Future Restaurant Aid in Limbo
U.S. Rep. Dean Phillips (D-Minn.) Jake Armour

Future Restaurant Aid in Limbo

U.S. Rep. Dean Phillips says prospects iffy as GOP members focus on fraud and workforce participation.

A growing sense in Congress that insufficient controls and unintended consequences are making a mockery of its efforts to soften the pandemic’s economic blows may doom desires to provide additional funds to the hard-hit restaurant industry, says U.S. Rep. Dean Phillips, a DFLer who represents Minnesota’s Third Congressional District.

In March, Congress allocated $28.6 billion for the Restaurant Revitalization Fund (RRF), with preferences for smaller, female, veteran, and “socially disadvantaged” businesses. It was partially designed, says Phillips, “for the folks shut out of the PPP,” also known as the Paycheck Protection Program. But the funds were quickly exhausted, with claims exceeding funding by $40 billion.

There are efforts underway to allocate additional funds, but they are hamstrung by a growing current of dis-ease in Congress, particularly among GOP members, says Phillips: “There’s an overwhelming sense on the GOP side of the aisle that the pandemic is over.” National worker shortages driven in part by generous unemployment compensation extenders and reports of fraud in the PPP program are damping efforts to sweeten the RRF. “We believe there was up to $40 billion of PPP fraud,” Phillips says. “People created shell companies, falsified documents.”

So, Phillips and Rep. Beth Van Duyne (R-TX) co-authored the Restaurant Revitalization Fairness Act, which puts its funds under Small Business Administration oversight to address fraud concerns. His hope is the legislation will be passed and it will improve the chances for additional RRF monies. “There’s a chance,” he says.

Some in the restaurant industry have leveled criticism that the RRF, which compensates operators for revenue losses relative to non-pandemic years, is biased against the restaurants most deserving of aid.

A restaurateur in Phillips’ district, who did not want to be named, told TCB, “If I shut my operations, negotiated forbearances with my landlords, and stayed in my house for 15 months, I would be eligible for millions. But since I struggled to keep my community fed, my employees paid and safe, and incurred substantial additional costs to do so, I’m eligible for a tiny fraction of that? That can’t be what Congress intended.”

Phillips acknowledged the RRF is “imperfect and needs to be improved,” but says right now the biggest challenge is just convincing Congress that there remains legitimate unmet need in the sector, which has also been among the most disproportionately hit by the worker shortage. Phillips notes that states have the wherewithal to end the federal unemployment add-ons before September 1, but that was at the discretion of Gov. Walz.

“I hear it all over my district,” Phillips says, “every enterprise is struggling to find people.”

A year ago, Phillips talked to TCB about bipartisan efforts to fix some of the problems with the Paycheck Protection Program.