LBA Committee OKs release of CARES Act funds

  • Rep. Chris Tuck, D-Anchorage, had his objections to the release of federal CARES Act funds overruled in the Legislative Budget and Audit Committee that he chairs on May 11 and more than $1 billion in aid was cleared for release to municipalities and small business. (Photo/Becky Bohrer/AP)

A committee of the Alaska Legislature approved Gov. Mike Dunleavy’s plan to spend federal coronavirus aid on May 11, but a handful of lawmakers warned that their vote might not be legal.

The governor’s plan calls for $568.5 million to cities and boroughs, as much as $100 million for fishermen and fishing businesses, and $289.3 million for small businesses that have not received aid from existing federal programs. Other sections of the approved plan include $10 million to fight homelessness and $52 million for the Alaska Department of Transportation and Public Facilities.

Legislative attorneys previously warned that a vote of the full Legislature is needed to legally approve the three biggest pieces of the governor’s plan. The governor has said he disagrees with that interpretation.

Members of the Legislative Budget and Audit Committee agreed with the governor, citing the need to get money to Alaskans quickly, and overturned chairman Chris Tuck, D-Anchorage, to approve the plan.

The plan has three main pieces:

• Community aid. Cities, towns, villages and boroughs will split $568.5 million that can be spent according to rules set by the U.S. Treasury Department. Municipal officials told a legislative committee earlier this month that they believe those rules are so restrictive that much of the money cannot be spent legally. The Municipality of Anchorage said it feels differently and that Congress intended to allow cities and boroughs to use the aid to cover lost tax revenue.

Rep. Mark Neuman, R-Big Lake, said he expects Congress will “continue to hear that local control is the best way” and that the issue will be resolved.

• Small-business aid. The Alaska Industrial Development and Export Authority, contracting with Credit Union 1, will offer up to $289.3 million in grants to small businesses. Grants will be granted to businesses with 50 or fewer full-time employees that did not qualify for federal aid programs under the CARES Act. The loans are up to $100,000, and recipients will be subject to audits and other restrictions. The commissioner of the Alaska Department of Commerce, Community and Economic Development said nonprofits would also be eligible for grants.

• Fisheries aid. The state can accept up to $100 million for aid to fishermen and fishing businesses, but right now, it is scheduled to receive only $50 million. The Alaska Department of Fish and Game will administer the aid program. Rick Green, a special assistant in the department, said the agency is “still working out the avenue the funds will take on their way down to be distributed.”

Smaller pieces have involved $10 million for rental and mortgage assistance to be administered by the Alaska Housing Finance Corporation, funding for rural airports, money for the Whittier Tunnel, and cash for local transit systems.

Lawmakers in the Budget and Audit Committee talked for almost three hours about the legality of approving the governor’s plan in committee rather than by the whole Legislature.

“So far no one has been able to show me how this is legal. You’re all saying ignore it. Some of us are having a hard time ignoring it,” said Rep. Chris Tuck, D-Anchorage and the committee’s chairman.

The budget and audit committee can make limited budget decisions on behalf of the full Legislature when lawmakers are not in session, and it normally can only increase line items already funded with federal cash. The governor’s proposal calls for creating new line items funded by the federal CARES Act.

The committee cannot alter the governor’s plan, even if there is a mistake. That contributed to delays, as the administration had to rewrite elements of the plan. Legislative reluctance added further delay.

A Department of Law spokeswoman said the department has no public documents explaining the administration’s position. The spokeswoman, Maria Bahr, previously said that those documents are covered by attorney-client privilege.

Despite the legal questions, a majority of the committee said the state is in an emergency and action is needed quickly.

“The COVID virus itself is stretching the limits of this state and the communities, and this money does need to be dissipated as soon as possible,” said Senate President Cathy Giessel, R-Anchorage.

Sen. Bert Stedman, R-Sitka, said the full Legislature will eventually be asked to ratify the committee’s action. In the meantime, the money will go out to communities and programs picked by the governor.

The final vote was unanimous in favor after Tuck’s opposition was defeated in a procedural vote, 3-7.

Updated: 
05/12/2020 - 11:20am