Mr. President, I again come to the floor today to highlight the ongoing needs of our small businesses in the gulf coast who were devastated by Hurricanes Katrina and Rita. In Louisiana alone, these disasters claimed 1,464 lives, destroyed…
Mr. President, I again come to the floor today to highlight the ongoing needs of our small businesses in the gulf coast who were devastated by Hurricanes Katrina and Rita. In Louisiana alone, these disasters claimed 1,464 lives, destroyed more than 200,000 homes and 18,000 businesses and inflicted $25 billion in uninsured losses. Many of my colleagues here in the Senate have been down to Louisiana and have seen firsthand the size and scope of the destruction.
The Congress has been very generous in providing billions of Federal recovery dollars as well as valuable Gulf Opportunity--GO--Zone tax incentives to help spur recovery in the region. These resources will be key in the recovery of the region but there are additional needs on the ground that still must be addressed. That is why I am proud to introduce a comprehensive package of three bills today--the Gulf Coast Back to Business Act of 2007, the Helping Our States Through Tourism Act of 2007, and the Work, Hope, and Opportunity for the Disaster Area Today Act of 2007. I believe these three bills provide substantive, commonsense solutions for addressing needs on the ground in the gulf coast. I am pleased that my colleague from Mississippi, Senator Lott, as well as Senator Kerry, chairman of the Senate Small Business and Entrepreneurship Committee, joined me in cosponsoring both the Gulf Coast Back to Business Act and the Helping Our States through Tourism Act. My friend Senator Lieberman, chairman of the Senate Homeland Security and Governmental Affairs Committee, also joined me by cosponsoring the Gulf Coast Back to Business Act. I appreciate my colleagues' support on these bills and hope that we continue to work in this bipartisan manner to provide real solutions for the gulf coast.
As you know, Katrina was the most destructive hurricane ever to hit the United States. The next month, in September, Hurricane Rita hit the Louisiana and Texas coast. It was the second most powerful hurricane ever to hit the United States, wreaking havoc on the southwestern part of my State and the east Texas coast. This one-two punch devastated Louisiana lives, communities and jobs, stretching from Cameron Parish in the west to Plaquemines Parish in the east.
We are now rebuilding our State and the wide variety of communities that were devastated by Rita and Katrina, areas representing a diverse mix of population, income and cultures. We hope to restore the region's uniqueness and its greatness. To do that, we need to rebuild our local economies now and far into the future.
My State estimates that there were 81,000 businesses in the Katrina and Rita disaster zones. As I mentioned, a total of 18,752 of these businesses were catastrophically destroyed. However, on a wider scale, according to the U.S. Chamber of Commerce, over 125,000 small- and medium-sized businesses in the gulf region were disrupted by Katrina and Rita. Many of these businesses have yet to resume operations
and others are struggling to survive. We will never succeed without these small businesses. They will be the key to the revitalization of the gulf coast.
After talking to the business leaders and small businesses in my State, there are three things that they need right now: immediate capital and their fair share of Federal recovery contracts, help in attracting more travel and tourism to the area, and tax relief, especially on some of the Gulf Opportunity--GO--Zone provisions which are set to expire.
For example, under current law, the SBA cannot disburse more than $10,000 for an approved disaster loan without showing collateral. This is to limit the loss to the SBA in the event that a loan defaults. However, this disbursement amount has not been increased since 1998 and these days, $10,000 is not enough to get a business up and running or to allow a homeowner to start making repairs. The Gulf Coast Back to Business Act increases this collateral requirement for Katrina and Rita disaster loans from $10,000 to $35,000.
To address the lack of access to capital for our businesses, this bill includes a provision to provide funds to Louisiana and Mississippi to help small businesses now. Not 3 months from now, but as quickly as possible. We are asking for $100 million so that businesses can have money they need for to repair, rebuild, and pay their employees until they get back up and running again. The States know what the needs of their affected businesses are and we want to provide them with this money so they can start helping businesses now. These funds would bolster existing State grant/loan programs and would help Louisiana and Mississippi reach out to more impacted businesses.
Many businesses and homeowners are also coming up on the end of their standard 1-year deferment of payment on principal and interest on their SBA disaster loans. For most disasters, 1 year is more than enough time for borrowers to get back on their feet. But for disasters on the scale of Katrina and Rita, 1 year came and went, with communities just now seeing gas stations open and some homeowners are just now returning to rebuild their homes. This is a unique situation and for French Quarter businesses, where tourism is down at least 60 percent from pre-Katrina levels, to require them to start making payments on a $50,000 loan is virtually impossible if there are no customers. Homeowners, too, are experiencing widespread uncertainty and I believe this current 1-year deferment requires serious reconsideration. That is why this bill gives borrowers an additional year to get their lives in order--allow residents to begin fixing their homes and allow businesses the time for economic activity to pick back up.
The Gulf Coast Back to Business Act also addresses the problem in which many of our local small businesses have been unable to obtain Federal recovery contracts. I understand that this is due to many reasons ranging from a lack of sufficient bonding to a lack of experience with contracts of these sizes and scope. That said, I know of countless local businesses with the right experience and personnel, yet they have had to settle for being a subcontractor on a contract some out-of-State company won. We appreciate out-of-State firms wanting to help our region recover, but if our local firms can do the work, they should get their fair share of these contracts. It is a no-brainer to let local firms rebuild their own communities but this has not happened on a wide scale in my State or across the impacted areas. This bill would fix that by designating the entire Katrina and Rita disaster area as a Historically Underutilized Business Zone. The expansion of this program to the devastated areas would help give our local small businesses a preference when they bid on Federal contracts. I should note that this proposal had bipartisan support in the 109th Congress and actually passed the Senate as part of the Fourth Emergency Supplemental Appropriations bill. However, despite the fact that this provision had widespread, bipartisan support from the gulf coast Senate delegation, it was stripped out in conference with the House of Representatives. So for the 110th Congress, I am pleased to re- introduce this provision in the Senate and to work closely with my colleagues to get our small businesses this vital help.
As I mentioned, following these disasters, about 18,000 businesses were catastrophically destroyed, many more economically impacted, and most still are struggling with the ongoing slowdown in travel and tourism to Louisiana. In terms of ongoing needs on the ground, the lack of tourism is stifling our full economic recovery, particularly the recovery of our small businesses in New Orleans. I do not think that people outside Louisiana know how vital tourism is to our economy. In 2004, tourism was the State of Louisiana's second largest industry-- employing 175,000 workers. The tourism industry also had a $9.9 billion economic impact in the State in 2004 and generated $600 million in State/local taxes. That is huge for our State and, by all indications, 2004 was a record year for tourism to the State and 2005 was on course to beat that. But then came Hurricanes Katrina and Rita, and the subsequent levee breaks, and tourism literally came to a grinding halt for the rest of the year. Travel and tourism picked up somewhat in 2006 but it has remained slow and has economically impacted our small businesses, many of which are dependent on the steady stream of revenue coming in from out-of-State tourists.
For example, according to the New Orleans Conventions and Visitors Bureau, Mardi Gras brings in about 700,000 tourists each year. Jazz Fest, which is a world-renowned music festival in New Orleans that happens each summer, usually draws half that--350,000 tourists. These tourists not only spend their time and money in New Orleans, but oftentimes travel around South Louisiana or even visit our friends next door in Mississippi. So in this respect, New Orleans is the gateway to tourism elsewhere in Louisiana and the rest of the gulf coast. For this reason, I believe it is important to not only spur travel/tourism to New Orleans but also to the rest of Louisiana and Mississippi as our smaller communities in these areas depend on tourism for their economic well-being.
Take Natchez, MS, for example. This historic town is full of beautiful antebellum homes and had a thriving business district pre- Katrina. It suffered minimal damage during the storm but now is struggling to get the word out that it is open for business. New Orleans is in much the same situation. Many parts of New Orleans, such as the Lower Ninth Ward and New Orleans East, do indeed have damaged houses and vacant businesses--as seen on television. But there are also parts of these communities which are slowly recovering and many parts of New Orleans, particularly the historic French Quarter, which survived Katrina are relatively unscathed. Despite that they are open and desperately need the revenue, businesses in the French Quarter are struggling to attract visitors.
With this mind, the Help Our States through Tourism Act, or HOST Act, which I am introducing as part of this legislative package, will provide significant assets to help our tourism sectors recover. In particular, this bill provides a total of $175 million for tourism marketing for the States of Louisiana and Mississippi. This pool of money would not only be used for the promotion of the States, but also to help communities rebuild their tourism and cultural assets, such as arts and music, which makes them a unique attraction for visitors.
The $175 million is also a wise investment for the Federal Government and not without precedent. In 2004, for every dollar spent on tourism in Mississippi, the State generated $12 in revenue. Louisiana was even better, generating $14 for every dollar spent on tourism that year. Also, when we talk about small business recovery, nothing helps our impacted small businesses more than having tourists return and spend money in these communities. In effect it works just as good as a grant but also helps the airline industry, our local restaurants and hotels, as well as the small businesses themselves. Furthermore, following September 11, Lower Manhattan was able to use supplemental Community Development Block Grant--CDBG--funds for tourism marketing. The State of Louisiana also recently used $28.5 million of supplemental CDBG funds for the ``Come Fall in Love With Louisiana All Over Again'' campaign. Given that Katrina and Rita were the first and third most-
costliest disasters in U.S. history, as well as the unprecedented media coverage on the destruction, these funds are badly needed to spread the word that our impacted communities are ready for our friends from around the country, and the world, to return and enjoy our unique culture, cuisine, and entertainment.
This bill also authorizes the U.S. Small Business Administration to provide Economic Injury Disaster Loans to tourism-dependent businesses in Mississippi and Louisiana that can demonstrate direct economic impacts from the post-Katrina and Rita tourism/travel slowdown. In talking to Federal agencies as well as our local small businesses, it is clear to me that no one believed that the economic impact would continue this long. Businesses also expected Federal/State assistance much sooner so many were left in a position of lacking revenue but waiting, and waiting, for the promised recovery funds to get into their hands. It has slowly come in the past year but now many businesses who waited months for Federal financial assistance, are now struggling to stay in business with little/no customer base. These Economic Injury Disaster Loans would help our tourism-dependent businesses stay afloat since the economic injury, as well as the tourism slowdown, has lasted much longer than most experts expected.
The HOST Act also would establish a $2.5 million fund in the Federal Treasury for Government agencies to hold conventions, workshops, and other events in the Katrina/Rita Disaster Area. Federal workers, like other convention visitors, bring in valuable revenue to our communities and pre-Katrina, New Orleans was one of the top convention destinations in the country. Post-Katrina, Federal agencies are already conducting activities and holding events in the disaster areas, but this fund would be separate of the normal administrative funds normally used for these purposes. Since this would be a separate pool of money that agencies could access, it would encourage more Federal agencies to hold their big conventions/events in the gulf coast. In the scheme of the billions allocated for recovery in the gulf coast, $2.5 million is not a large sum of money, but for Federal agencies looking to hold large events, it would serve as incentive to choose New Orleans or Mobile or Natchez for their next event. This amount of money is also not large enough to severely impact other destinations such as Las Vegas or San Francisco, but would be just enough funds to, hopefully, steer a couple of large conventions in our direction.
I am also pleased to introduce the Work, Hope, and Opportunity for the Disaster Area Today Act of 2007 to help small businesses in the hardest hit areas of the Gulf Opportunity--GO--Zone as they work to succeed in a very challenging environment. We have made great progress in rebuilding our communities and our local economies in the gulf coast. The Gulf Opportunity Zone Act of 2005 has produced needed investment in housing and provided businesses with important tax incentives to invest in new plant and equipment as part of their rebuilding. The Federal Government has made funding available to rebuild our levees. At the end of the last Congress, we passed the Domenici-Landrieu Outer Continental Shelf Revenue sharing bill that Louisiana will use to restore our wetlands as an additional barrier of hurricane protection.
However, we still face many challenges that are making it difficult for our small businesses. In Louisiana, as I mentioned, tourism--one of our most important industries--is down. We have had 22 percent fewer visitors and those that are visiting are spending 35 percent less money than before the storm. The city of New Orleans has lost more than half of its population. On top of this, labor costs and insurance premiums have skyrocketed, making it more expensive for businesses to keep paying the workers they have.
The combination of these various factors have hit our small businesses hard. They used the tax benefits of the Gulf Opportunity Zone Act to invest and rebuild, and they are open for business. But they are losing money because of downturn in tourism and they cannot afford to do that for much longer. I am hopeful that the HOST Act will address many of these needs but additional assistance is needed.
The Work, Hope, and Opportunity for the Disaster Area Today Act is a package of short-term tax breaks that will help put money in the hands of small businesses immediately, as well as extend tax breaks that already exist in the GO Zone. The main tax provision is a wage tax cut for employers. Small employers in the most heavily hit areas of the GO Zone--defined as those parishes and counties that experienced 60 percent or higher housing damage--will be eligible for a tax credit in the amount of FICA taxes they paid on up to $15,000 in salary per employee. This would lower employer tax burdens immediately, leaving them more money in hand as an offset to the losses that they are experiencing.
My bill also contains a bonus business meals and entertainment deduction to encourage business travel to the GO Zone. Under current law, businesses can only deduct up to 50 percent of meals and entertainment expenses. The Work, Hope, and Opportunity Act would allow a full deduction for these expenses if they are incurred in the areas of the GO Zone that need it the most. This will bring more conventions, meetings and conferences to the Gulf.
We must also extend some of the expiring provisions in the GO Zone Act. For example, my legislation will extend the special small business Section 179 expensing that is available in the gulf coast. Small businesses in the rest of the country can deduct up to $112,000 in 2007 of the cost of investments they make in their businesses such as computers and software, or new equipment and machinery. GO Zone small businesses can deduct an additional $100,000 for these investments. This special GO Zone benefit, however, will expire at the end of this year. The Work, Hope, and Opportunity bill will extend this much needed assistance until 2010. It will also extend the availability of the Work Opportunity Tax Credit for Katrina employees and the special 15-year depreciation schedule for restaurants, retail, and other leasehold property for the GO Zone.
In introducing this comprehensive legislative package today, I am hopeful that it sends the signal to gulf coast residents and businesses that Congress has not forgotten about them. Congress made great strides during the 109th Congress to help disaster victims, but that does not mean we should just write off recurring problems to the responsibility of States or disaster victims themselves. There are still ongoing needs in the gulf coast and I believe the 110th Congress should address these needs. I look forward to working closely with my colleagues on both sides of the aisle to provide substantive and lasting solutions for our small businesses.
I urge my colleagues to support these important pieces of legislation and ask unanimous consent that the text of the three bills be printed in the Record.