How State and Local Officials Can Save Restaurants

The National Restaurant Association has sent letters to the National Governors Association, the United States Conference of Mayors and the National Council of State Legislators outlining recommendations for COVID-19 relief at the state and local level.
The proposals include providing grants for restaurant operators, property tax relief and suspension of state and local sales taxes on meals, prepared food and catering.

As Congress moves slowly on a proposed COVID-19 relief package that includes targeted assistance for restaurant operators, the National Restaurant Association has reached out to state and local government leaders with recommendations for keeping the still-ailing industry afloat.

The Association has sent a letter and a Blueprint for State and Local Restaurant Recovery to the National Governors Association, the United States Conference of Mayors and the National Council of State Legislators.

The letter suggests detailed steps that lawmakers can take at the state and local level. Among the recommendations:

Safeguard tax treatment to prevent any unforeseen liability of federal relief funds. “States and localities must ensure that any emergency relief funds in 2020 and 2021 are not taxed as income for the business,” the letter states. “This includes loans—forgiven or not—through the Paycheck Protection Program” as well as donations from individuals or third-party fundraisers.
Suspend state and local sales taxes on meals, prepared food and catering, including off-premise food sales.
Establish grants to help restaurants stay open, pay their bills and keep employees on the payroll.
Create hiring/rehiring tax incentives to encourage the hiring of the long-term unemployed, veterans and the formerly incarcerated as well as Americans who lost their jobs due to the pandemic.
Provide property tax relief that reflects the new economic reality of the COVID-19 era. “If a restaurant or retail location was closed or partially closed by government order and lost revenue, state and local governments should consider a corresponding reduction of property tax due,” the letter states.
Make alcohol-to-go a permanent option for restaurants. “Alcohol-to-go has been an important economic lifeline for restaurants with alcohol licenses during the pandemic,” the letter notes. The Association’s state-by-state polling found that 75 percent to 85 percent of consumers support legalization of alcohol-to-go.
Enact pandemic liability protections. The letter notes that restaurants have followed regulatory guidance from federal, state and local health authorities and should not be vulnerable to “frivolous lawsuits regarding COVID-19 infections.”
Streamline outdoor dining permit renewal and continue to expand outdoor dining access. “Starting in spring 2020, expanded outdoor dining served as a lifeline to many operators around the country,” the letter says. “According to Association research, upwards of 75 percent of full-service restaurant operators expanded their outdoor dining offerings last summer in response to the pandemic. As spring returns, operators need the opportunity to utilize and expand upon outdoor dining spaces as quickly and easily as possible.”

“State and local lawmakers have the chance to make a real difference in their local industry’s survival,” said Mike Whatley, the Association’s vice president for state affairs and grassroots advocacy, in the letter. “Restaurants are the largest employer in many states and cities, and decisive action on recovery by local leaders will be a critical part of our future. As states and localities begin new legislative sessions, we encourage lawmakers to take action that will help restaurants survive the winter and the pandemic.”

Federal aid for restaurants may still be coming and has President Joe Biden’s support. In addition to the president’s broader American Rescue Plan for recovery from the COVID-19 economy, Congress is also considering a bipartisan bill called the RESTAURANTS Act. That bill would provide $120 billion in relief to restaurant operators in the form of grants and other aid.

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