to recover.”
The letter to the MASC request explicitly that local governments:
- Extend tax deadlines for businesses and suspend penalties, in line with the adjusted federal and state deadlines.
- Extend the time for which to appeal a tax assessment.
The letter to the SCAC requests that county governments explicitly:
- Work with the SC. Department of Revenue to extend tax deadlines for businesses, in line with the adjusted federal and state period, most notably:
- Business Personal Property taxes on several business types, including real estate, securities brokers, insurance, hotels, health services, and legal services.
- Extend the time for which to appeal a tax assessment
Yesterday, the Board of Economic Advisors (BEA) met to update the state’s general fund forecast for the current and upcoming fiscal year.
2019-20 Forecast: Budget forecasters expect to see a reduction in revenues by $1.2 billion for the current 2019-20 fiscal year, nearly wiping out the surplus $1.9 billion projected by the BEA earlier this year. Fortunately, current state revenues are still above state expenditures by about $40 million.
2020-21 Forecast: For the upcoming 2020-21 fiscal year, the BEA reduced the estimates by $643.5, with revenue growth estimated at a much lower 2.3%, compared to the earlier February estimate of 4.5%.
Frank Rainwater, the state’s economist, predicts that with the expected loss in revenue, the state may have about a $750 million surplus; but that number assumes a June 1st return to social norms. The forecast may continue to change as the effects of COVID-19 on the economy begin to materialize. Last month, the House of Representatives passed a version of the budget based on the original surplus of $1.9 billion.
This week, the House and Senate each passed a version of a Continuing Resolution, which would allow the state to operate at current budget levels without a new budget on June 30th. After they reach a compromise and pass the final resolution, both bodies will likely return to adopt a new budget for FY 2020-2021 in late summer or early fall. The updated BEA forecasts will be critical in shaping the allocation of funds.
Last week, the Chamber sent out a survey to businesses across the state to gauge the effect COVID-19 is having on operations and find out what information companies need to move forward. We received 123 responses from businesses across varied sectors, including manufacturing, business and professional services; financial services; health services; hospitality/retail; transportation, distribution, and logistics, agribusiness, utilities, and others.
Some of the key takeaways are as follows:
- Over 60% of respondents think the actions of the federal government have put us on the right track.
- Nearly 60% of respondents think the actions of state government have put us on the right track.
- About half of the respondents plan to apply for a Paycheck Protection Program (PPP) loan.
- Almost half of the respondents did not plan to lay off or furlough employees at the time of their response.
- Overwhelmingly (nearly 70%), respondents want more information about the CARES Act.
Click here to see the full survey results.