By: Bryan P. Sears Daily Record Government Reporter June 7, 2022
The state’s top tax collector said efforts to get aid to businesses struggling to survive the early days of the pandemic may have been slowed by a paralyzing fear of fraud.
Comptroller Peter Franchot called for a quicker response in a future pandemic situation Tuesday. The comptroller heads a work group that is reviewing how state pandemic aid was spent.
“Here’s the problem: We are paralyzed in this country by this notion of fraud,” said Franchot. “We see a lot of (fraud) … but we’re paralyzed by it. Scared of our own shadows. We don’t want to give the money unless there is a 25-page application filled out in detail.”
The work group heard from business owners and advocates in the state’s hospitality industry about what worked and didn’t during the early days of the COVID-19 crisis. Maryland funneled hundreds of millions in aid directly to small businesses, including restaurants, breweries and hotels. Additional money was doled out from the state through local governments.
“I think that’s one of the major lessons of this experience,” said Franchot. “We’ve got to get the money in the pockets of the people who need it.”
Business owners and trade association representatives told the panel at its penultimate meeting that they welcomed the aid but that navigating the bureaucracy and sometimes even knowing what was available and from which governmental entity proved challenging at times.
Kevin Atticks, executive director of the Brewers Association of Maryland, said the grants were helpful but communication often lagged.
“While they were helpful, we sometimes hear this from members, it was months before (businesses) heard back about their grant and sometimes when they heard about their grant it had already been, the funds had been exhausted a month or two prior and they were only just getting letters,” he said.
Marshall Weston, president & CEO of the Restaurant Association of Maryland, said many restaurants found access to state aid passed through local governments to be uneven and confusing.
“Some jurisdictions had checks in local restaurant owners’ hands in days,” said Weston. “Others had a cumbersome bureaucratic process that delayed grant payments with lack of communication and as we learned, many small businesses were even discouraged from applying because they did not have the wherewithal to go through such a bureaucratic paperwork system.”
Minority and ethnic restaurants may have suffered disproportionately. Weston attributed the problems to language barriers, lack of understanding and awareness of the aid available and a lack of trust in government programs.
“This is clearly something that needs to be on our minds,” said Weston. “We understand there was a need for speed and the crisis management mode that we were all in. But far too many very small businesses with 15 or fewer employees, family businesses that were owned by minorities and ethnic restaurants, did not play a significant part in receiving these funds.
Weston declined to identify specific counties. Instead, he called Franchot and his panel to ask for reports from each jurisdiction.
Julie Verratti, co-founder of Denizens Brewing Company in Silver Spring, said the number of grants, many just for $5,000, often required time-consuming applications for each.
“Our monthly rent in one of our locations is $25,000 a month. It’s helpful,” said Verratti, who operates two locations. “I don’t want to say no thank you to $5,000 in grant funds, but the amount of time and effort it took to apply for each one of those grants — it would have been a much better program if it was just one grant, $100,000, apply for it once and then you do reporting afterwards.”
In addition to state funding, Verratti told the panel her brewery received “$700,000 to $800,000” in federal pandemic aid that was forgiven.
Verratti said she believed federal, state and local governments did their best in making aid available while balancing the need to guard against fraud with speedy delivery of support.
“As we get into less of an emergency state there needs to be a little more pressure on preventing fraud and less speed,” she said. “But that’s a tough balance to strike when you’re also getting phone calls from panicked business owners every day.”
In cases of fraud, Verratti said, the government “can always claw (money) back later.”