Vermont arts organizations face an “existential threat.”
That’s what Catamount Arts executive director Jody Fried told lawmakers on Wednesday.
Fried warned that two-thirds of the state’s creative sector could close permanently without additional state and federal aid.
“The impact on Vermont and the ripple effect would be huge,” said Fried, who testified before the House Commerce and Economic Development Committee and then participated in a performing arts roundtable discussion with Congressman Peter Welch.
It’s no exaggeration.
The coronavirus crisis has shut down Vermont’s $123 million arts and culture industry and the 40,000 jobs it creates.
Facing a lengthy downturn, those organizations will look to the Paycheck Protection Act and CARES Act to deliver relief, until pandemic restrictions are lifted and revenue generating events like concerts, festivals, fairs and performances are allowed to resume.
The Paycheck Protection Program was designed to keep people working during the COVID-19 pandemic.
Good idea, but not every business is open.
The PPP program — which provides short-term payroll support through June 30 — doesn’t address the needs of arts organizations that remain closed under Vermont’s stay-at-home order.
That includes Catamount Arts, which shut down on March 15.
“We received a PPP loan. It’s sitting in a savings account because we haven’t been unable to bring any of the staff back in a meaningful way,” said Fried.
Now Congress is working to make PPP more flexible, to help struggling businesses stay alive.
Changes would extend the program through Dec. 31 and eliminate payroll spending requirements, allowing borrowers to put more PPP money towards operating costs like utilities, mortgage or rent.
That would permit arts organizations — particularly those with facilities — to pay their bills.
“The larger arts organizations that are sitting on infrastructure, like arts centers or theaters, are carrying significant fixed costs,” Fried said. “We laid off our entire staff [and still] our run rate on a monthly basis is about $26,000, and $18,000 of that is fixed. That’s with the arts center physically closed and us just maintaining our debt service, our insurance, our utilities, the basic things that you have to do to keep your organization going.”
Modified PPP is not enough.
Catamount Arts will need additional funds to survive an extended downturn. Arts organizations could face a two-year wait before a vaccine is developed, restrictions are lifted, acts resume touring, and audiences return to concerts, festivals and shows.
“The PPP we have would cover about three months in terms of our payroll,” Fried said. “It’s not going to replace what we’ve lost in terms of our revenue stream. So it’s a piece of the solution, but it’s not going to be the entire solution.”
The federal CARES Act will be another piece of the puzzle.
The Vermont legislature is in the early stages of creating a framework to distribute $400 million in CARES Act funds.
It’s unclear if PPP recipients will be eligible for the CARES Act. Gov. Phil Scott’s administration has recommended against double dipping, but representatives of hard hit industries have testified about the need for broad based aid.
The industry testimony has been convincing.
“The more I hear, the more concerned I become,” said House Commerce and Economic Development Committee Vice Chair Rep. Mike Marcotte, R-Newport.
Pointing to the number of small businesses in need of combined PPP and CARES Act funds, Marcotte said, “If we can make sure some of this money gets into their pockets and keeps them going, that’s what I think we should do.”
Rep. Welch agreed.
During Wednesday’s roundtable, he said arts organizations will be “among the last to open” and what they need is “cash to get through this period where [they] are not able to do performances because [they] are complying with the health requirements.”
He urged those in the arts and culture sector to make their case in Montpelier.
“What is very clear is that your particular circumstances are different even than the restaurants. The restaurant and tourism industry has been really hammered. But you guys can’t function unless you can have full capacity, and people are not going to go to a theater for a while,” Welch said. “You’ve got to advocate for a plan that meets the reality of your situation — and your reality is an 18 to 24 month window.”