Leah Pappas Porner:
So we'll kick off our webinar. I'm Leah Pappas Porner with the Calfee firm, and with me today is my partner, Josh Sanders, and State Senator Matt Huffman. Thank you for all that are joined today. The format for the seminar will be that all the participants will be on mute. Use the question and answer icon to post any questions, and Josh and I will field them for you and try to get them to Senator Huffman for some questions. And we'll wrap up closer to the 30 minute mark as well.
Leah Pappas Porner:
So I'll kick it off by thanking Senator Huffman for joining us today, we really appreciate your time and willingness to participate. Many of our clients are asking questions about the State of Ohio's economy, when will we reopen, what will the general assembly do, all those questions. So thank you Senator for joining us, and I will kick it over to Josh to lead us off.
Josh Sanders:
Yeah. Well, good morning everybody and yes, thank you Senator. Questions are already starting to come in, and not surprisingly the first one is about reopening. It says, "The Governor has announced that he's developing a phased in approach to reopening, sounds like we'll hear about on Monday, and how do you see the legislature working to support such a plan, or do you see the general assembly working on a different approach?"
Matt Huffman:
Well, first of all I want to thank Josh and Leah and Maggie for putting this together and being proactive about it. There are some other firms who have actually asked me to do this, but they were the first, so I guess the Calfee lobbyists are always first in line when it comes to being proactive and getting things done, so I really appreciate them asking me and including me. I don't think it's a practical matter that, especially when you have a scattered non-meeting general assembly, that the general assembly can come up with a plan. And frankly I think it's difficult for any government central planning authority to come up with a specific plan.
Matt Huffman:
There are so many different circumstances for businesses in different parts of the state that the requests and things that are coming in, the questions, it almost becomes white noise because there's so much of it. So I think the Governor, as I understand it, will have some announcements on Monday about the kind of approach, and I've had some conversations with some of the epidemiologists at Ohio State and Cleveland Clinic about what that may look like, but whatever plan comes out I think is going to continue to change based on additional information that comes in in the next week, in the next month, in the next several weeks.
Josh Sanders:
Well, along those lines, are there measures that business owners should be taking now to help ensure that they can be phased in as quickly as possible?
Matt Huffman:
Well, yeah, I mean I think, and I'm a small business owner myself, and our law firm is an essential law firm. We have closed the door and allowed our employees who didn't want us to come to work to not work, and some of them chose to do that, some of them chose to stay, but what I would suggest is the same thing you would do with other issues or problems that you may have in your business, which is plan for the best opportunities.
Matt Huffman:
This is Matt Huffman's personal opinion, and there are other people who are smarter than me thinking this, so maybe you want to put some stock into it, but not because I'm saying it. I think we're beginning to discover that the coronavirus is not as dangerous, at least not as dangerous, it may be as contagious as many people thought. And you can read articles in The Wall Street Journal or The Hill, or just look at the statistics here in the State of Ohio. So I think as people begin to turn around and say, "Wow, this isn't as bad as we thought," we may get a quicker turnaround to opening.
Matt Huffman:
Now, the difference in that may be large gatherings, church festivals, County fairs, Ohio State football games, things like that, but I think the best thing you can do to prepare is assume that things are going to come back, at least by the time of the schedule that the Governor announces on Monday, and perhaps sooner, as more information... statement the Governor made to me yesterday was, "We're interested in data, and if data shows that we should be doing things more quickly, we want to see it." And I think that data is there now, and we talked a little bit about it yesterday.
Josh Sanders:
And are there things that business owners should be doing to ensure that with the reopening, it does not create another peak in the outbreak?
Matt Huffman:
Well, right, I can go through the litany of things that we've all heard with the hand washing, and social distancing, and clean surfaces, and doing all of those things. Those are probably always good ideas for all sorts of problems and things like that. When I go into a meeting, I think the last meeting I went in with some of the Calfee lawyers a few months ago, you feel like as the politician you're supposed to go around and shake everybody's hand, and I usually look at somebody and say, "Is it okay if I don't come around and shake everybody's hand? Just because that's five minutes worth of handshaking that we can get on with the meeting."
Matt Huffman:
So we can change some things that don't need to get done. Jerry Seinfeld was right when you don't have to kiss everybody you see in your building because you live in the same building. [Inaudible 00:06:44] all this stuff anyway? So I think that all of those things can happen, but they're probably things that are going to take a cultural change anyway, and maybe a cultural change for the better.
Josh Sanders:
Mm-hmm (affirmative). Getting quite a few questions on if you, and again, this is obviously your best estimate, you see it as a general kind of opening with specific guidelines, or more sector by sector, industry by industry. You know, dental practice, yes you can open, no you can't, salons, yes you can, no you can't, or more general.
Matt Huffman:
As I mentioned I had two conversations, one with the Ohio State doctors and one with the Cleveland Clinic doctors. And what I've been able to glean from that in conversations with the Governor's office is that there are three tiers to this, the first tier being manufacturers or businesses that don't have customers, so you can control your employees and who comes in and where they go. And the second is businesses that have customers, but don't have a lot of traffic necessarily, maybe a jewelry store or a gift shop. And then the third tier are restaurants and places like that. After that, then we're talking about large public gatherings like parades and festivals and things like that.
Matt Huffman:
So the problem with that is that's scoped out, at least by the doctors to me last week, is that means restaurants don't fully open until mid to late June. And I just don't think that's acceptable given what we now know about the virus, and I'm urging the Governor to do something different. But the second part of your question, Josh, I don't think that the state government can really administer this. You say there are guidelines and restrictions, and it's a little bit like education policy when you say, "Hey, we're going to have this guideline for schools." And it works for a school of 4,000 in suburban Cleveland, but for a school of 400 in rural Western Ohio, it makes no sense. So I'm urging the governor to issue general guidelines, but allow the real application of that to be done on a local level by local public health authorities.
Josh Sanders:
Moving to the budget side of things. So we've seen the April 10th report from the office of budget management, we know tax revenues are down well below estimates. What type of measures do you see as being on the table to ensure adequate revenue to support essential services?
Matt Huffman:
Well, I say to first question, before we get to adequate revenue, is to begin thinking about where were we spending money that we really didn't have to be spending money? And there are a lot of places, as anyone knows, whether it's your personal life or your business, and certainly true in government, if you have money, extra money, you tend to spend it on things that maybe you wouldn't ordinarily. Let's go on a nicer vacation or buy a better Sea-Doo, or whatever people do with their money. And we do that in government too.
Matt Huffman:
So as an example, in the education department, one of the things, and this is just an example, one of the things is that we budgeted $10 million a year for bonuses for schools for the third grade reading guarantee. So if you did really well, your school got extra money. That may or may not be a good idea policy-wise in the first place, but the point is, we're not given the tests this year, so there's no reason, obviously, to have the bonus. Now, some people in schools will say, "Well, give us the money anyway, because we would have done well."
Matt Huffman:
But there are multiple things like that as it relates to teacher evaluations, testing, a whole number of things that weren't done because we didn't have school the last two or three months. Those are specific line items, and there are many, many other things. My personal issue is, not personal, but one of the things I had tried to do something about in the budget last year was a program called Step Up to Quality, which would have spent about an extra $600 million in the next three years out of the temporary aid to needy family budget line item. And I lost that battle last June, I suspect I will not lose it now because that money is needed for needy families and not to pay daycare providers for the work that essentially they were already doing anyway, to pay them more.
Matt Huffman:
There are a lot of places like that in the budget that we can take out. So now the question, second part of your question, is the revenue, and we can't have the revenue we need while the economy is shuttered, or largely shuttered, and it won't come back. Even if we did all of this on May 1st, we're going to have a devastating revenue situation. So those are things that you really have to get out the pencil and the green eyeshade and begin seeing what are the things that we really need to pay for based on the revenue that we have, but there isn't going to be the revenue until we open up the account.
Josh Sanders:
Mm-hmm (affirmative). Well, kind of, I guess, along the same lines, obviously the speaker came out with his announcement yesterday about coming back. When the Senate comes back, what do you see maybe tackling early on, or what do you see on your plates going forward?
Matt Huffman:
Yeah, there will be a series of initiatives, some of that has to do with how money gets spent that's coming to the state government from the federal government, some of it is specifically for schools, some for businesses, some of it is just discretionary for governors to spend. So we do have almost a mini budget situation going on right now. But there are several other issues, some of them are specific to industries. I had a Zoom call yesterday with the Ohio Hotel Association, and as you would all suspect, they are having a devastating situation right now, and there are some provisions we have regarding non-recourse mortgages, unknown to me until yesterday that Ohio and Michigan are the only folks who have this law, which may be helpful in dealing with some of the language they say may need to be changed.
Matt Huffman:
So we're going to look at that. The President's asked me to talk about liability limitations for COVID-19, and how that's affecting businesses. Is that an immunity? Is it a stricter standard? So that's one of the things specifically that I'm dealing with. And so we're going to have a real, I hate to use the word MBR, or the acronym MBR, but that's really what it's going to amount to being. And whether that happens in may or June, I think it has to happen fairly soon, and we'll be going to the same process. So pay your lobbyists more than you were, because they are working twice as hard, is the message here. They didn't tell me to say that.
Leah Pappas Porner:
Boy, that's great news to hear.
Josh Sanders:
Yeah. Kind of going back to the business owner front, so a lot of businesses have obviously lost employees, even perishable inventories while closed. It's going to take a big effort to reopen, and specifically the need to access capital. As federal programs run dry, and without further action by Congress, obviously we had asked yesterday, but if nothing else, is there something the state can do to help business access capital so they can reopen more quickly?
Matt Huffman:
Well, I think the best thing that the state can do is, and I'm not avoiding your question, but before we get to that, the best thing that the state can do is remove as many restrictions as are practical to operating. Our government in particular moves slowly and moves awkwardly, and we designed it that way because we care about our Liberty. And so government [inaudible 00:16:15] to protect the rights of individuals and entities, but allow those individuals and entities to operate freely, again, as long as they're not effecting the rights of other people.
Matt Huffman:
So I think that's the first thing that the state government can do. The access to capital really needs to come from our financial institutions, and one of the problems with that, as I'm sure many of your clients know, is the liquidity problem. Essentially if the banks don't have the cash, there's no money to lend. So the quicker that, again, go back to the first promise, the quicker that we can get back to operating, the more liquid people become, the more the banks are able to do things. So that's what I think state government can do.
Josh Sanders:
So a lot of the business owners and employees are at home now with children. If businesses are going to reopen, we will need to address how we care for children and childcare. Obviously schools have now been announced to be closed. How do you see the state reacting on that front?
Matt Huffman:
Well, I don't think the state is, or any government really, is in a position to, on a massive scale, take care of children. I talked about this Step Up to Quality issue, and I'll just talk about that briefly. This was something that was put into law in 2012 that said all daycare centers that receive public funds must be part of the Step Up to Quality system and must have three gold stars out of five in order to access the money. Well, a couple of things happened. A number of daycare centers, especially daycare centers that don't have all of the facilities and the staffing and the computers, and they don't send their people there, they're essentially babysitters who people take to the local church, things like that. They've simply decided, "We're not going to do it anymore." So a lot of daycare centers are closing, especially for the folks who have the least amount of money.
Matt Huffman:
A number of other daycare centers that have a small percentage of folks, kids who are paid for by the government, they simply said, "Well, we're not going to do all that extra stuff. We're not going to make sure that we have a child psychologist on board, or buy extra computers, or et cetera, et cetera, so that we can have three stars or four stars, because our parents don't care about that. They just want to bring it here because this is the church they go to, and so we're not going to have that extra 10% of kids here because our parents don't want to pay extra to get all of that."
Matt Huffman:
And so the, again, unintended consequences of government action are, we have less available daycare as a result of the Step Up to Quality program. So I think, we're essentially in the summer months, and the summer months are going to last five months instead of three months for the school year. But for those who still have need for daycare, and I think has to do, not overly regulate the business. Obviously we want children to be safe, things like that, but we can't overregulate it and put people out of business, which is I think what we did with the Step Up to Quality program,
Josh Sanders:
Couple more here, I know we're running out of time. So one is, what else can the general assembly, or what else do you see as general assembly doing to support institutions so they can reopen safely and smoothly. I'll brag about one of your ideas that I know is out there, is on the liquor permit aspect, and obviously a lot of establishment can't be open right now and they shouldn't be forced to pay the full amount of the expensive permit. But are other ideas out there like that to help businesses get back into being reopened?
Matt Huffman:
Yeah, I guess I'll put in my usual plug whenever I'm talking to a group is, legislators don't know everything, that's not a shock to a lot of people. We get our ideas from people like Josh and Leah, and they bring these things to us and we say, "Hey, yeah, that's a good idea." The idea about, I don't think liquor permit holders should be paying a fee to the state to have a permit when the state's prohibiting them from selling liquor, that came from one of my buddies who owns a restaurant locally, not from anybody in Columbus.
Matt Huffman:
So there's a lot of those kinds, and so if there are specific things, my conversation yesterday, if a hotel has to pay a particular fee for operating an overnight establishment to the city of Columbus, but they can't, or they're closed down or substantially closed down, that money should not only not have to be paid, it should be refunded. So again, this is a lot of amendments, and there will probably only be one bill, like a budget bill. So those ideas should be coming as soon as possible. And again, I anticipate some sort of late May early June action on that kind of bill.
Josh Sanders:
Great. I have two more here if we can get to them.
Matt Huffman:
Yeah, sure.
Josh Sanders:
One is that it's estimated that Ohio will receive over 4.5 billion from the CARES Act. What efforts are the general assembly going to need to make to monitor and evaluate the federal funding?
Matt Huffman:
Well, it's a little like the folks right now who are part applying for the PPP. There are people that get it, and because they qualify, and now we find out that, well maybe some people qualify, but should they really have it? And that's true with the government program, and the fact that this is going to be administered amidst a crisis, and so quickly, means that there is going to be abuses in this program. So we're going to set up, whatever the program we're going to say, this is available, we're going to get the money out to folks, it's going to help some folks. Some other people who should get the money won't get it, and there will be an insight next year about, do we continue this program or that program?
Matt Huffman:
It's very difficult for any government in a short period of time to do true due diligence on these things, because we want to help people, and the regulation I just spoke about, about not over-regulating, is also what prevents abuses. So I think we'll probably end up distributing a lot of money, because it's there, that's what governments do. If we have money, we spend it, and do the best we can to make sure that it's not abused.
Josh Sanders:
Mm-hmm (affirmative). And finally, have you heard of any issues about supply chain blockages due to cross border issues?
Matt Huffman:
No. I mean, personally I haven't heard anything like that at all. I don't know necessarily that I'd be the first person in the information stream, but I couldn't speak to that.
Josh Sanders:
Okay. Well, thank you. I know we're right up on our 9:30, I'll turn it back to Leah.
Leah Pappas Porner:
Senator, thanks for the opportunity to spend some time with you. We'd like to close with your reaction to your constituency. What's going on in your district, events that have happened. The state is very diverse in its urban and rural settings and the participants that are listening today are from all over the state, but many are from primarily in the Columbus area. So you being up in the better corner of the state of Ohio, in your opinion, give us a little feedback about the events and what's it like in your district right now?
Matt Huffman:
Sure. Up in the flat lands where I live, it is substantially different. I will tell you that this is just one of the, I represent all of part of seven counties, and Allen County in Lima, it's a little different than the other six. We do have an urban center, but in Mercer County, for example, Mercer County, if you look on a map, up against the Indiana border, it almost always will be the best County in the State in terms of unemployment. Before this, the unemployment rate was about 1.8%, which essentially means everybody who wants a job is working. And the schools, there's usually three or four of their school districts that are in the top 20 in the state, and they're pretty independent folks. I think if somebody tried to build a windmill, there might be pitchforks and knives and all that sort of thing coming out. We've had lots of windmill discussions I know, but they have them just to the North and Van Wert and Paulding County and things like that.
Matt Huffman:
Those folks, right now there's about 41,000 people who live in Mercer County. There are a total of four known COVID-19 cases. And I think they had tested, and I think as we all know now, a lot more people have COVID-19, we don't know because they're asymptomatic and it's the devastating result that we thought initially. And they're very frustrated because they don't think that what we've done is necessary where they live. They have a very proactive chamber of commerce that is going to all of their business, they have a lot of supplies, folks who supply Honda and Ford, et cetera, with automobile parts. They're all ready to go, and everyone's kind of sitting around on their hands saying, "They won't let us work."
Matt Huffman:
One of the high schools had an event with all their graduating seniors where they all took pictures of them together with all the parents there and kind of shrugging your shoulders like, "If they want to come and arrest us, I guess they can." So that's not good for citizens to have that mindset about what the law is. And that's not just true for Mercer County, it's true for a lot of other places that are in this part of the state. I gave some statistics before for one of the news media. My daughter lives in Battery Park in Manhattan, and she and her husband are in their two bedroom apartment working from home, and they go to the bodega around the corner, and they don't get around much, that's about it.
Matt Huffman:
Well, Manhattan Island is 23 square miles and there's 8 million people who live on it. That's different than Franklin County which is 540 square miles and has a million, or a million two, something like that. And in Western Ohio, which has, if you count up the three Senate districts, mine and Dave Burke's and Rob McCauley's, that's 20 times bigger than Franklin County, and we have the same number of people. So it's just not the same, and that's why I've encouraged the governor to not treat it the same. And I've seen that approach also being taken now actually by the governor in New York, Florida, and some other places. So hopefully that will be part of the announcement on Monday.
Matt Huffman:
Our guys around here, manufacturers are ready to go. They got their plastic screens up, they got people six feet apart. We have to be careful not to overregulate that because one of my guys who supplies to Honda said, "Look, I can operate at 70 or 80% capacity for a few months, but I can't operate at 50% capacity. If that's what we're doing, I'm going to shut down." The suppliers to Honda shut down, that means Honda's not making cars in Marysville, and if they're making them in Monterrey, Mexico, someplace like that, that's real bad for the State of Ohio. I mean, if mom and pop restaurants are going to shut down, it's a tragedy for them and their family, but if the automobile supply chain breaks down, we are all in very serious trouble.
Matt Huffman:
I didn't mean to close like that, but that's just the facts.
Josh Sanders:
Yep.
Leah Pappas Porner:
The diversity of the state is really one of the issues that is being discussed, and it's why we asked the question. Because we're hearing it from our client base, we're hearing it from other legislators around the state, so thank you for sharing that information, and thank you for being our star of our webinar today, we really appreciate it. For all of you that are attending and watching, thank you. Hope everyone in your family stays safe, and really look forward to seeing everyone at the State House very soon. Josh, thanks for leading us through the questions. Senator, enjoy the weekend, happy Friday, hope to see you soon in Columbus. Thank you so much everyone, stay safe.
Matt Huffman:
Yeah, me too. Thanks everyone. We'll see you.
Josh Sanders:
Bye.
Leah Pappas Porner:
Thank you.
Matt Huffman:
Take care.