Small businesses adapt to survive the stresses of COVID-19
Shutdowns and a big reduction in foot traffic have challenged small businesses. Some have adapted to survive.
Kelly Marsh, For the Times Herald-Record
Pennsylvania’s business waiver process during last year’s COVID-19 shutdown was “flawed” and confusing, state Auditor General Timothy DeFoor said Tuesday.
But the review found no favoritism in granting waivers — even though “outside influences” affected how quickly businesses were given answers.
In a news conference in Harrisburg, DeFoor unveiled the 159-page report that covers March 2020, when Gov. Tom Wolf’s emergency declaration order, to June 2020, the date the last counties were moved into the state’s yellow reopening phase.
On March 19, 2020, Wolf ordered business that were not considered “life-sustaining” to close, but said they could seek a waiver from the state Department of Community and Economic Development to stay open.
Republican lawmakers and business owners criticized the agency’s handling of the process to allow certain businesses to remain open during the shutdown, saying the program was slow and lacked transparency.
And the audit found many of their claims to be valid.
“Our audit revealed a flawed process that provided inconsistent answers to business owners and caused confusion,” said DeFoor, whose office continued the audit begun by his predecessor Eugene DePasquale.
DeFoor said the waiver program was conducted “on the fly” and “unevenly administered,” and the audit found that Pennsylvania’s definition of a life-sustaining business was more restrictive than federal guidelines.
Changes and confusion
DCED received 42,280 waiver requests, DeFoor said, and granted about 7,000, but a third of the requests came from businesses that did not need to apply for a waiver, demonstrating the owners “were confused about the state’s guidance on life-sustaining businesses.”
Following Wolf’s March 19 order, DCED’s guidance changed nine times between March 21 and May 28, 2020, and the frequently-asked questions section offered to businesses was revised 14 times and the application was revised five times, DeFoor said.
State auditors reviewed 150 waiver applications and questioned the responses to 45 of them, or 30%.
The responses had “real-life consequences” for business owners who were told to close when they did not have to, DeFoor said.
Response times for 148 of the applications were also reviewed, and auditors found businesses received replies within one to 28 days with the average being 5.7 days.
“When the future of your business may be hanging by a thread, waiting for just a few days for an answer can feel like an eternity,” DeFoor said.
A fruits and vegetables business, for example, asked if it could remain open offering pick-up and delivery, and it was initially told a waiver was not required, but then was told it could not, DeFoor said.
DCED, he said, should have told the owner that only delivery was allowed.
Early applications were handled differently than later ones, the report found, after another layer of review was added by DCED. Also, businesses that used certain key words, such as “healthcare workers,” on their applications received “favorable, but questionable, responses,” a statement from DeFoor’s office said.
DeFoor said the audit did not find any cases of favoritism in deciding what businesses were allowed to stay open, but did determine that outside influences, such as legislators and lobbyists, did play a part in how quickly businesses received responses.
“Getting prompt answers shouldn’t depend on whether you have the right connections in Harrisburg, DeFoor said.
A response from DCED Secretary Dennis Davin to the audit was included in DeFoor’s report.
After Wolf’s order, the department said it shifted its focus from helping businesses expand to determining which businesses could stay open under his shutdown order.
“Outside of an emergency situation, a task this huge would have involved months of development, information technology planning, and testing, along with many layers of review,” Davin wrote.
“However, in this case, the entire business waiver program had to be developed literally overnight.”
Davin said about 90 state employees from various agencies were recruited to organize the process while still working from their homes using new equipment and unfamiliar software, as well as dealing with the pandemic in their personal lives.
“These dedicated employees truly redefined what it means to be public servants,” he wrote.
Davin wrote that the changing guidance was actually updated “as a process of continuous improvement” as new information became available.
Federal shutdown guidance was “advisory only,” Davin wrote, and no state was required to follow it.
“Each state was faced with determining whether, to what extent, and how to implement the federal guidance, and Pennsylvania appropriately chose to develop and implement state-specific criteria,” Davin wrote.
Davin insisted that DCED offered continuing updates on state websites and the waiver program “did not operate in a vacuum.”
His department worked with the Pennsylvania Emergency Management Agency and other agencies “to understand the rapidly changing landscape of the pandemic and the specific needs of industry sectors related to the business closure order together with the need for waivers for certain businesses.”
Findings and recommendations
The audit included five findings and 22 recommendations in case another shutdown order is needed in the future:
- Pennsylvanian’s shutdown order was more strict than federal guidance. Recommendation: Wolf’s office reevaluate the waiver process and consult with the federal government, lawmakers, agencies and industry groups on what constitutes life-sustaining businesses.
- DCED’s guidance on defining life-sustaining businesses kept changing during the waiver process. Recommendation: The state should limit changes or clearly highlight any changes.
- Deficiencies in the waiver program’s development resulted in a lack of accountability and transparency. Recommendation: The state should offer detailed instructions for applications and reasons for decisions.
- Questionable decisions on some waiver requests hurt businesses and risked public health. Recommendation: Decisions should be approved by a second reviewer before responses are given, a monitoring process should be created and a planning tool should be developed in evaluating applications.
- There were inconsistent responses to businesses in the same industry. Recommendation: Detailed evaluations should be made to ensure consistency within industries. Submitted applications should be reviewed if changes in guidance are made to also ensure consistency.
J.D. Prose is a reporter for the USA TODAY Network’s Pennsylvania State Capital Bureau. He can be reached at firstname.lastname@example.org.