Gov. Dunleavy’s coronavirus aid plan would send $563 million to cities and boroughs, eliminating layoffs and tax hikes for many

JUNEAU — Alaska Gov. Mike Dunleavy plans to distribute $562.5 million in federal aid to cities and boroughs across the state, part of a proposal to spend more than $1.25 billion approved last month by Congress.

Local officials said they will use the money to cover the cost of fighting the COVID-19 pandemic, provide aid to local residents and fill holes in local budgets. Several said Wednesday that the aid means they no longer need to raise taxes or cut jobs at schools and public facilities.

The federal government has not yet released firm guidance on what the money may be used for.

In other sections, Dunleavy’s plan includes $300 million for state loan programs, $100 million for fishermen, millions for education, airports and more. Before that money is spent, the plan must be approved by the Alaska Legislature.

“We’re hoping the Legislature takes a look at this and acts quickly,” Dunleavy said.

The governor has requested that his proposal be approved within a week by a select panel of lawmakers; legislative leaders believe they need a vote of the entire 60-member Legislature, something that might not happen until early May.

“I’ve had a number of members email today and say wow, that was almost the exact amount we needed,” said Nils Andreassen, director of the Alaska Municipal League, an association that represents 165 cities and boroughs across Alaska.

Earlier this month, Dunleavy vetoed more than $210 million from the state budget, including money earmarked for local school districts. At the time, the governor promised to use coronavirus aid to compensate.

The Matanuska-Susitna Borough lost more than $18 million when the governor used his vetoes. On Wednesday, Borough Mayor Vern Halter praised the governor, saying the borough will receive $37.8 million.

“The governor promised us he would significantly backfill the school bond debt and other things that we would be missing in the budget. This will do that. And so to me, personally, the governor’s word is good,” Halter said.

The Municipality of Anchorage is slated to receive $156 million.

“That’s going to go for items like direct expenditures that deal with the COVID pandemic, it’s going to go to cover lost revenues," said Mayor Ethan Berkowitz.

“I don’t know the extent to what that’s going to be needed to cover some of the vetos that the governor put in place, and there will be smaller items,” he said.

With cruise ships canceling voyages, the City and Borough of Juneau was expecting a $34.5 million budget hole even before officials voted to spend millions on aid to local residents.

“I’m happy to have the problem of trying to figure out the smartest way to use it,” city manager Rorie Watt said.

Not everyone was pleased with the governor’s spending plan, which relies on a modified version of an existing formula used to pay municipal aid.

The Northwest Arctic Borough, which lost about $4 million when Dunleavy vetoed school bond debt reimbursement, will receive $1.2 million. The Kodiak Island Borough, which lost about $6 million, will get less than $3.4 million.

“I’m scratching my head. I have no clue how they did this and how they came up with those numbers,” said Kodiak borough mayor Bill Roberts, who said he and other local officials are already petitioning the state for additional help.

In the Municipality of Skagway, whose 1,000 residents would share almost $7.5 million, Mayor Andrew Cremata said he’s not making any plans until the Legislature approves the plan.

On Wednesday, lawmakers again said they believe the full Alaska Legislature must approve the governor’s plan. The governor believes that is not necessary and that a legislative committee — normally in charge of budget action when the Legislature is out of session — can act instead.

With that uncertainty, Cremata said it doesn’t make sense to make firm plans.

“Until there’s a signature on the dotted line, we’re not speculating about what we will do with it. I’d take everything with a grain of salt right now,” he said.

Reporter Zaz Hollander contributed reporting from the Matanuska-Susitna Borough. Reporter Aubrey Wieber contributed reporting from Anchorage.

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