Alaska Gov. Mike Dunleavy

There’s a wave of federal and state rescue money heading for Alaska. It may take some of the sting out of a sharp economic contraction across the state. 

Restaurants, bars, hotels, retail and service companies across the state are suspending operations on state and municipal orders, resulting in hundreds of people being laid off. 

The 2020 tourist season now appears lost, for all practical purposes. The Port of Seattle suspending cruise ship sailings through mid-summer. 

Federal and state governments are moving fast to offer relief. Congress appropriated an unprecedented $2 trillion-plus emergency appropriation to aid states, including Alaska. The state Legislature, as it recessed early last Sunday, approved bills easing Unemployment Insurance Compensation, or UIC, waiting periods and increasing benefits for dependents of laid-off workers filing for unemployment.

The new federal law will also send $1.25 billion to Alaskan to help offset effects of COVID-19. Sen. Lisa Murkowski said in a briefing Monday that the funds can be used by the state for any purpose related to the virus and its adverse economic effects, from immediate health care to compensation to coastal communities for lost tourism summer sales tax income, to school districts to help with expenses in distance education since schools themselves are closed. 

Gov. Mike Dunleavy said Tuesday that decisions on how the $1.25 billion will be distributed will be made in the governor’s office. 

The new federal initiative also increases the weekly Alaska unemployment benefits by $600 a week which would be in addition to the Alaska benefit, which has a maximum of $370 per week, as well as allowing laid off workers who do not qualify for unemployment – the so-called “gig” workers – to receive a $600 weekly federal benefit.

Also, Alaskans who filed 2019 federal income taxes will receive a $1,200 cash payment, or $2,400 for joint filers, with the amounts would be reduced for those in higher income levels. The Legislature approved $1,000 Permanent Fund Dividend as part of the state budget. 

An earlier proposal for a second $1,000 dividend approved by the state Senate was rejected in a House-Senate conference committee because it would have required exceeding limits of an annual state draw on Permanent Fund earnings to support the budget. 

Dunleavy criticized legislators’ decision not to fund the second PFD, or a single dividend funded according to a formula in state law that would have resulted in a $3,000 PFD. “Thousands of Alaskans are out of work through no fault of their own, due to the government pausing most economic activity to slow the spread of the disease. It would appear lawmakers missed the opportunity to create a cash infusion from the earnings reserve account into the hands of Alaskans, like hairdressers and restaurant workers, that could have happened in as little as two weeks. 

“I am quite frankly puzzled why they would not do that,” the governor said.

Federal and state money is also coming to help small businesses affected by the COVID-19, too. Alaska was included in a federal economic disaster declaration, which means small businesses are now eligible for Small Business Administration loans for working capital, and the new federal legislation will sharply ramp up small business lending. Firms should work through local banks to get the disaster loans.

Federal officials meanwhile say they hope the expanded unemployment benefit money will show in days for laid-off Alaskans and within a couple of weeks for the expanded small business loans, part of which would be forgiven, essentially converted to a grant, if the business agrees to retain and not lay off its employees. A small business is considered to be a firm employing 500 workers, but for companies in oil, gas or mining the limit is 800.  

As it recessed early Sunday the Legislature approved its own bill granting emergency relief, including Senate Bill 241, a bill imposing moratoriums on foreclosures and seizures of collateral by lenders in a variety of state and private loans, and disconnections of service by utilities for people suffering financial hardship due to COVID-19. 

Borrowers seeking relief would have to sign sworn statements that they are adversely affected by the virus and its effects on the economy, under the legislation. Making false statements would constitute perjury, a criminal offense. Borrowers would also have to work out repayment agreements with lenders and utilities.

Other provisions of the bill extend the filing deadlines for Permanent Fund dividend applications and state taxes; recognize professional licenses in field like nursing that are issued by other states; provide for electronic voting in shareholder meetings, which is important to Alaska Native corporations; and ensure that health workers exposed to COVID-19 while treating patients are covered by workers’ compensation. 

SB 241 also authorizes a new program for small state grants for working capital to small businesses and nonprofits that would be administered by the state Department of Commerce and Economic Development. 

The agency would work through regional economic development organizations, or ARDORs, in different parts of the state. Anchorage Economic Development Corp. is the ARDOR for Anchorage. Details odf the program are not yet available.

However, a much-anticipated measure that would have allowed the state to expand a larger loan program for working capital and other business needs failed to materialize last weekend after lengthy back-room negotiations.

The Alaska Development and Export Authority, the state’s development finance corporation, has meanwhile organized a program to extend loans of up to $1 million for working capital and other qualified purposes to businesses. However, AIDEA is able to lend up to only $50 million under the program.

What was being proposed in Juneau was authorization for a major increase to this, and on Monday, March 30, AIDEA announced that it would seek authorization to expand the program to $1 billion. As with SBA loans businesses would have to apply through local banks to get the loans.

The expansion to a $1 billion fund will have to wait until the Legislature returns to Juneau to finish up work, which may be in a special session called for this summer or fall. 


Key bills that passed the Legislature last weekend

• HB 301: Plumber and electrician certificate of fitness; apprenticeships. This puts existing apprenticeship regulations in statute, blocking an administration attempt to lighten apprenticeship rules for electricians and plumbers. This is now passed and is to the governor

• SB 155: Mining claim rules. This updates existing law so that mining claims are not lost due to minor procedural or clerical errors. This is now passed and is to the governor

• HB 96: Pioneer home rates. This limits the magnitude of one-time increases in rates for the state’s Pioneer Homes. This is now passed and is to the governor

• HB 232: Municipal air quality tax credits. This gives municipalities the option of allowing local tax credits for building improvements that will improve energy efficiency and local air quality.

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