Governor Greg Abbott made a conscious decision to not order restaurants and bars closed in the state of Texas like other states, stating that closing bars and eateries would drive panic and complete societal breakdown That however has not stopped Harris County and the City of Houston from ordering the restaurants and bars closed in their jurisdiction.
What is not factored into to these decisions is the economic carnage that will be levied against these businesses. While eateries can make up some of the lost revenue with takeout and deliveries, bars, on the other hand, are going to see a complete reduction in revenue without the equivalent reduction in rent, facilities and licensing fees, tax liabilities and other fixed costs. Likewise, those in the service industry will be cut off from their employment and will be struggling to come up with ways to cover their March 2020 expenses.
The pain can be equally felt in the travel and hospitality industry, where up to the start of the pandemic airlines were booming and had a pilot shortage, only to see the bottom completely fall out. Airlines have gone from making record profits to requiring government backed bailouts in a matter of two weeks. And pilots working for domestic carriers are now encouraged to take voluntary time off to prevent massive mandatory furloughs like those working for foreign carriers have been subjected to.
From top to bottom COVID-19, a.k.a., the Coronavirus, is causing an economic meltdown of the travel, hospitality, service, and entertainment industries greatly affecting livelihoods in Houston and everywhere else. From business owners to those who invested heavily in training such as pilots, this could lead to a great financial burden. A shrunken GDP that may be unrecoverable in the near term is coming, with a lot of this damage credited to not the virus but the economic prohibition put into place as a response.
What reduction in tax, fee, and regulatory burdens are these government agencies going to grant? While the airlines will likely receive a bailout, what about the small business owners whose businesses were ordered closed by no fault of their own? Are they going to receive a reprieve of property tax requirements? Are they going to get sales tax waivers to help restore their balance sheets? Are their landlords going to be given a bailout on their financial requirements? If it isn’t waving of taxes and fees but cash payouts, who is going to be responsible? The taxpayer?
These are questions that should have been asked before Houston, as well as other cites, counties and states, committed the knee-jerk reaction of shutting down restaurants and bars. Governor Abbott clearly weighed the consequences and even factored in the social breakdown caused by these closures. It should be noted that keeping restaurants open alleviates the supply chain mess from grocery stores hit with panic buying. Also with the economy structured so heavily in the aforementioned industries, the longer they are disrupted, the greater chance the United States will enter a recession that could have far greater consequence than the COVID-19 virus could itself unleash.