Alaska’s approach to federal relief is critical

Gov. Mike Dunleavy’s proposed use of federal relief funding is a good starting point to meet the many challenges facing the state. Those challenges are experienced differently by Alaska communities, so the breadth of the proposal helps to meet needs in a variety of ways. The Legislature will fine-tune this to make the most of these funds.

From a local government perspective, there are two priorities. First, Alaska’s cities and boroughs need the state to be in a stable fiscal position that allows it to fully fund things like school bond debt reimbursement and community assistance. There are dozens of other programs that directly affect local governments, but a proposed 50% reduction to the first and a 30% reduction to the latter results in the most concrete impact felt by local governments. Funding these fully would mean that those local governments who have taken on school construction and maintenance through the school bond debt reimbursement program, in partnership with the state, don’t have to cut their budget or increases taxes during what remains a difficult time for Alaskans. Full funding of Community Assistance makes sure that all local governments can afford the basic administrative load expected by the state; it keeps the lights on in many communities.

The other priority is that for those local governments that have been disproportionately affected, there should be additional relief provided by the state. Disproportionate impact is measured by the lost revenue and additional costs resulting from this pandemic, against the federal relief that’s gone out or will through the CARES Act and American Relief Plan, or ARPA. The CARES Act helped with expenses but couldn’t be used for lost revenue. ARPA can be used for lost revenue, but is population-based, not needs-based.

For 34 communities that we know of, we can say they have experienced $134 million in disproportionate impact. That includes the upcoming lost cruise ship season. It might be worse for some; it might include more communities than we know of. But it’s a good baseline to work from, knowing that those communities aren’t being made whole by this latest — last? — round of federal relief.

Just because we can measure impact for this group of local governments, that doesn’t necessarily mean that others are doing well, only that federal relief matches lost revenues. What about all the other expenses they need to consider, and uses of those funds? It will definitely mean that for the majority of local governments, the federal relief that’s coming in two tranches over two years will mean very different uses than the CARES Act funds. For many, it might mean they simply aren’t able to do more in ways that the public or state expect them to.

The state’s actions, then, will need to keep this in mind. The governor’s proposal points to this broadly. We know that for many local governments that are disproportionately affected, their business community has been ravaged by loss of travel and tourism. Those sectors most affected are found in communities most impacted, generally. State support for local governments will be just as critical as support for the economies of those communities; together, we can make sure that communities are still standing on the other side of this crisis.

State investment in infrastructure will spread benefits out beyond the immediate and contribute to addressing Alaska’s longer-standing infrastructure deficit. These are needs that local governments haven’t had the funding to take care of on their own — budget cutting these last few years has meant deferring maintenance and capital improvements — which the state can address and augment by leveraging partnerships with the federal and tribal governments. Again, we’ll have to work together to make the most of this opportunity.

Within the governor’s proposal, legislators will need to see what they can do to spread it beyond one year. The state can and should stabilize its own budget, including to make sure that continuity of operations extends to its political subdivisions. The state can and should target federal relief toward those who need it most — businesses, nonprofits, municipalities, schools and individuals who are significantly and disproportionately affected. The state can and should ensure investments are made to meet Alaska’s infrastructure needs. Tailoring investment to fill the gaps left by federal relief and state shortfalls will be critical for Alaska’s economy and communities.

Nils Andreassen is the executive director of the Alaska Municipal League, founded 70 years ago to strengthen local governments. AML responds to the needs of Alaska’s 165 cities and boroughs.

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