Legislature waits on federal rules for pandemic funds

While Alaska legislators await federal rules for how the state can spend the almost $1.2 billion in federal pandemic relief funds headed this way, communities are waiting to see their allocations from a separate pot of federal aid - and ready to push the state to share some of its money.

In addition to the general relief funding going to the state, Alaska communities will receive a share of a separate $231 million municipal allocation under the American Rescue Plan signed into law last month.

How the federal government distributes that $231 million is worrying some cities and boroughs, particularly those hardest hit by the loss of tourists and sales tax revenues.

"Businesses and municipalities that depend on tourism still need help,"said Ketchikan Rep. Dan Ortiz, who also represents Wrangell.

Though the numbers are not final, Wrangell expects to receive about $500,000 in direct federal aid this year under the American Rescue Plan. This year's federal distribution formula generally is based on population, whereas the state last year shared some of its federal money with municipalities based on a formula of economic activity - communities that relied heavily on sales taxes received a larger share.

Wrangell received $3.8 million under last year's formula when the state decided to share with municipalities almost half of its federal aid under the CARES Act.

"The first round was really generous,"Mayor Stephen Prysunka said Monday. Round 2 looks to fall short, he said. "It is frustrating."

And while Wrangell is doing better in sales tax collections than it had feared at the start of the pandemic a year ago, revenues are still down and pandemic-related expenses continue, Prysunka said. Before COVID-19 hit the economy, sales tax receipts provided more than one-third of Wrangell's general fund revenues.

Sales tax receipts are running about 20% under budget, Borough Manager Lisa Von Bargen said Monday. Wrangell is also losing revenue from a significant decline in visitors, gift shop sales and events at the Nolan Center, she said.

A drop in Parks and Recreation registration fees also has left a hole in revenues, she said.

Additional federal aid could help the community in its drive to attract more independent travelers to town, the mayor said, as Wrangell and the rest of Southeast Alaska face a second summer without large numbers of cruise travelers.

Ortiz said he is talking with municipal officials in his district about community needs while legislators wait for more spending guidance from the federal government. While the Legislature is in session, it retains the authority to appropriate federal funds.

The representative would like to direct some of the federal aid to help communities, but it's too early to speculate on how much or how it might happen.

While waiting on the federal guidance, lawmakers may have a calendar problem. They face a constitutional adjournment deadline of May 19, but have been told the federal government may not issue American Rescue Plan spending rules for states until early May.

"That's getting close to the adjournment time,"Ortiz said.

If lawmakers cannot get the work done by May 19, they could vote to extend the session, but that would require approval by a two-thirds majority in the House and Senate, which could be difficult in the politically divided and diverse bodies.

Last year, when the CARES Act money arrived after lawmakers had adjourned for the year, the administration of Gov. Mike Dunleavy made the spending decisions, requiring only consent by a legislative committee. This year, "we want to make sure we're the ones appropriating the funds,"Ortiz said.

In addition to sending money to states and municipalities, the $1.9 trillion American Rescue Plan also allocates about $358 million to the state of Alaska for K-12 education, intended to help districts hit by higher expenses because of the pandemic and revenue losses.

The money also is supposed to be used to help restore in-person classes and address "learning loss"among students who have gone through a year of online classes and disruption.

The state has not released the numbers for how the $358 million will be shared among districts across Alaska. The Wrangell School District received about $370,000 from last year's federal pandemic relief programs.


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