May 8, 2020
Dear Friends and Neighbors,
Thank you to everyone who joined me and Senator Elvi Gray-Jackson for our first ever virtual constituent meeting earlier this week. It was great to hear your thoughts and to see your faces! This is something we hope to continue to do occasionally as social distancing continues.
This week there has been a lot of attention put on one specific topic: the governor’s proposal for distribution of CARES money. That topic has been the focus of my attention as well. Today, I want to share my thoughts on why I feel that the fund distribution mechanism proposed by the governor, the Revised Program Legislative (RPL) process, is not the correct way to allocate these funds.
All About RPLs: A Tool Meant for Narrow Adjustments not New Appropriations…
The Alaska Constitution is explicit about the responsibilities of the three branches of Government and requires that the powers of these branches remain separate. The power of appropriation is held by the legislative branch alone. Additionally, the legislature cannot delegate this power to the executive branch nor to any legislative committee.
The RPL Process is a procedure outlined in statute (AS 37.07.080(h)) and is designed to allow the governor a constitutional method of approving additional funds (federal or other) that may become available when the legislature is unable to appropriate them. Typically, it is used between regular legislative sessions.
What does this mean practically speaking? The RPL process makes it so that the Legislative Budget and Audit Committee (LB&A) can accept additional dollars, but only if we have a corresponding appropriation.
Here’s the example I’ve been using: if the State received crates of tomatoes from the federal government, and the federal government came into some great squash, LB&A could likely say (after the governor handed it an RPL), “We’ll take the squash. Thank you.”
However, if we had an appropriation for tomatoes, and the federal government said, “We’ve got a bunch of extra fleet vehicles. Do you want them?” we’d have to decline (unless we had fleet vehicle appropriation receipts). Our top legal and fiscal minds have affirmed that we cannot accept the fleet vehicles in my hypothetical.
At this point LB&A has accepted many of the legally permissible RPLs put forward and the governor has submitted a revised packet of RPLs so that a few more can likely be approved legally.
However, there is no way to get around the lack of existing appropriations for $958 million in three areas:
o Fishing Industry Assistance- The governor is asking for $100 million in receipt authority (though NOAA announced Alaska would actually be receiving only $50 million) and would like the Department of Commerce Community and Economic Development (DCCED) to administer these funds. The mechanism for how these funds would be distributed is unclear.
o Small Business Relief- The administration is aiming to develop a loan program through DCCED to be administered by the Alaska Industrial Development and Export Authority (AIDEA). The big problem with all of this is that the federal treasury has released guidance instructing states to dole out the small business money in grants, and the non-partisan legislative lawyers have told us that we have clear authority to use the CARES Act funds for grants rather than loans. Small businesses need grants and they need them yesterday. Even though numerous entities already exist which can pass this money out to small businesses, the Dunleavy administration has been focused on creating new programs for disbursing this money and doing so by way of loans. The legislature heard testimony weeks ago about the need to start passing out the grant money, yet even now the governor’s people are saying that their untested forgivable loan program will take a couple more weeks to stand up. There are also concerns with oversight of how AIDEA would distribute these loans. AIDEA recently approved emergency regulations making disaster lending exempt from most of their usual review process.
o Municipal Assistance- The governor proposes to use $568 million for municipal assistance, via two mechanisms: one using the existing Community Assistance program structure to pay out $257 million and the other a $311 million payout outlined in 200 separate RPLs, to all cities and boroughs as well as many unincorporated communities. The formula used to determine the $311 million in payments is predominately based on the expected loss of tax revenue. This calculation calls into question the fairness of how these monies are distributed. Communities who lack a sales tax (such as the Municipality of Anchorage) or who have lower tax rates in general would receive less per capita using the governor’s proposed structure. Another wrinkle related to the topic of payments to local governments is this: if local governments are unable to use all of the funds that they are given for COVID-19 relief on COVID-19 related spending, these monies will need to be paid back to the federal government. Additionally, we have heard from local governments that they might have difficulty spending this large influx of federal dollars on permissible expenses in the time frame available to them.
It is my believe that the legislature should return to Juneau as soon as possible to address these problems and I am advocating for an appropriation bill to be agreed upon and passed quickly. I am fighting to add appropriations for the University, for Rental and Mortgage Relief, for Healthcare Expense Payments, for COVID-19 Tracing and to make sure there is fairness in the distribution of small business grants. We have a responsibility to ensure that federal money be allocated not just quickly (time is of the essence and the need to move forward is urgent) but also that these funds should be used in full and be directed where they are needed the most.
COVID-19 Alaska Help Line
Alaskans who need help or connection to information about services, including related to COVID-19 impacts, can dial 2-1-1 from their phones. You can also reach out via email to Alaska211@ak.org or dial 1-800-478.2221.
Please do all you can to protect yourself and others.
Please do not hesitate to reach out to my office if you need any assistance.
We are all in this together.
Representative Andy Josephson
Alaska House of Representatives, District 17
Serving Midtown, University and East Anchorage Neighborhoods