Legislature(2019 - 2020)DAVIS 106
05/06/2020 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Covid-19 Impacts on Communities and Cares Act Funding | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
May 6, 2020
8:07 a.m.
MEMBERS PRESENT
Representative Harriet Drummond, Co-Chair
Representative Sara Hannan, Co-Chair
Representative Matt Claman
Representative Jonathan Kreiss-Tomkins
Representative Steve Thompson
Representative Sharon Jackson
Representative DeLena Johnson
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Grier Hopkins
Representative Andy Josephson
Representative Dan Ortiz (via teleconference)
Representative Chris Tuck (via teleconference)
Representative Bryce Edgmon (via teleconference)
COMMITTEE CALENDAR
PRESENTATION: COVID-19 IMPACTS ON COMMUNITIES AND CARES ACT
FUNDING
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
NILS ANDREASSEN, Executive Director
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Gave a PowerPoint presentation on COVID-19
Impacts on Communities and CARES Act Funding.
STEPHANIE QUEEN, City Manager
City of Soldotna
Soldotna, Alaska
POSITION STATEMENT: Testified following the presentation on
COVID-19 Impacts on Communities and CARES Act Funding.
CALVIN CASIPIT, Mayor
City of Gustavus
Gustavus, Alaska
POSITION STATEMENT: Testified following the presentation on
COVID-19 Impacts on Communities and CARES Act Funding.
TOM WILLIAMS, Administrator
City of Gustavus
Gustavus, Alaska
POSITION STATEMENT: Answered questions during the testimony
that followed the presentation on COVID-19 Impacts on
Communities and CARES Act Funding.
TOD LARSON, Manager
City of Dillingham
Dillingham, Alaska
POSITION STATEMENT: Testified following the presentation on
COVID-19 Impacts on Communities and CARES Act Funding.
JIM MATHERLY, Mayor
City of Fairbanks
Fairbanks, Alaska
POSITION STATEMENT: Testified following the presentation on
COVID-19 Impacts on Communities and CARES Act Funding.
MIKE MEEKS, Manager
City of Fairbanks
Fairbanks, Alaska
POSITION STATEMENT: Testified following the presentation on
COVID-19 Impacts on Communities and CARES Act Funding.
VINNY CORAZZA, City Manager
City of Bethel
Bethel, Alaska
POSITION STATEMENT: Testified following the presentation on
COVID-19 Impacts on Communities and CARES Act Funding.
ACTION NARRATIVE
8:07:00 AM
CO-CHAIR DRUMMOND called the House Community and Regional
Affairs Standing Committee meeting to order at 8:07 a.m.
Representatives Johnson, Thompson, Jackson, Claman, Hannan, and
Drummond were present at the call to order. Representative
Kreiss-Tomkins arrived as the meeting was in progress. Also
present were Representatives Hopkins, Josephson, Representatives
Ortiz (via teleconference), Tuck (via teleconference), and
Edgmon (via teleconference).
^PRESENTATION: COVID-19 Impacts on Communities and CARES Act
Funding
PRESENTATION: COVID-19 Impacts on Communities and CARES Act
Funding
8:08:39 AM
CO-CHAIR DRUMMOND announced that the only order of business
would be a Presentation: COVID-19 Impacts on Communities and
CARES Act Funding.
8:09:04 AM
NILS ANDREASSEN, Executive Director, Alaska Municipal League,
gave a PowerPoint presentation on COVID-19 Impacts on
Communities and CARES Act Funding. [The heading on the first
slide read: "Local Government Impact" and "Alaska Municipal
League."] He directed attention to Slide 2, which read as
follows [original punctuation provided]:
Emergency declarations
? Goal: Clear point of contact, budget flexibility,
mobilize response
? Unified Command lists 87 declarations received
? AML has collected 73 of those and passed them
to Unified Command
? Process involves drafting, governing body passage
? Amendments may be necessary, including to
extend as the crisis continues
? Additional types of resolutions in response to State
Health Mandates
? Every change or addition at the State level
requires adaptation at the local
? Municipal managers often have leadership roles
? Elected officials have broader responsibility
to set policy
MR. ANDREASSEN added that a statewide public health emergency is
challenging, in terms of managing communications and ensuring
the state has access to points of contact in each community.
Emergency declarations allow communities to reallocate
resources, name an incident commander, and make decisions they
might not otherwise be able to make. He indicated half of all
communities in Alaska have taken this step. He talked about the
work involved in being in crisis mode.
8:11:54 AM
MR. ANDREASSEN turned to slide 3, which read as follows
[original punctuation provided]:
Emergency management
? Goal: Emergency operations, state and federal
communications
? Unified Command lists 20 active municipal EOCs
? AML has provided points of contact for 165
cities and boroughs
? Incident commander in each community, with teams of
public officials dedicated to managing crisis
? Responding to State and Federal emergency officials
within the Unified Command clarifying mandates and
resources
? Implementing federal, state and local decisions
effectively
? Coordinating response to resident concerns
MR. ANDREASSEN said it is essential during a statewide emergency
to ensure there are local government contacts with the ability
to communicate with unified command. He related that since
early March, local government officials, leadership teams,
managers, attorneys, clerks, and human resource officials
collectively have been consumed by emergency management, which
has included: reviewing personnel policies, identifying
essential and nonessential workers, managing leave, managing
public health within the local government setting, and
responding to each of the federal alerts and mandates that have
been issued. He emphasized that local governments must keep
apace with each tweak of state information and each mandate. He
said, "For every state action, there are as many as 1,000
different local actions having to be taken."
8:15:33 AM
MR. ANDREASSEN, in response to Co-Chair Drummond, spoke about
the many facets in which local governments scramble to make
changes to keep up with state information during the crisis. In
response to a follow-up question regarding the 165 cities and
boroughs, he indicated that AML is responding only to
incorporated cities and boroughs; unincorporated communities
receive community assistance on "a basic level." He mentioned
that the legislature is the assembly for unorganized boroughs
and the unincorporated communities therein, and he said he
thinks the state bears "a different kind of responsibility to
working with those communities that aren't incorporated."
8:19:11 AM
MR. ANDREASSEN discussed slide 4, which read as follows
[original punctuation provided]:
Travel restrictions
? Goal: Avoid community spread and overwhelmed heath
facilities
? Implemented in majority of remote (off road system)
communities, either by tribe or city, or both
? Manage incoming visitors to require quarantine or
other protective measures
? Dissuading non-essential visits
? Communities overcoming general confusion about role
and responsibilities, including in response to changes
to State mandates
? Restricting inter-state travel perhaps most
effective mitigation measure of state; local control
of in-state travel ensures further community
protection, especially where small or no health
facilities
MR. ANDREASSEN remarked that the state took early action in
terms of travel restrictions. He said he does not have the
numbers to state how many communities have issued travel
restrictions. He opined that travel restrictions have been one
of the most effective measures in handling the public health
crisis. Conversely, they have been the biggest point of
contention, in terms of determining who has the authority and
responsibility and when the state can "supersede a local
government's interest in protecting a community's public
health." He estimated that out of the 87 or so of about 220
communities that have issued emergency declarations, the vast
majority have issued travel restrictions. He said tribes have
also taken action under different authority; a lot of the travel
restrictions he has seen have been issued by the city and tribe
jointly to more effectively "leverage their governance." Larger
communities are governed by state mandates. He said there is an
"Attachment B" that allows smaller communities to keep their own
restrictions in place. He said, "This has additional
implications." He listed: project delays, restrictions on
industry, additional quarantine requirements for teachers coming
in to school districts. Small communities may not have a place
for quarantine.
8:22:30 AM
MR. ANDREASSEN turned to slide 5, which read as follows
[original punctuation provided, with some formatting changes]:
Responding to public health crisis
? Goal: Mitigation measures, active first responders,
PPE, testing
? Implementing State Health Mandates and CDC guidance
? Implementing local actions that protect public
health
Different by class and powers
? what can we do vs. what can we ask public to do
? Requesting resources from State EOC
? Establishing continuity of operations
? Identifying essential and non-essential staff and
reallocating staff time and overtime
? Working with business and nonprofit partners
MR. ANDREASSEN mentioned there are differences between larger
municipalities and smaller, home rule communities. He said each
local government went through a continuity of operations
planning process to rework how services are provided to
citizens.
8:24:04 AM
MR. ANDREASSEN discussed the information on slide 6, which read
as follows [original punctuation provided]:
Hunkered down
? Goal: Closed public facilities, operating remotely,
continued service
? Libraries - closed but some offering curbside
pickup, online access
? Pools closed, maintenance required
? Rec Centers closed, maintenance required
? Museums - closed
? City offices
? Staff remote working except for essential
services
? Appointment only reduce lines, total overall
traffic
? No physical transactions deferred payments,
no cash, online services
? Council and Assembly meetings conducted
virtually, with public participation
8:26:20 AM
MR. ANDREASSEN discussed slide 7, which read as follows
[original punctuation provided, with some formatting changes]:
Budgets
? Goal: Addressing significant lost revenues
? Current Budget
? Spending from savings emergency management,
uncertain reimbursement
? Furloughs implemented, offset by overtime and
reallocated staff time
? Closed facilities plus lost tax revenue
? FY21 Budget
? Tax increases may be necessary, especially
for school bond debt reimbursement; recognize
challenges during economic crisis
? Program reduction least likely right now,
with economic rebound needed
? Spending from saving less available for
future emergencies
? Significantly reduced as used to manage
current crisis
8:27:58 AM
MR. ANDREASSEN related the information on slide 8, which read as
follows [original punctuation provided]:
Significantly reduced as used to manage current crisis
7 Implementing business and resident support
? Goal: Alleviate resident and business economic
crisis
? Implement grants, waivers and extensions
? At least two communities have provided direct
resident support
? At least one community has provided grants or
loans to businesses
? A number of communities have been supporting
nonprofits
? All utilities have been kept connected, with
payments extended and fees waived or extended
? Economic task forces launched in collaboration with
local business community
? Leveraging technology what's open and what's
changed
? Resource- and information-sharing
8:29:18 AM
MR. ANDREASSEN brought attention to the information on slide 9,
which read as follows [original punctuation provided]:
Costs of COVID
? Short-term expenditures = $150-250 million
? Short-term lost revenues = $250-400 million
? Long-term expenditures = $150-250 million
? Long-term lost revenues = $400-500 million
? Short = March through May/June
? Long = June/July through December
MR. ANDREASSEN advised that the cost of COVID has been
undervalued. A lot of needs have been met out of the current
budget, but that has been done through reallocation of funds.
He said the crisis is far from over. He said, "We're talking
about at least through the end of this year managing through
uncertainty." He indicated that if he were to do a quick
calculation, he could "come up with this being something like a
billion-dollar crisis, ... at the end of the day," but across
the board there is no way for municipalities to really know what
the cost of this pandemic will be.
8:31:08 AM
MR. ANDREASSEN covered the information on slide 10, which read
as follows [original punctuation provided]:
Short-term allowable expenditures
? All staff time spent on public health emergency
? 7,691 employees affected 20% majority of time
? Leave requirements of the FFCRA or implemented
locally
? All first responders and EOC personnel
? All responses to Federal or State Health Mandates
? Arguably any closures of public facilities
? 20% to 50% variable impacts to $2.5 billion budgets
over a quarter
? Plus additional costs of direct response PPE,
telework, outreach
? Hospitals, schools, vulnerable population support
? Economic recovery planning and business community
support
8:33:32 AM
MR. ANDREASSEN addressed slide 11, which read as follows
[original punctuation provided]:
Snapshot
? 17 municipalities provided current estimates of
costs
? Roughly accounted for $87 million, even though many
left expense side off
? $640 average per capita expenditure on direct and
secondary impacts (not including lost revenue) = $528
million
? About equal to 45% with very early estimations by
municipalities
? Varies widely by class and powers adopted any per
capita formula doesn't accurately differentiate by
roles and responsibilities, thus miscalculating
impacts and need
MR. ANDREASSEN covered the allowable expenditures, as listed on
slide 12, which read as follows [original punctuation provided]:
Long-term allowable expenditures
? Public Health Emergency
? Preparation for additional surges in cases as
reopening continues
? Interstate travel restrictions will have
biggest impact, potentially
? Eight more months, at least, of crisis
management and recovery
? Vulnerable population support
? Social distancing, hygiene, and sanitizing
? Water and wastewater improvements
Public building redesign and improvements
? Additional staff needs for implementation
? Rethinking service delivery
? Crisis communications
MR. ANDREASSEN said local governments are given a lot of
latitude in terms of how they can use CARES Act funding in
support of residents. He said public facilities will have to be
redesigned. Mentioning the mandate for people to wash their
hands, he suggested a question as to whether [providing] running
water in places that do not have it would be covered under
allowable expenditures, and he said, "I hope so." He said there
is a lot to consider.
8:35:52 AM
CO-CHAIR HANNAN asked how many of 165 communities do not have
water.
8:36:25 AM
MR. ANDREASSEN estimated 22.
8:37:31 AM
REPRESENTATIVE THOMPSON asked whether AML would reach out to
non-AML-affiliated communities to help support accurate
reporting and compliance. He expressed concern that these
communities would need help and he did not know how to get it to
them.
MR. ANDREASSEN talked about support for members. He said he is
open to working with Representative Thompson and others
regarding the extent to which that assistance was extended
beyond municipal government; however, to a large extent, the
onus for helping unorganized boroughs and the unincorporated
communities therein falls to the legislature.
8:40:16 AM
CO-CHAIR DRUMMOND thanked Mr. Andreassen for making clear the
responsibility of the legislature to serve those boroughs and
communities "with those kinds of services."
8:40:37 AM
REPRESENTATIVE JOSEPHSON indicated his takeaway from recent
guidance of the U.S. Department of Treasury was that local
governments must constantly question whether something is an
allowable expense. He asked whether local governments were
being advised to vigorously ask this question.
8:42:33 AM
MR. ANDREASSEN answered that the U.S. Department of Treasury put
forth three points: Is it allowable? Is it necessary? Is it
reasonable? Each unit government must make these determinations
and will consider those questions tied with additional guidance
provided by the federal department.
8:45:00 AM
MR. ANDREASSEN returned to the PowerPoint presentation, to slide
13, which read as follows [original punctuation provided]:
Secondary impacts
? All actions in support of businesses, residents, and
nonprofits that have demonstrated need
? Local control of priority investments
? Development and implementation of grant
programs
? Training programs for workforce or furloughs
? Legal and consultant fees
? Municipal owned airports, hospitals, school
districts, ports, and utilities
? Contract deferral costs; vendor replacement
costs
MR. ANDREASSEN said he thinks secondary impacts will be "a
bigger way for local governments to play a role to support
businesses, rather than nonprofits and others."
MR. ANDREASSEN directed attention to slides 14 and 15, which
read as follows [original punctuation provided]:
Potential Uses
Expenditures for renovations of municipal buildings
and/or procurement of equipment to enhance social
distancing, protect against secondary COVID-19 virus
transmission, and enhance remote access of Municipal
services:
? Create 1-stop customer service centers;
? Renovate HVAC system to add HEPA filters
? Deep clean entire building & replace floor
coverings
? Install key card access
? Purchase state-of-the-art IT equipment for
better remote meeting capability
? Purchase IT software/equipment for greatly
enhanced online access to municipal functions (online
sales tax filing, building permit requests, etc.)
Expenditures for community centers and local education
to enhance social distancing, protect against
secondary COVID-19 virus transmission, enhance
distance learning, and deal with emotional trauma in
children:
? Purchase distance learning hardware for each
student
? Purchase distance learning software and IT
hardware
? Purchase food service equipment to permit
dining in each classroom
? Hire a temporary mental health counselor for
each school
? Remodel libraries, locker rooms, common areas
to accommodate social distancing 14
Potential Uses
Expenditures for direct financial assistance to
private business and citizens to offset the adverse
economic impacts of the COVID-19 pandemic;
? Direct payments by municipality into utility
accounts of vulnerable citizens/businesses
? Direct payments by municipality into moorage
accounts of vulnerable citizens/businesses
? Direct stimulus payments to residents
Expenditures for economic assistance to private
businesses and residents to assist in recovery from
loss of business or employment resulting from the
COVID-19 pandemic;
? Direct business loans that turn into grants
? Direct payments by to pay off bad debts of
citizens/businesses that can't repay the debts due to
loss of jobs/business
? Purchase of fish from commercial fisherman for
free distribution to citizens
Expenditures for new programs to identify or protect
against COVID-19 virus transmission, or, protect
vulnerable populations against COVID-19 virus
transmission or poverty-related impacts of the
pandemic.
? Create and operate municipal food pantry or
essential food package distribution system
? Create and operate a homeless shelter
? Create and operate a job training/retraining
program
? Create and operate a new business incubator
MR. ANDREASSEN remarked there are a lot of options, and he
thinks members are considering long- and short-term options. He
predicted more plans will emerge in the coming weeks.
8:47:11 AM
MR. ANDREASSEN brought attention to the information on slide 16,
which read as follows [original punctuation provided]:
Treasury Guidance
? "Necessary" expenditure is determined by local
government official
? No lost revenue replacement, nor anything that
appears as such
? No utility payments or property tax relief,
except in relation to individual circumstance
? Can include staff time even though already budgeted,
if staff time applied to public health emergency
? State can transfer to local governments, and local
governments to State, as needed to address public
health emergency
? Workers compensation coverage allowed for public
facing personnel
? Interest earned must be used consistent with
original purpose
? Assets acquired for public health emergency purposes
may be kept
? Recovery planning efforts are an allowable expense
? Hospital support allowed
? Record-keeping sufficient to demonstrate compliance
MR. ANDREASSEN, regarding the second bullet point, stated that
although AML does not agree with that interpretation, it is
"moving forward with that understanding." He commented that the
U.S. Department of Treasury guidance gives latitude to local
governments to spend the funds.
8:48:07 AM
MR. ANDREASSEN provided his conclusion with slide 17, which read
as follows [original punctuation provided]:
Conclusions
? Local governments are currently undervaluing their
allowable expenditures under the CARES Act guidance
? Local governments should be able to expend their
overall total allocation of CARES Act funding but will
still see a relative and significant deficit
? A municipality and OMB should be able to identify
unspendable or unspent funds that may need to be
redistributed to communities in demonstrable need.
This is easily accomplished under the current
structure.
? It is very difficult to anticipate expenses over the
next eight months, assuming potential spikes or surges
of Coronavirus cases.
? Community support mechanisms can be led by local
governments, to strengthen and provide relief to
businesses, organizations and individuals.
? Additional Congressional or State support will be
necessary
MR. ANDREASSEN said local governments have been "looking at
what's right in front of them" and tracking direct expenses
"beyond what's budgeted." He said, "A lot of that's gonna
change as we now have new guidance and can reinterpret those
past two months' expenses." He said members are increasingly
expressing that the funds are needed now rather than later to
keep municipalities running and jobs and businesses secured. He
said he thinks local governments will be able to spend their
total CARES Act funding, as currently proposed, but "that won't
address their shortfall, in terms of lost revenues and ... their
FY 21 budget." Communities will need to work with the state to
move funds around as necessary. He said, "We don't know what's
coming, but this is a huge insurance policy to allow local
government to make sure that they're able to respond as changes
occur." He emphasized his support for local control in this
issue. He said AML is "advocating at the congressional level"
for changes to the CARES Act that "can address the lost revenue
portion."
8:51:20 AM
REPRESENTATIVE JACKSON mentioned a "water challenge" through the
University of Alaska Anchorage, about five years ago, during
which addressed utilities for running water that could be
maintained by villages, and she indicated she was bring the
subject up because it had not been looked into. She asked Mr.
Andreassen whether any monies coming in through the Act are
being used to build infrastructure for protecting communities
both now and into the future or if they are just serving as a
Band-Aid.
8:53:37 AM
MR. ANDREASSEN responded that he remembered the challenge, and
he acknowledged the entities involved, with which he said he
thinks local governments will be able to work to implement some
of the innovation that came about from that challenge. He said
the U.S. Department of Treasury's guidance does speak to assets
purchased during this time being used for this emergency and
repurposed for future emergencies, as long as they are
determined to be necessary and allowable.
REPRESENTATIVE JACKSON expressed she was glad to hear Mr.
Andreassen was aware of the issue, and she hoped there would be
further discussion of it.
8:55:59 AM
REPRESENTATIVE JOHNSON directed attention to a handout in the
committee packet, [a letter from Neil Steininger, Director,
Office of Management and Budget, Office of the Governor, to
Representative Chris Tuck, Chair, Legislative Budget and Audit
Committee, dated May 1, 2020, and including a CARES Act summary
sheet and a package of revised programs legislative (RPLs).]
She observed that Talkeetna, which would be hard hit [by the
lack of tourists due to the pandemic] and whose relief would
likely come from the Matanuska-Susitna Borough, was not one of
the communities named to receive relief funds. She asked how
the list was formulated and how the amounts of relief funds were
determined.
8:57:22 AM
MR. ANDREASSEN explained that the administration makes those
determinations; however, he noted that "as we've flagged
concerns, they've tried to address those." He said there is no
perfect formula. He stated, "Ultimately it's not going to be
about what goes in or out from the state to local governments;
it's going to be about ... how able the local governments [are]
to spend that on allowable expenditures." He said AML views the
important factor as the ability to move funds around between
communities to address need, to not leave any federal funds on
the table, and to manage risk.
REPRESENTATIVE JOHNSON expressed interest in learning more about
the formulas and whether everything in them "relate to something
that could be used for COVID relief."
MR. ANDREASSEN said he cannot speak to how the formulas were
made but can speak to how communities can be helped to spend
these funds in an allowable manner in response to a health
emergency.
9:00:47 AM
CO-CHAIR DRUMMOND suggested the committee could ask the five
communities that would be presenting in the upcoming hour
whether they know "how the formula was applied."
9:01:04 AM
CO-CHAIR HANNAN asked whether Talkeetna is one of the
communities that does not typically receive state assistance.
9:01:35 AM
MR. ANDREASSEN said he does not know. He said there are a
couple inconsistencies that AML is trying to address and has
forwarded to the administration. He said statute lays out the
guidelines regarding community assistance, and he does not know
the specific status of Talkeetna.
9:02:27 AM
CO-CHAIR HANNAN asked Mr. Andreassen to elaborate on the third
bullet point on slide 17, which read as follows [original
punctuation provided]:
? A municipality and OMB should be able to identify
unspendable or unspent funds that may need to be
redistributed to communities in demonstrable need.
This is easily accomplished under the current
structure.
CO-CHAIR HANNAN specified she wanted to know what Mr. Andreassen
meant by "current structure."
MR. ANDREASSEN indicated it involves OMB, a grant process that
would follow the "treasury guideline," and collaboration with
state agencies.
CO-CHAIR HANNAN presumed this would be more easily accomplished
when AML helps to set up uniform reporting for the 165 member
communities; this would add a level of transparency.
MR. ANDREASSEN agreed.
9:05:15 AM
REPRESENTATIVE JACKSON asked how shared funds would be shared
and whether they would flow back through the state.
MR. ANDREASSEN answered that that is still to be determined. It
would be up to OMB and the Division of Community and Regional
Affairs (DCRA) [under the Department of Commerce, Community &
Economic Development (DCCED)] to set the right structure based
on its grant process. He said he thinks there is "early
indication that ... things like that could be accommodated."
9:06:59 AM
CO-CHAIR DRUMMOND thanked Mr. Andreassen for his presentation.
She noted the committee would hear from some city officials on
how COVID-19 is affecting their communities and how CARES Act
funding could be used.
9:07:45 AM
STEPHANIE QUEEN, City Manager, City of Soldotna, spoke to the
committee about the effects of COVID-19 in Soldotna and need for
CARES Act funds. She began by sharing what the city's response
has been thus far, beginning on March 13. She said the city
closed sports centers and shut down all large events; libraries
were closed to the public; several days later, all city
facilities were closed to the public. Policies were put in
place to keep employees safe and keep essential services going.
She said focus was put on maintaining public safety, water and
sewer utilities, and road maintenance. She stated that the
city's existing emergency operations plan has one paragraph
indicating that there is no existing policy for an infectious
disease pandemic. She said the City of Soldotna looked to its
peers, to other local governments tackling the same challenges,
and to Mr. Andreassen.
9:10:38 AM
MS. QUEEN next discussed expenditures. She said the city spent
money on items such as masks and sanitizer; however, the bulk of
its expenditure has been in time responding to mandates,
developing new policies, and learning about unemployment and
emergency leave to keep people safe. She said although the city
is tracking its expenses as best it can, it has not come to
consensus on what the definition of expenditures includes, thus
it has not yet calculated its expenses. Ms. Queen relayed the
biggest impact is lost revenue, which has been quantified. She
said 75 percent of the City of Soldotna's general fund revenue
comes from sales tax. Next are investment earnings, followed by
parks and recreation user fees. Those three categories combined
make up 90 percent of the city's general fund revenue. Property
tax is only 3 percent. She said those categories have been
significantly impacted, with an expected loss or reduction of
$800,000 of sales tax revenue for just March through June. The
city is projecting a $1.7 million reduction in sales tax for
fiscal year 2021 (FY 21). Combined with those other revenue
sources, the projected reduction in the FY 21 budget is $2.2
million. She said this would be a significant loss of about $3
million out of a general fund budget of $10.5 million. For
effect, she shared that amount is essentially the budget for the
city's police department.
9:13:48 AM
MS. QUEEN talked about the necessity to redo the budget, with a
plan for being conservative in "cutting discretion and
spending." She said the city has been fortunate in having a
healthy fund balance, which has allowed it to continue building
and maintaining when state funds have not been available. The
$3 million hit to the budget will impact the ability to do that
moving forward, she said. Also impacted will be interest
earnings. Ms. Queen, in terms of looking forward, said the City
of Soldotna spent the first month of the pandemic figuring out
how to close down safely, and "now, suddenly, everyone's talking
about how to open up again." This requires internal risk
assessment. She said currently she is spending the most time in
consideration of reopening boat launches, camp grounds, and
fishing infrastructure. Delivering these services may require
innovative service delivery options. The library now offers
drive-up pickup services for books. She talked about the
essential services of the library and the importance of getting
it open. The guidance and rules, as written, are being followed
by the city. She said she thinks the city will be able to
reimburse some of its personnel expenses and direct expenses.
8:17:21 AM
MS. QUEEN said there will be "opportunities ... for direct pass-
through for programs that relieve community need or business
owner need." For example, the City of Soldotna started a
storefront improvement program in 2012 with a matching grant,
and this has been transformed into a virtual storefront
improvement program for businesses to improve their presence
online. She said that is the type of thing that may be eligible
for CARES Act funds and could increase in scale going forward.
She said the city also has thought creatively about the ability
for communities or municipalities to share or pass through funds
to other layers of government or to nonprofit organizations, for
example. She said planning is in process, and streamlined
guidelines will be helpful in managing such a considerable
amount of money to use it in the best way possible and without
waste. She remarked, "We're all making decisions at a pace that
doesn't leave a lot time for deliberative, really thoughtful
consideration, and so the more that we can do together to
identify good uses of this funding, or strategic uses, I think
we're all going to be better off for it."
9:19:32 AM
CO-CHAIR HANNAN referred to the figure of $3 million anticipated
lost revenue from this fiscal year. She asked whether Ms. Queen
has speculated as to the next fiscal year, which begins on July
1. She surmised that since Soldotna is on the road system, it
is probably a community that has seen a return in travelers to
its area, which may generate revenue; however, she asked whether
Ms. Queen has anticipated what restricted travel will mean in
terms of lost revenue over the summer season.
9:20:47 AM
MS. QUEEN clarified that the $3 million of lost revenue is
actually the combined number for the remainder of the current
fiscal year, FY 20, and FY 21. She said for the budget being
built for FY 21, the city expects to be down by about $2.2
million, and it expects to be down about $800,000 for the
remainder of the current fiscal year. She said Soldotna is
seeing traffic. The cities of Homer and Seward are ahead of
Soldotna in its boat launches and campgrounds filling. She said
the City of Soldotna typically opens May 15, but she does not
know if the city will be ready to do that by then, because she
wants to see and approve an operational plan put out by the
parks directors. She said reopening some businesses is both
exciting and anxiety producing, as city leaders determine how
people will interact safely in spaces.
9:22:20 AM
CO-CHAIR DRUMMOND asked Ms. Queen whether she had considered the
impacts of Governor Mike Dunleavy's vetoes to the FY 21 budget
and whether the legislature should restore that funding either
through a veto override, if possible, or through a new
appropriations bill.
9:22:43 AM
MS. QUEEN answered that she had not considered that point. She
said the City of Soldotna "was relatively insulated from the
impact of those vetoes."
9:23:48 AM
CALVIN CASIPIT, Mayor, City of Gustavus, in response to an
earlier question, related that the City of Gustavus does not
have a municipal water system. He then related that the City of
Gustavus is a rural remote community of approximately 537 full-
time residents. Access is only by boat or airplane. Gustavus
has a clinic, which operates with one nurse practitioner and one
staff. Summer tourism is the primary income source, producing a
sales tax, income tax, and "a small amount of our fish box tax."
He related that the City of Gustavus does not impose a property
tax. Mr. Casipit emphasized that state funding is critical to
provide services to the community; the little money the
community receives in federal receipts is allotted mostly to
road maintenance. He indicated that COVID-19 has impacted the
city's budgeting process catastrophically. He said while
Gustavus has some money in reserves, "a protracted shutdown of
our economy will create ... the necessity to eliminate services
that make our city a city." For example, he predicted the city
recycling center would have to cut its hours, resulting in
people burying, burning, or dumping trash; the city library,
which offers many activities and learning opportunities could be
affected; and businesses may have to reduce services or shut
down.
9:26:35 AM
MR. CASIPIT related that the City of Gustavus derives $336,000
from combined sales tax and bed tax and other revenues, and it
is not counting on any of that revenue in FY 21, because there
won't be much of a "tourist season." He warned that without a
return to some level of normalcy, Gustavus would face the
closing of businesses, the outmigration of its citizens, and a
collapse of its social systems related to health and welfare.
He remarked that many people in Gustavus spend money on goods
and services in Juneau. Mr. Casipit opined that the full
Community Assistance Program (CAP) needs to be restored, whether
through supplemental funding or a veto override. He said he had
corresponded with the legislature and others early in the year
expressing concern over "the assumption that the CARES Act
funding could be substituted for the assistance program." He
added, "I think it needs to be fully funded, and then figure out
a way to supplement it later, if we can." He noted minimal
expenditures have been made on supplies; money spent on the
increased staff time spent is still being calculated. He
reported that the City of Gustavus has taken significant action
to keep COVID-19 out of the community, thus it has not spent "a
whole lot of money" responding to COVID-19. He said spending
will increase dramatically once there are cases locally.
Currently, the hit to the budget has been to revenues, and since
CARES Act money cannot be used to replace lost revenue, the city
is in a tough situation and hopes the governor will be able to
help. He concluded, "We feel like we've done what was right as
far as preventing [COVID-19] from coming to the community, but
now we're in a spot where ... we're not going to see the
revenues that we normally see."
9:31:22 AM
CO-CHAIR DRUMMOND, regarding Mr. Casipit's comment about
overriding the veto or restoring community funds, asked what
that amount would be for Gustavus under normal circumstances.
MR. CASIPIT deferred the question to his city manager.
9:31:38 AM
TOM WILLIAMS, Administrator, City of Gustavus, said this year
the City of Gustavus was going to get approximately $75,000.
CO-CHAIR DRUMMOND stated that there was an RPL for $375,804 in
direct municipal relief to the City of Gustavus. She said this
information was in a table and being considered by the
Legislative Budget and Audit Committee. She acknowledged that
that is funding Mr. Casipit is concerned cannot be used, since
it cannot be spent to recoup lost revenues.
9:33:26 AM
CO-CHAIR HANNAN indicated that the City of Gustavus, under a
"supplement B," is allowed to place travel restrictions on who
can come into the community, and she remarked that that would be
easier done in March than in June [when tourism typically would
be active]. She asked how those restrictions have been going
now that it is May and seasonal residents may be seeking to
return.
MR. CASIPIT answered that it has been challenging. He shared
that Gustavus has no law enforcement, so there tends to be a lot
of feedback from residents reporting, for example, when someone
has not strictly adhered to a 14-day quarantine. He said staff
is spending a lot of time working with businesses with staff
that want to come back to Gustavus. He relayed that the
Gustavus City Council is working on a resolution to address the
operations of the dock. He said the City of Gustavus is "taking
it as it comes" and attempting to work closely and consistently
with the state mandates. This requires much time, effort, and
coordination of staff. In response to a follow-up question, he
reported that the dock work is still in progress and scheduled
for completion on June 1.
9:37:15 AM
TOD LARSON, Manager, City of Dillingham, noted that Dillingham
is one of only a handful of first-class cities in an unorganized
borough. He described the ripple effect of the pandemic, and he
said the ripple had not yet reached the City of Dillingham. He
related that the city already has a small staff, and he is in
reactive mode, addressing state mandates and council
requirements and ordinances. He noted that the city has an
accounting firm that gives advice. He said he has done research
and has found there is not a lot of federal or state guidance.
He said the RPL for the City of Dillingham would provide $3.4
million, but "it's not money in the bank for us." He added, "We
know there's going to be something out there, ... and we have
been spending it." He said the city is spending money on unique
items, such as tents, cots, and sleeping bags. He explained
that processing workers are starting to arrive, as fishing
begins in three weeks.
9:41:04 AM
MR. LARSON noted that the community has a small hospital. He
explained that sometimes a new hire does not get on with the
crew and is returned to shore; the city wants to maintain
separation between its residents and transient fishing fleet
during the pandemic. He emphasized concern about the hospital's
limited capacity. He said citizens in the community are
anxious, and there are been struggles related to "response from
the administration." Mr. Larson said the city has extended its
closures; it began a new emergency ordinance spanning 60 days to
June 29. He mentioned speaking with two staff of the Department
of Transportation & Public Facilities (DOT&PF), and he expressed
the difficulty of navigating through mandates and simultaneously
addressing everyday concerns, such as pot holes in the roads.
9:43:47 AM
MR. LARSON said the City of Dillingham has "the lost revenue
issue" and unbalanced reserves that it can leverage to spend.
He complimented Mr. Andreassen for some of the ideas he had put
forward. He said the school bond dept really hurt financially.
He indicated that in FY 19, the city was paying $320,000; in FY
20, that amount was $750,000; and in FY 21, the amount is $1.1
million. He said that is an increase in three years of
approximately $700,000 out of a budget of about $13 million,
which he said is significant. He added to that an expenditure
of approximately $100,000 of community service. He said the
city expects long-term revenue issues but does not have an
estimate on that yet. Legal fees are increasing as ordinances
are created. Currently there are a number of construction
projects for which the city bonded, and some workers from the
Lower 48 have to quarantine, which will result in a significant
impact to the cost of the projects. He remarked that he is
looking at three more months of this [related to fishing and
construction season] and said he is exhausted already. He
welcomed questions from the committee.
9:47:56 AM
CO-CHAIR DRUMMOND asked how much CAP usually brings to
Dillingham.
MR. LARSON answered $107,000 last year and a little over
$200,000 in prior years.
9:49:04 AM
CO-CHAIR HANNAN asked what the demands on the City of
Dillingham's water system are with the influx of seasonal
workers.
MR. LARSON answered that the water system services only a small
part of town; some seafood processors receive water from the
city while others operate on a well system. He said Dillingham
triples in size when the fleet comes in.
9:51:15 AM
CO-CHAIR DRUMMOND asked Mr. Larson whether there were any
further issues in the vetoed items, beyond the school bond debt
and CAP, that would affect the City of Dillingham and which he
would like the legislature to override or reappropriate.
MR. LARSON answered that those are "the two big ones."
Notwithstanding that, he said any loss of revenue is an impact.
He expressed appreciation to the legislators for their efforts.
He speculated that everyone has the same goals in mind; "it's
just tough right now."
9:52:29 AM
JIM MATHERLY, Mayor, City of Fairbanks, acknowledged what each
community is facing during the pandemic, and he said the entire
state is experiencing something unexpected and which "none of us
has experienced." He reported that early on, the city spread
out its workers to avoid proximity to anyone who might be
contagious, and out of its 200 employees, only one has tested
positive, and that person quarantined at home and recovered. In
addition to COVID-19, the City of Fairbanks has dealt with lower
than average temperatures, a big "break up" producing more water
than usual, and copious amounts of snow this last year. He
reminded the committee that the City of Fairbanks is tucked
within a second-class borough. He said he has experienced
pressure from those wanting him to close down businesses in the
city limits, but he considered that the result of that would be
that people would congregate in businesses just outside the city
limits, for example, crowding into restaurants, some of them
just across the street from city limits. He pointed out that
the borough mayor does not have the authority to close down
businesses, only the governor can do that, and which he
subsequently did. Mr. Matherly said a unified command was
created comprising himself and representatives from Fairbanks
Regional Hospital, Fairbanks North Star Borough, the City of
North Pole, Eielson Air Force Base, and Fort Wainwright. He
reported that the unified command created structure and has been
successful.
9:57:50 AM
MR. MATHERLY stated that the economic impacts are immeasurable.
A few weeks ago, he said, the City of Fairbanks was facing a $3
million loss; however, since then more businesses have closed,
which shrinks the tax base. He named some businesses that have
shut down and the effect of the loss of tourism. He said he is
getting pressure regarding the annual Tanana Valley State Fair,
which might have to be canceled. He named other annual events
on the chopping block. He said 2020 is up to a $5 million loss,
and that number is continually increasing. The borough, which
closed the public library, the pool, and schools, has its own
calculations. The city is in charge of police and fire, which
must stay active; public works, such as snow plowing; and
garbage pickup. He emphasized the effort made by the City of
Fairbanks. He noted that the annual clean-up day would take
place, because the city needs a break from COVID-19 and there
will be mask wearing and sufficient social distancing. He
credited many restaurants in the city adapting by offering
curbside pickup, but said it has been sad to see many businesses
closing because they could not make it. He spoke of a "soft
opening" of restaurants, with many making individual choices
about whether to open their doors, while others are open and do
not require their employees to wear a mask. He said he spends
much of time conducting meetings by phone to address complaints
and speak with the press.
10:02:02 AM
MR. MATHERLY thanked Mr. Andreassen and the staff at AML for
"getting our messages out collectively ...." He noted that
revenue loss has been an ongoing, fluctuating issue for the City
of Fairbanks. He deferred to the city manager to provide
details. He offered his understanding that former testifiers
had spoken about expenditure of CARES Act funds "not just on
COVID-related expenses, but also loss of revenue."
10:03:53 AM
MIKE MEEKS, Manager, City of Fairbanks, said expenses for the
City of Fairbanks are approximately what its revenue loss will
be. He said the city projects a $5 million revenue loss, most
of that related to tourism. The city has "sin" tax and property
tax. He related that of the sin taxes, alcohol has fallen,
tobacco has risen slightly, and marijuana has "about" broken
even. The closing of businesses is affecting the property tax.
Worst-case scenario projection for expenses is approximately
$1.5 million. He said operations have moved to at-home setups,
and though productivity has fallen, "the services are there."
MR. MEEKS said the City of Fairbanks would like to see the
provisions of the CARES Act based on the number of citizens, not
on sales tax. He emphasized the three things most important to
the city's ability to grant monies from the CARES Act are: What
is the final amount? When will the money be received? What
strings will be attached? He said unlike the City of Anchorage,
the City of Fairbanks will be "risk averse" in terms of the
funds. He stressed the difficulty in making plans without all
the information. He offered his understanding that the funds
have to be spent by the end of December. He said any assistance
[the legislature] can provide regarding the three questions
would be appreciated.
10:07:17 AM
MR. MATHERLY related that he has sensed a ground flow of angst
from citizens. He said a vocal minority have expressed opinions
in opposition to [hunkering down] at home and wearing masks, for
example. He said the sooner money can be put into the hands of
business owners, the better. He said people are experiencing
mental angst and some are expressing anger.
10:09:13 AM
REPRESENTATIVE THOMPSON noted that in the early 2000s, the City
of Fairbanks received $2.8 million in what was called revenue
sharing, now called community aide, and he recalled the amount
of community aide now is under $500,000. He asked about the
affect to the city from the lack of bed tax revenue.
10:09:51 AM
MR. MATHERLY answered that that figure is still being
calculated. He deferred to Mr. Meeks.
10:10:05 AM
MR. MEEKS proffered that the original estimate was $3 million,
but since that time Princess Cruise Line announced it would not
be touring Alaska, and there have been other closures. Now, of
the $5 million projected revenue loss, the majority is coming
from bed tax.
10:10:43 AM
REPRESENTATIVE THOMPSON offered his understanding that
[Fairbanks Memorial Hospital] received only $5 million of the
CARES Act money and its administrators project that by the end
of July the hospital will be "$5 million down." He said,
"Before they were allowed to start up other procedures, they
were projecting [a] $52 million shortfall." He emphasized that
this hospital services everyone within 500 miles. He expressed
concern for the availability of care, and he asked whether Mr.
Matherly had been in contact with the hospital.
10:11:59 AM
MR. MATHERLY confirmed that City of Fairbanks representatives
had held a conversation with representatives of the hospital,
who conveyed that they are "hurting." He said the hospital had
to put off procedures in order to handle COVID-19 cases. He
related that the city put 100 beds at the Carlson Center to
prepare for any overrun, which he said luckily did not occur.
He indicated that the hospital administration made a pitch to
the city for money and is trying to pursue additional money from
the federal government. He stressed the importance of increased
funds for the hospital.
10:13:11 AM
REPRESENTATIVE THOMPSON noted another meeting with hospital
administrators was scheduled for Friday. He urged the city
officials to pursue the issue.
10:13:48 AM
CO-CHAIR HANNAN assured Mr. Meeks that the legislature shares
his concern about the RPL process and knowing the exact dollar
amounts going to each local government. She said no amendments
can be made to the RPLs; therefore, it is important to do the
work of ensuring local governments' needs are met through
discussion such as occurring at this hearing. She indicated
that where there are strings attached is within the guidance
from the U.S. Department of Treasury. She said the legislature
wants as much latitude as possible for communities to be able to
serve their own needs, which she described as "hugely varied
across the state." The goal is to keep communities whole and to
distribute "as much money as we can legally put out there as
soon as possible."
10:15:31 AM
CO-CHAIR DRUMMOND specified that RPLs cannot be changed by the
legislature but can be amended by the administration; therefore,
she urged Mr. Matherly to "have some strongly worded
conversations with the administration" regarding the method by
which the amounts were derived and what is needed.
10:16:27 AM
VINNY CORAZZA, City Manager, City of Bethel, prefaced his
testimony by reporting that Bethel was in a current flood
situation amidst the pandemic, and if it got any worse, he would
have to declare a state of emergency. He then said he would
touch on four points: the city's response in the last four
months and potential need for the end of the year; expenditure
of funds; loss of revenue and budget impacts; and the city's
ability to use CARES Act funding to support community businesses
and other needs.
MR. CORAZZA said on his first day as city manager, April 6,
2020, the mayor called him to report the City of Bethel's first
positive case of COVID-19. He described the emergency steps
that were taken. He said city funds were spent to keep the
homeless center open with the idea that the city could keep an
eye on its homeless population; however, since "mandate 14," the
thinking is that non-congregate housing is better than
congregate housing in terms of housing the homeless. He said
some villages in the Yukon-Kuskokwim (YK) Delta demand residents
[who have been outside their villages] quarantine 14 days before
setting foot inside their villages, and since Bethel is the hub
for approximately 47 villages, it has become a transit zone. He
said the immediate need for [CARES Act] funds is to retrofit a
building to become the emergency operations center. Mr. Corazza
said non-congregate housing for quarantine is another need. The
city has no idea how to pay for hotel rooms for "positive,
under-suspected, or evacuees who have no quarantine shelter."
10:20:28 AM
MR. CORAZZA said the city will need funds to pay people to
operate the shelters. Many people will not volunteer because
they are fearful of being in close proximity with positive or
suspected positive cases of COVID-19. Funds are needed to cover
food, water, hand sanitizer, as well as other personal
protection equipment (PPE).
MR. CORAZZA, in terms of loss of revenue, said that because the
City of Bethel is almost entirely dependent on its 6 percent
sales tax, any economic loss would be a hard hit. He offered
his understanding that the city's last reported sales tax income
was about $8 million, and the city has a budget of $11 million.
He said, "So, that's going to be ... a huge, crippling effect
... on our economy."
MR. CORAZZA, regarding the ability to use the CARES Act funding,
said the fear of COVID-19 can cause chaos. For example, even
before the first local case of COVID-19, older bus drivers were
too worried about driving, so people had to take taxis; however,
one of the largest cab companies in town shut down for fear of
getting COVID-19 from passengers. The city had to step in to
set up a new fare system which encouraged individual fares
rather than ride sharing. That lead to fare prices rising, and
the city did not have the means to subsidize this increase.
Citizens forced to pay the higher fares have expressed anger.
He said CARES-Act funding could be used to subsidize the
industry while encouraging social distancing. It could be used
to purchase meters, which would more accurately calculate the
fare than the current use of a stopwatch. Mr. Corazza said the
funds could also be used to purchase PPE, which is hard to come
by and sold at a premium.
10:25:05 AM
MR. CORAZZA, in response to a query made previously by
Representative [Jackson], reported that the City of Bethel has a
hybrid piped/hauled water system. Should a water truck driver
get sick, the water system would fall apart. He said having a
pipe water system is the answer, and he said he thinks the city
would use some of its CARES Act funding to convert the areas
still dependent on truck delivery to a piped water system. This
would mean citizens would be able to wash their hands frequently
without concern about losing their water source if drivers got
sick.
10:26:49 AM
CO-CHAIR HANNAN asked Mr. Corazza whether he had been a resident
of Bethel prior to April 6 or was initiated upon arrival with a
pandemic and flood.
10:27:17 AM
MR. CORAZZA answered that he moved from Florida on March 18,
thinking he would escape the coronavirus, and he quarantined
"for several weeks" before his first day working. He related
his experience in Florida surviving two hurricanes and working
with emergency operations response.
10:28:38 AM
CO-CHAIR DRUMMOND reiterated her question about whether the
legislature should restore veto items through a veto override or
a new appropriations bill. She also asked what the City of
Bethel "normally" gets from the community assistance program.
MR. CORAZZA reiterated that the sales tax is the main source of
revenue for the city. He added, "About 80 percent of it comes
... from taxes of various avenues." He indicated the city
receives $150-$200 million through CAP. He said any assistance
the legislature could provide in restoring [the lost sales tax
revenue] would help restore city operations. If no CARES Act
funding is provided, the city would have to work with a reduced
sales tax projection.
10:30:33 AM
CO-CHAIR DRUMMOND thanked all the speakers. She closed out the
meeting by expressing thanks to all frontline workers and noting
that today is National Nurses Day.
10:31:18 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 10:31 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| COVID-19 Needs and CARES Act Funding--Alaska Municipal League--2020.5.4.pdf |
HCRA 5/6/2020 8:00:00 AM |
|
| COVID-19 Response Revised Programs Legislative Letter 5.1.20.pdf |
HCRA 5/6/2020 8:00:00 AM |
|
| CARES Act Funding Summary Sheet 5.1.20.pdf |
HCRA 5/6/2020 8:00:00 AM |
|
| COVID Local Impact AML PowerPoint Presentation.pdf |
HCRA 5/6/2020 8:00:00 AM |
|
| 2020.4.22--Coronavirus-Relief-Fund-Guidance-for-State-Territorial-Local-and-Tribal-Governments.pdf |
HCRA 5/6/2020 8:00:00 AM |
|
| 2020.5.4--Coronavirus-Relief-Fund-Frequently-Asked-Questions--Federal Guidance.pdf |
HCRA 5/6/2020 8:00:00 AM |