CARES Act money will go to local governments, and may not make up for budget vetoes

Gov. Mike Dunleavy briefed reporters on the state’s preparations for the coronavirus on March 10, 2020. (Liz Ruskin/Alaska Public Media)

Gov. Mike Dunleavy said nearly half of the $1.25 billion in CARES Act federal stimulus money received by the state will go straight to local governments.

On a Wednesday call with reporters, Dunleavy said $562.5 million would go to cities and boroughs.

“We’re hoping that the Legislature takes a look at this and acts quickly,” he said. “We want to get this money out as soon as we possibly can and get it into the hands of Alaskans as soon as we possibly can.”

In a follow up statement released to reporters, Dunleavy walked back his earlier assertion that some of his vetoes could be replaced with federal stimulus money.

“When I publicly stated CARES funding could be used to replace state funding, I was working with the best available information at the time which led many to believe CARES act funding could in fact be used to offset revenue loss,” the governor wrote. “Today, there continues to be a lack of clarity as to whether the use of CARES act funds can be used to backfill lost revenue as a result of the pandemic.”

He added that his administration will operate under the federal guidelines for stimulus funds to, “mitigate the impact of the pandemic on state/municipal expenses and to support businesses and the state’s nonprofits.”

More than a quarter of the funding, about $156 million, will go to Anchorage. In most cases, the money will come in stages — paid in May, July and October. Juneau will receive about $53.2 million. Sitka will receive about $14 million.

The Alaska Municipal League applauded the governor’s announcement.

“AML estimates that local government revenues will be impacted just in the short term – March through June – by as much as $150 million, and longer-term impacts by another $100 million,” the organization representing local governments wrote in a memo.

But Nils Andreassen, the organization’s executive director, said not all communities are celebrating. In some cases the stimulus funding won’t make up for revenue erased by the governor’s vetoes — specifically his blocking of school bond debt reimbursement. And some communities are receiving fewer payments than others.

“There’s questions about why some communities received an additional contribution or distribution and some didn’t,” Andreassen told CoastAlaska. “But generally the feedback we’re receiving from communities is that they’re really hopeful that this meets their needs in the short-term and the long-term.”

The governor’s Chief of Staff Ben Stevens told reporters that local governments would receive the funds with few strings attached.

“We can provide resources through the CARES Act to the municipality,” he said. “How the municipality chooses to use those, is the municipality’s side of it.”

But some lawmakers say they’re skeptical it’s that simple and have told the executive they’re waiting for the Legislature’s non-partisan lawyers to weigh in.

“The last we want to happen is to owe the federal government this money back,” Legislative Budget and Audit Committee Chair Rep. Chris Tuck, D-Anchorage, told CoastAlaska. He said there are outstanding questions about whether the Legislature will need to reconvene to appropriate these federal funds.

The CARES Act disbursements are being overseen by the U.S. Treasury’s Inspector General, he said. That will require due diligence by the state to ensure the money is spent appropriately, which is why lawmakers want a legal opinion.

“But we’re going to do this very, very quickly,” Tuck said. “Because we know that Alaskans are hurting.”