‘It’s absolutely maddening’: Alaska communities wait for more federal coronavirus funding as spending deadline approaches

No one is sure when Congress will pass another round of coronavirus relief.
No one is sure when Congress will pass another round of coronavirus relief.(KTUU)
Published: Nov. 23, 2020 at 7:54 PM AKST
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JUNEAU, Alaska (KTUU) - Alaska communities are waiting for another round of federal coronavirus relief less than six weeks out from the deadline to spend funds that are currently available.

According to the Office of Management and Budget, the state has received $5.85 billion in federal coronavirus funding since March. Over $1.9 billion has been directly distributed to Alaska businesses while another $1 billion has been given to tribes.

The state has received $2.3 billion which has then been further distributed to local governments, small businesses, individuals and nonprofits.

Current U.S. Treasury Department guidance makes clear that Coronavirus Aid, Relief and Economic Security Act funds must be spent by Dec. 30 or any unspent funds will need to be returned to the federal government.

Congress has been deadlocked on passing another coronavirus relief package or extending the deadline to spend current funding.

Neil Steininger, the director of the Office of Management and Budget, said the state “structured the grants to communities to give them as much time and flexibility as possible.”

Local communities are not due to return final spending reports until after Dec. 30. Any unspent funds are not required to be returned to the state until March 31.

At that point, the state could reallocate any unspent funds on eligible expenses that were incurred before Dec. 30, Steininger said by email.

But, for communities like Juneau, that have spent the vast majority of their CARES Act funds, the uncertainty at a federal level is frustrating.

“To be honest, it’s absolutely maddening to not know what Congress will do,” said Rorie Watt, the Juneau city manager.

Juneau is set to receive a total of $53 million from the state in federal funding to address the COVID-19 pandemic. Around $14 million has been spent on salaries for emergency personnel and another $26 million has been distributed as grants.

If the Juneau Assembly approves another round of small business relief on Monday evening, around $17 million will have been distributed to local businesses in the form of grants since the pandemic hit Alaska.

“We’ve had some really kind notes from people in the business community,” Watt said. “We’ve saved some people, no doubt, whether they’re going to survive until we get out of this, I don’t know.”

Grants have also been given to people in Juneau in the form of rental and housing assistance. But, all of those programs are set to sunset on Dec. 30 unless Congress acts to extend the current spending deadline or another relief package is passed.

“I’m concerned about individuals, and their finances, as we reach the end of the year,” Watt said.

The Alaska Municipal League recently held its annual conference and local community leaders discussed spending CARES Act funds and the possibility of another federal relief package.

“Nobody was holding their breath for funding to come this year,” said Nils Andreassen, the executive director of AML. “That may mean it’s more like January discussions, a February or a March time frame, when the next relief package might come forward.”

Across Alaska, $568 million was earmarked for local communities out of the state’s CARES Act funds. Over $418 million was distributed to those communities as of September and $238 million has been spent.

But, tracking what communities have spent is a lagging indicator as reports are published months later.

“I think I have a high degree of confidence in their ability to spend these funds,” Andreassen said about communities meeting the late-December deadline.

Around $70 million was spent by local communities in September, and AML expects spending levels to increase closer to the end of the year.

Forty-eight communities have not applied or received any coronavirus funds available to them. Twenty-one of those communities are incorporated cities while 27 are unincorporated.

AML says communities have not applied for the funds because they feel like they have not been directly impacted by COVID-19, and don’t want to risk breaking federal rules on spending the money. Others have had tribal organizations taking the lead in mitigation efforts.

Another impact of the potential gap in federal funding on local communities is on testing and emergency operations centers that have been activated to tackle the pandemic.

In Juneau, the EOC has managed the city and borough’s COVID-19 response since March.

The state is set to cover the cost of airport screening and testing beginning in January, said Jeff Rogers, the city and borough’s finance director. That’s estimated to cost the state $486,000 per month.

But, without federal help, Rogers estimates that it would cost the city and borough around $550,000 per month to continue operating the EOC and COVID-19 testing from January until June.

That added fiscal burden would come at a difficult time for many communities that rely on tourism for local government revenue.

“In the middle of that, we’re going to start our budget process,” Watt said. “And, we have to forecast our revenues. So, is there or isn’t there going to be a cruise ship season next year? That’s a big part of our forecasting.”

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