Arts Relief in the $1.9 Trillion American Rescue Plan
On Saturday, March 6th the US Senate passed its amended version of the American Rescue Plan, a $1.9 trillion relief package that contained several provisions that will assist the arts sector endure the economic strain caused by the pandemic. The US House is expected to vote to approve this version on Tuesday, March 9th and send it to President Biden to be signed into law. The American Rescue Plan includes an extension of federal unemployment programs, more funding and flexibility for the Shuttered Venue Operators Grant (SVOG), an expansion of the Employee Retention Tax Credit (ERTC) through the end of 2021, $135 million in arts relief through the National Endowment for the Arts (NEA), and $350 billion in relief to state, county, and municipal governments that could be used for additional relief for the arts sector. Arts NC is proud to see so much of the relief we have been advocating for provided in this package.
$350 Billion in Aid to State and Local Government
Relief funding totaling $350 billion will be distributed to state, territory, and tribal governments as well as to counties, metropolitan cities, and smaller cities and towns. The funds will be distributed as follows:
- $195.3 billion to states and Washington DC
- $20 billion for tribal governments
- $4.5 billion for US territories
- $65 billion to counties
- $45.5 billion to metropolitan cities
- $19.5 billion to smaller cities and towns
There is still much we do not know about the details of how these funds can be spent, though the American Rescue Plan put no deadline for use of the funds (covered expenses must be incurred prior to January 1, 2025) and outlined four expenses on which these governments are required to use this funding :
- To respond to the public health emergency with respect to COVID–19 or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
- To respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers of the government entity that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work;
- For the provision of government services to the extent of the reduction in revenue of such government entity due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year of the government entity prior to the emergency; or
- To make necessary investments in water, sewer, or broadband infrastructure.
It is possible that this funding may be used for arts relief in North Carolina at the state, county, and municipal level. The legislation contains language that incentivizes states to use the funds for aid to small businesses and nonprofits as well as hard-hit industries like tourism, hospitality and travel, among other things, in order to receive all funding for which a state is eligible. Arts NC will continue to monitor updates to this funding as it becomes available. We encourage our advocates to prepare to request relief from all levels of government in the coming months.
Shuttered Venue Operators Grant Funding and Flexibility
$1.25 billion will be added to SVO Grant funds, for a total of $16.25 billion. Also, all those considering applying for an SVO Grant will be allowed to first apply for and receive a First or Second Draw PPP loan through an approved lender in this year, before the March 31st PPP application deadline. Eligible entities may then also apply for an SVO Grant when that application opens, subtracting their 2021 PPP loan amount from their SVO Grant award. This will allow many organizations that have already received a PPP loan in 2021 to also apply for an SVO Grant, as well as allowing some of the financial resources needed to fulfill the promise of the SVO Grant program to be drawn from the ample PPP funding currently available.
Arts Relief through National Endowment for the Arts (NEA)
The NEA will receive $135 million in funding to provide relief for art organizations across the country. State and regional arts agencies will receive 40% of those funds to distribute. Arts NC estimates that the NC Arts Council will receive $910,000 to distribute statewide. The NEA will distribute the remaining 60% of the funding to arts organizations directly. There are no details currently about how the NEA or NC Arts Council will distribute this funding. Arts NC will continue to monitor this funding disbursement and provide more information when it is available.
Other federal agencies received relief funding as well, including $135 million for the National Endowment for the Humanities (NEH), $175 million for the Corporation for Public Broadcasting (CPB), and $200 million for the Institute of Museum and Library Services (IMLS).
Extension & Tax Exemption of Federal Unemployment Benefits
These programs will be administered, and benefits distributed, by the NC Department of Employment Security (DES). The NC DES will interpret this law and define eligibility for all benefits administered under these programs
- Federal Pandemic Unemployment Compensation (FPUC) is extended for 25 weeks through September 4, 2021. During that period FPUC will provide federal funding for a $300 increase to all UI weekly benefits resulting from the pandemic.
- Pandemic Unemployment Assistance (PUA) is expanded by 29 weeks (from 50 to 79 possible weeks), extending the deadline for new and existing claims to be paid until September 4, 2021. PUA provides federal funding to states for weekly unemployment insurance (UI) benefits to the self-employed and independent contractors (1099 “gig” workers), as well as those who have exhausted all other UI benefits, who are unemployed as a result of the pandemic.
- Pandemic Emergency Unemployment Compensation (PEUC) is expanded by 29 weeks (from 24 to 53 possible weeks), extending the deadline for new and existing claims to be paid until September 4, 2021. PEUC provides federal funding for weekly UI benefits of claimants who have exhausted their state UI benefits.
- Unemployment benefit payments will be tax-free for the first $10,200 of benefits for households with annual incomes less than $150,000.
- Emergency Unemployment Relief for Non-Profits is extended by 25 weeks until September 4, 2021 and now pays 75% (up from 50%) of unemployment expenses incurred by nonprofits due to the pandemic. North Carolina currently pays any portion of these expenses not covered by the federal government. Pending legislation is likely to extend this provision through December 31, 2021.
Employee Retention Tax Credit (ERTC)
The Employee Retention Tax Credit (ERTC or ERC) will be extended for an addition two quarters at the same rate of up to $7,000 PER QUARTER (70% on $10,000 in wages) per employee for the EACH and EVERY quarter of 2021 for those businesses and nonprofits that that had a 20% loss of revenue in a single calendar quarter in 2020 compared to the same period in 2019, regardless of whether they have received a First or Second Draw PPP loan or an SVO Grant. These entities will also be able to receive a refundable credit for payroll taxes of up to $5,000 (50% on $10,000 in wages) per employee retroactively for all of 2020.
Arts NC does not provide legal or financial advice and we strongly encourage organizations interested in ERTC to consult their own tax professional. For more information, you can watch the Arts NC webinar that covers the ERTC or the IRS website.