Under Dunleavy’s new CARES Act distribution, rural boroughs will get more funding

Alaska Gov. Mike Dunleavy speaks about the state’s COVID-19 response from the Atwood Building in Anchorage on Monday. (Courtesy of Alaska Governor’s office)

Gov. Mike Dunleavy on Friday amended how much money municipalities would get from the $1.5 billion that Alaska received in the federal CARES Act. Three Alaska boroughs would get considerably more funding under the new distribution plan. 

When Dunleavy signed this year’s budget, it came with a whole slew of line-item vetoes that he said could be made up from federal COVID-19 relief money. He’s since walked back that sentiment. During a news conference Monday, he said he originally believed that the money could be used to make up for revenue shortcomings. 

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“It was our understanding, when I say our understanding … many governors, that the impacts of the pandemic on states including municipalities as a result of the business close-downs, as well as any expenses for dealing with the pandemic would be covered by the federal government,” Dunleavy said.

Under his original distribution plan, the Northwest Arctic Borough would have received a total of $1.2 million in community assistance from the CARES Act. Borough mayor Lucy Nelson says that amount was considerably less than what the region normally gets from the state.

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“We normally receive $4 million for reimbursement and then a $300,000 community assistance program amount,” Nelson said.

Governor Dunleavy says he revised the distribution plan after talking with municipal leaders around the state. He says the state overlooked some factors when calculating the original amounts. The new plan gives considerably more funding to the Northwest Arctic Borough, the North Slope Borough and the Kodiak Island Borough. 

He says the additional CARES Act money for those municipalities was diverted from funds originally designated for health and social services. 

The North Slope Borough is receiving $2.5 million under the revised plan, more than double the amount from the previous plan. The $5.7 million the Kodiak Island Borough is getting is about 1.5 times what was originally proposed.

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The Northwest Arctic Borough is set to receive about $4 million under the governor’s revised distribution plan. That’s about three times what they would’ve gotten under the old plan, Nelson sees it as getting closer to what they generally receive anyway from the state, which she says is vital. 

“But it’s pretty close to [the amount] and to me it’s better than the 50 percent school bond debt [funding] that we received,” Nelson said.

She says the borough doesn’t have a lot of pots of money they can pull from. The borough receives most of its revenue from an agreement with Teck Resources. That company operates Red Dog, a zinc and lead mine 80 miles north of Kotzebue. That agreement can’t be renegotiated until 2026.  And, Nelson says raising taxes on residents is almost impossible due to most Northwest Arctic Borough communities being economically distressed. 

Nelson says moving forward, a big question for boroughs across the state will be how the CARES Act funding can be used. 

“We can only spend it for what the distribution plan says,” Nelson said. “If we can’t apply it to school bond debt, then they’ll probably ask for the money back. So it’s not really clear. We’re still not really sure.”

Governor Dunleavy says the state is hoping to get clarification this week from the state legislature and Congress on how the CARES Act money can be spent.