State needs to clarify rules for federal bailout and be quick about it.
The Dunleavy administration plan for handing out more than $1 billion in federal money to deal with the pandemic is plagued by problems that need to be fixed and questions that need to be answered.
Here are 10 of them.
Legislators are divided over whether the Legislative Budget & Audit Committee can approve the plan or whether the entire Legislature has to consider it. The attorney for the Legislature says the law requires a full vote to appropriate most of the money, describing “substantial legal issues.” There is also a constitutional question on timing, the attorney said. Those issues are to be reviewed by the House Judiciary Committee Wednesday at 10 a.m.
The Legislative Budget & Audit Committee is to meet Wednesday afternoon. Dunleavy and Senate President Cathy Giessel disagree with the legislative legal analysis and claim the committee has the power to decide the billion-dollar question. Committee Chairman Rep. Chris Tuck says the full Legislature has to weigh in. Here is an examination by Andrew Kitchenman of KTOO. Giessel’s legal argument is weak one.
The Legislature needs to meet, appropriate the money, and update its antiquated rules to allow for a vote to be conducted electronically.
The House Community and Regional Affairs Committee plans to meet Wednesday at 8 a.m. to review the problems facing local governments in legally spending their proposed allocation of funds, which is $257 million for this fiscal year. A big issue for local governments is dealing with the narrow federal rules on spending the money—they say the funds can’t be used to replace lost revenue. The Alaska Municipal League says that “local governments are currently undervaluing their allowable expenditures” and need to rework the analysis.
Dunleavy claimed at a Monday press conference that the federal guidelines are broad and suggested there are many ways in which local governments can find ways to use the money. There are mixed messages coming from the state, however, with the commerce department warning, “No distributions will be made without a signed agreement that places the onus of repayment of misspent funds on the local government, not the state of Alaska.”
Dunleavy has no intention of requiring public transparency about which businesses get grants from the $290 million small business bailout fund and which don’t. Asked about this Friday by Anchorage Rep. Andy Josephson, Commerce commissioner Julie Anderson said, “that is not something we are considering now.” It’s government money. Public disclosure is the best way to prevent corruption, avoid political grants and build trust.
The $290 million for small businesses was originally going to be used for loans, under the Dunleavy plan. But after the Trump administration said the money was intended for grants, not loans, the administration began to talk about “loan forgiveness” as an alternative. The commerce department said Friday it didn’t know if this was legal and was waiting for clearance from the attorney general. The state is focusing its efforts on yet-to-be-defined programs to be run by the Alaska Industrial Development & Export Authority.
The governor’s plan gives short shrift to the Alaska Regional Development Organizations, which have the potential and the ability to make a difference for struggling small businesses and do it quickly by distributing grants. Dunleavy proposed grants totalling $750,000 to help small businesses apply for state aid. The administration has refused to recognize the track record of the development organizations, but should do so now during this emergency.
Legislation approved this year allows the commerce department to authorize the regional development groups to disburse grants to small businesses. That is a more sensible alternative than the AIDEA route, which is more cumbersome and will be slower. The regional groups have the added advantage of knowing the business conditions in their communities.
Anchorage Rep. Zack Fields said the approach chosen by the administration “effectively ignored the problems presented to the Legislative committees and ignored the solutions proposed by outside experts and the Legislature.” A letter from the regional development groups asked that they be allowed to distribute $125 million in grants to small businesses.
“This funding could make the difference between permanent closure and viability for many small employers in the state,” wrote the local development officials from across the state.