As we begin 2021, there are a number of tough issues and opportunities for the club community at the local, state and federal levels. While the development and approval of multiple vaccines for COVID-19 occurred much faster than some believed possible, mass inoculations of the general public are proving to be much slower. Best estimates look to the spring before any reasonable level of uptake of a vaccine by the public. This, no doubt, will continue to affect clubs around the country who are facing varying levels of restrictions on their operations. City clubs have been hit particularly hard by the pandemic with remote working in most industries, fewer people are commuting and as a result fewer members are visiting their clubs. That’s why the National Club Association (NCA) put together a letter to House and Senate leadership highlighting their plight, which was signed by more than 40 clubs from across the country.
The issues surrounding COVID-19 will continue to dominate discussions in Washington and state capitals, but there are other issues certain to come up that will affect clubs. In the spring of 2020, NCA published a State Legislative Response Manual for clubs in anticipation of increased activity at the state and local level. Some of the key points in the manual are for clubs to form coalitions by reaching out to other clubs to coordinate efforts, developing a compelling message and deploying resources available to make your case to policymakers. Those resources don’t need to be financial in nature; it could be email campaigns from employees and members who are willing to engage with their representatives to make their support or opposition known. If you haven’t downloaded the manual, I urge you to visit NCA’s website (nationalclub.org/insight/publications) and do so. It has foundational knowledge and links to every state’s governor and state legislature to get you started on making a plan.
Property taxes are likely to be a hot topic as municipalities and states look for revenue to fill the holes left by COVID-19. Indeed, several states were heading in that direction prior to the pandemic. States, as well as the federal government, are also making or already made moves to increase minimum wages, which will impact the budgets of most clubs to some degree. Other revenue sources states may pursue are taxes on dues or initiation fees, though we won’t know the landscape until February after most state legislatures reconvene.
Changes Under the Biden Administration
NCA is assessing where and how policies will shift from a regulatory standpoint during a Biden presidency. The nomination announcements for various Cabinet posts have given us better insights on the areas of focus for the incoming administration, and it’s fair to say there will be dramatic shifts in approach on the environment and labor issues. President Biden has announced former Secretary of State John Kerry as Climate Czar; and in one of his first acts as President rejoined the Paris Climate Agreement and to elevate climate to the national security team. We could see revisions to the Navigable Waters Protection rule formerly known as Waters of the United States (WOTUS), which many believe was weakened by the Trump Environmental Protection Agency (EPA). It’s also possible rules surrounding the use of pesticides, herbicides and fungicides could be revisited in some form.
Labor issues also will be shifting significantly and there may be revisions of many of the policies adopted by the Trump administration in the areas of independent contractor status and worker classification, shifts in National Labor Relations Board decisions and many others. While much of the labor policies President Biden campaigned on would require legislation to pass Congress, such as the business-opposed Protecting the Right to Organize (PRO) Act, the potential for passage of these policies is dependent on the ability of leadership to pass them with a much narrower majority for Democrats in the House of Representatives and a 50-50 split in the Senate. The same holds true for an increase in the federal minimum wage and paid time off. President Biden has already announced plans to raise the minimum wage—which hasn’t been increased since 2009—to $15 per hour. Many believe it is long overdue for an increase.
Advocacy in 2021
NCA also will be looking at opportunities in 2021. We will continue our work to secure additional avenues of coronavirus relief for clubs to access. In late 2020, the Trump administration passed a $2.4 trillion coronavirus relief package, which did not include 501(c)(7) clubs in the Paycheck Protection Program (PPP). The primary relief is an extension and enhancement of the employee retention tax credit (ERTC). The program was expanded to include businesses with fewer than 500 employees—the previous program was capped at fewer than 100. The credit was increased to 70% on up to $10,000 of wages per employee per quarter. This equates to up to $14,000 per employee in 2021. The business meal deduction was also increased to 100% for the next two years.
Depending on tax status, a small number of clubs were able to access PPP loans in 2020, though 501(c)(7) clubs were not eligible at that time. Many clubs were able to participate in the ERTC, and for those who did it was likely a better option than the PPP loans even if they were forgiven. NCA will continue working to expand and enhance both programs in the next year.
The Biden administration’s $1.9 trillion package, called the American Rescue plan, includes 501(c)(7) clubs with less than 300 employees to access $7.25 billion in PPP loans (as of this writing). The approval of clubs in this package marks a major victory in NCA’s efforts to provide clubs with the relief they have needed to combat the pandemic. In addition, it sends $1,400 stimulus check to eligible recipients and calls for aid to address unemployment, hunger and evictions; additional support for small businesses, states and local governments; and increased funding for vaccines and testing.
In addition to our work on coronavirus relief, NCA will continue to engage with our allies to pass the Personal Health Investment Today (PHIT) Act. This legislation would allow individuals with health savings accounts (HSA) to use up to $1,000 as an individual and $2,000 for a couple toward fitness-related expenses and certain fitness clothing and equipment with limitations. While the bill excludes funds from being used to pay private club dues or initiation fees, it is silent on point of purchase with regard to fitness-related activity, instruction and equipment. This could be of benefit to parents who are facing increasing costs in youth sports and is a small, but yet significant shift in how we think about spending our health care dollar by allowing individuals to invest in improving or maintaining their health rather than only investing in sickness.
I know most of us are looking forward to 2021 to bring some sense of normalcy in our everyday lives and our political discourse. Though we still face significant challenges, there are opportunities ahead—sounds like an apt description for the upcoming year.
Joe Trauger is NCA’s vice president of government relations. He can be reached at [email protected] or 202-822-9822.