Miami Herald: As virus rages, S. Florida residents cling to government aid. What happens when it runs out?

With about one out of every nine Miami-Dade workers — and nearly one out of every six in Broward — still out of a job due to the coronavirus pandemic, a question lingers in South Florida: How long can the region stave off an even worse economic disaster?

Greater Miami ranks as one of the hardest hit metros in the country, thanks to its reliance on a tourism industry that has instantly dried up.

Yet the region seems to have avoided, so far, a more traumatic economic shock thanks to massive government intervention.

After a rough start, Florida’s unemployment system has come online to furnish tens of thousands of local workers with as much as $875 per week in unemployment insurance — the state’s standard $275, plus an extra $600 through the emergency U.S. CARES Act passed in March. Then there was the one-time $1,200 stimulus check Congress and the Trump administration signed off on for most U.S. residents.

Perhaps more importantly, Gov. Ron DeSantis has continued to extend a statewide moratorium on evictions and foreclosures, staving off an acute housing crisis.

But Florida’s unemployment insurance lasts only 12 weeks. And the extra $600 from Congress is set to expire July 31.

Then there is the added uncertainty of a virus that continues to rage throughout the state, and especially in South Florida — prompting the threat of more business closures that could cause further economic damage.

For economists and local officials alike, two things have become clear: There remains huge uncertainty about what comes next — and as a result, even more government help is needed.

“The extent of the recovery is going to be dictated by additional stimulus,” said Abbey Omodunbi, economist with PNC Financial Services Group. “State and local governments [are] under tremendous pressure, so additional stimulus is likely necessary to keep the recovery strong.”

Congress has yet to come to an agreement on additional economic relief in response to the pandemic.

The Democratic-controlled House of Representatives passed a $3 trillion relief bill in May, but officials say it has no chance of becoming law. That bill would extend increased unemployment benefits through January 2021, and includes another round of direct payments to Americans. For now it is largely viewed as a starting point for upcoming negotiations with Republicans.

The Republican-controlled Senate has not passed an additional coronavirus relief package, though Senate Majority Leader Mitch McConnell indicated he is open to direct cash payments for Americans making less than $40,000 and liability protection for businesses from coronavirus-related lawsuits.

“I can’t comfortably predict we’re going to come together and pass it unanimously like we did a few months ago — the atmosphere is becoming a bit more political than it was in March,” McConnell said. “But I think we will do something again. I think the country needs one last boost.”

Republicans are generally not in favor of keeping expanded unemployment benefits, arguing that the extra $600 per week on top of state benefits discourages people from finding work. The White House has not released a specific coronavirus relief plan, but is more likely to support another round of direct cash payments or more limited unemployment benefits rather than extending the $600-per-week benefit.

Miami-Dade leaders are not waiting to act. This week, the county announced a $25 million RISE small business relief program through the Dade County Federal Credit Union that is set to provide rent and other overhead relief to Miami-Dade small businesses.

County leaders also announced a new, $10 million rent relief program for tenants. Demand for the latter program is expected to be overwhelming, with 15,000 households set to apply, according to Commissioner Eileen Higgins. That number nearly matches Miami-Dade’s one-week total of workers newly filing for state and federal unemployment benefits for the week ending June 27, the most recent week for which data is available.

Higgins remains confident that the county has more room to act, pointing out it still has access to hundreds of millions of dollars in CARES Act funds. On Wednesday, county commissioners are expected to discuss next steps for deploying it.

“If the new rent program works, we can just add to it,” she said. “There’s no reason we can’t just keeping giving money to these pots if the programs prove effective.”

The cracks in the local economy have not necessarily grown worse; they’ve simply been there from the outset of the pandemic.

Months into the state’s unemployment relaunch, there remain at least 875,000 Florida workers who have had their unemployment claims processed, but have yet to receive payments.

Another set of workers have gotten through the system and been paid — but not the full amount they are entitled to, according to Daniel Rowinsky, an attorney with Legal Services of Miami.

Specifically, the state does not appear to be accurately processing some Pandemic Unemployment Assistance filings. Under the CARES Act, those workers not entitled to traditional unemployment benefits — like self-employed workers or independent contractors — were entitled to a minimum of $125 a week in PUA assistance.

Rowinsky says his office has been inundated with calls from workers saying they are not receiving any more than that. The Florida Department of Economic Opportunity did not respond to a request for comment on that issue.

Timothy S. Kingcade, managing shareholder of Miami-based Kingcade & Garcia, P.A., which represents clients throughout Florida facing Chapter 7 bankruptcy, said he did not have any more bankruptcy cases in June compared with June of 2019.

In other words, the credit industry is not putting any more pressure on customers — but not taking any off either.

Many clients, he said, are simply maxing-out credit cards to get by month to month.

In fact, says Richard Storfer, member of Fort Lauderdale-based firm Rice Pugatch Robinson Storfer & Cohen, PLLC, the credit industry appears to be going out of its way to work with customers to provide payment deferrals and other forms of relief.

But it can only continue to do that for so long, he said.

“I don’t know how long that can last,” he said. “I don’t know if they’re going to be willing to shelve defaults for 12 months. No one is talking timelines — everybody’s just playing it by ear and trying to read the room.”

Kingcade says there is potential for an avalanche of simultaneous bankruptcies and evictions, if the credit industry starts leaning into the former, and the moratorium on the latter is lifted.

“Even if you’ve now found a job, you now have to pay August’s rent, plus the four months of back rent you missed,” he said. “If you’ve been paying $1,000 a month, it’s going to be very difficult for you to come up with that money. And that’s not one person, that’s thousands of people down here. The demographics of this are sweeping.”

For Omodunbi, the economist, any barrier to borrowing more to bail out the economy is political, not economic. He points out that borrowing costs remain at ultra-low levels, so there is every reason to take advantage of them.

“Things like inflation may be a long-term concern,” he said. “The immediate concern should be to get us back to where we need to be.”

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