Legislature(2019 - 2020)Anch LIO Lg Conf Rm
06/17/2020 03:00 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Economic Injury Disaster Loan (eidl), and Coronavirus Aid, Relief, and Economic Security (cares Act) | |
| Public Testimony | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
INTERIM
June 17, 2020
3:07 p.m.
[Note: meeting took place in the Anchorage LIO and was
recorded from Juneau.]
3:07:09 PM
CALL TO ORDER
Co-Chair Johnston called the House Finance Committee
meeting to order at 3:07 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair (via teleconference)
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair (via teleconference)
Representative Andy Josephson (via teleconference)
Representative Gary Knopp (via teleconference)
Representative Bart LeBon (via teleconference)
Representative Kelly Merrick (via teleconference)
Representative Cathy Tilton (via teleconference)
Representative Adam Wool (via teleconference)
MEMBERS ABSENT
Representative Ben Carpenter
Representative Colleen Sullivan-Leonard
PRESENT VIA TELECONFERENCE
Julie Anderson, Commissioner, Department of Commerce,
Community and Economic Development; Alan Weitzner, Interim
Executive Director, Alaska Industrial Development and
Export Authority; Representative Chris Tuck; Bill Milks,
Assistant Attorney General, Department of Law; Megan
Wallace, Director, Legislative Legal Services, Alaska State
Legislature; John Bittner, Executive Director, Alaska Small
Business Development Center; Barb Nickels, Kawerak Inc.,
Bering Strait Development Council; Brittany Smart, Special
Assistant to the Mayor and Staff to the Economic
Development Commission, Fairbanks North Star Borough; Tim
Dillon, Executive Director, Kenai Peninsula Economic
Development District; Kristin Carpenter, Executive
Director, Prince William Sound Economic Development
District; Robert Venables, Executive Director, Southeast
Conference; Cheryl Hickson, Business Owner, Anchorage; Kyle
Gardner, Building Blocks Early Learning Center, Anchorage;
Lori Berrigan, Child Care Facilities, Palmer; Paul Lorentz,
Self, Haines; Vivian Mork, Self, Juneau; Stephanie
Berglund, CEO, THREAD, Anchorage; Judith Miller, Self,
Homer; Russ Reno, Independent Travel Business, Anchorage;
Nathan Vallier, Owner, Alaskan Yukon Tours, Juneau; Scott
Hursey, Business Owner, Petersburg; Susan DeLoach,
Corporate Administrator, Bright Beginnings Early Learning
Center, Anchorage; Andy Hedden, Self, Haines; Blue Shibler,
Discovery Preschool, Juneau; Laurie Wolf, President and
CEO, The Foraker Group, Anchorage; Shauna Donnelly,
Imagination Station Early Learning Center, Anchorage;
Joanna Littau, Owner, Planet Anchorage Bed And Breakfast,
Anchorage; Sharon Anderson, Valdez Convention and Visitors
Bureau; Sally Anderson, Self, Fairbanks; Alicia Berka,
Thrive Alaska, Fairbanks; Christina Eubanks, Hillcrest
Children, Alaska; Greg Whiteside, Romper Room of Fairbanks,
Fairbanks; Debra Rodriguez, Bright Beginnings Early
Learning Center, Anchorage; Coleen Goldrich, Owner, Annie
Kaill's, Juneau; Heather DeLoach, Bright Beginnings Early
Learning Center, Anchorage; Brittany Ford, Self, Fairbanks;
LeeAnn Garrick, Chief Operating Officer, Cook Inlet Tribal
Council, Anchorage; Representative Bryce Edgmon;
Representative Steve Thompson.
SUMMARY
SMALL BUSINESS IMPACTS RELATED TO THE PAYCHECK PROTECTION
PROGRAM (PPP)
ECONOMIC INJURY DISASTER LOAN (EIDL), AND CORONAVIRUS AID,
RELIEF, AND ECONOMIC SECURITY (CARES ACT)
INVITED TESTIMONY:
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT
DEPARTMENT OF LAW/LEGISLATIVE LEGAL SERVICES
ALASKA REGIONAL DEVELOPMENT ORGANIZATIONS (ARDOR)
SMALL BUSINESS DEVELOPMENT CENTER (SBDC)
Co-Chair Johnston reviewed the meeting agenda.
^SMALL BUSINESS IMPACTS RELATED TO THE PAYCHECK PROTECTION
PROGRAM (PPP)
^ECONOMIC INJURY DISASTER LOAN (EIDL), AND CORONAVIRUS AID,
RELIEF, AND ECONOMIC SECURITY (CARES ACT)
3:09:37 PM
JULIE ANDERSON, COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT (via teleconference),
thanked the committee for the invitation to testify on the
CARES [Coronavirus Aid, Relief, and Economic Security] Act
funding. She listed other presenters on the line. She
shared that the director of Alaska Industrial Development
and Export Authority (AIDEA) would provide an update on the
Alaska CARES grant fund program. Following the update, she
would provide information on the changes to the program
guidelines based on advice received from the Department of
Law (DOL).
3:10:50 PM
ALAN WEITZNER, INTERIM EXECUTIVE DIRECTOR, ALASKA
INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY (via
teleconference), shared that as of the previous day,
information from the program operator Credit Union 1, there
had been 1,509 applications received since the program's
June 1 start date. The number represented applications by
small businesses for $64,949,003. The average grant
application amount was $43,000, which fell within AIDEA's
original forecast. He reported that to date, 403 of the
applications received were from rural designated zip codes,
while 841 were for urban designations. He noted that 265
applications had not yet been fully processed to define out
the rural or urban designation.
Mr. Weitzner detailed that 83 applications and $2.5 million
had been approved as of the previous day. He detailed that
14 of the 83 applications or 21 percent were located in
rural designations. He reported that a total of 26
applications had been declined. He shared that AIDEA had
been working with Credit Union 1 to understand the way
applications were being processed. He understood that
Credit Union 1 had been diligently looking at how the
process could be augmented or increased in terms of getting
funding to small businesses. The credit union had been
reviewing the first phase of applications - over 540
applications had been submitted on the first day and
slightly over 275 had been submitted on the second day. The
credit union was working to ensure each of the applicants
received a response and feedback specifying anything else
that may be needed on an application.
Mr. Weitzner stated that the credit union had taken a
customer service approach to the applicants. He elaborated
that if an application did not comply with guidelines the
credit union was working with the applicant to resolve the
issue. He explained that it had resulted in a delay in
response time for other applicants situated later in the
queue. He detailed that the credit union management and
would be initiating information to all applicants to let
them know their application had been received and was in
the queue.
3:14:48 PM
Representative Tilton asked for the reason 26 applications
had been declined.
Mr. Weitzner answered that the majority of declined
applications had been submitted by parties who had received
Small Business Association (SBA) PPP [Paycheck Protection
Program] funding. One applicant who had been declined had
over 50 employees. The application had gone through a
review process and been resubmitted. Another application
had been submitted by a minor, which was unexpected and was
currently under review by DOL.
3:15:51 PM
Representative Tilton referenced Mr. Weitzner's statement
that 841 urban applications received. She asked if the
urban applications could be broken out zip code.
Mr. Weitzner replied that AIDEA had received the
information from Credit Union 1 based on zip codes. He
confirmed that the information could be provided. He
recommended looking at AIDEA's website and the AK CARES
program. The sites included two maps showing areas where
applications had come from and areas where grants had been
approved.
3:16:57 PM
Representative Wool thought it appeared $2.5 million had
been approved, which he estimated to be less than one one-
hundredth of the total amount of $290 million. He stated it
constituted 83 applications out of 1,500 received. He knew
another RFP had been initiated by AIDEA to look for other
lending institutions that could help. He stressed that
there were businesses hurting. He emphasized there was
still a long way to go if only 83 applications and $2.5
million had been approved. He asked how AIDEA proposed
accelerating the process.
Mr. Weitzner answered that AIDEA had put out an RFP and
bids had been received. The agency was looking at how to
incorporate the bids into the program. He shared that there
was some additional information from Commissioner Anderson
that required discussion. He agreed that businesses needed
more funding. He relayed that AIDEA was working with Credit
Union 1 to see how it could help expedite the process. The
credit union was taking proactive measures on how to
increase the amount of funding disseminated. He shared that
AIDEA was also increasing information provided to
applicants to keep them apprised of their location in the
queue. Additionally, AIDEA was looking at ultimately
incorporating new program operators in to facilitate the
process to get more money out to businesses.
Representative Wool understood there was an RFP for other
lending institutions. He noted that at the previous
meeting, consideration had been given to the idea of having
more of a regional approach so that each region would loan
to businesses within their region (i.e. Fairbanks community
banks would loan to Fairbanks businesses, Anchorage banks
would loan to Anchorage businesses, and Juneau banks would
loan to Juneau businesses). He thought having more lending
institutions involved may accelerate the process.
Additionally, it would allow institutions to work with
local businesses that they knew and may already have an
existing relationship with. He did not know how many more
institutions AIDEA wanted to bring into the fold. He
thought that a well-intended institution like Credit Union
1 could only process a given number of applications. He
elaborated that an institution was limited by the time per
application and the number of employees processing
applications.
3:20:25 PM
Mr. Weitzner replied that via the RFP, AIDEA had reached
out to all financial institutions in Alaska. He explained
that AIDEA was not excluding any process that would prevent
the agency from putting together what Representative Wool
had identified. He elaborated that AIDEA needed the parties
to respond to the RFP.
3:21:19 PM
REPRESENTATIVE CHRIS TUCK (via teleconference), asked if
AIDEA had any takers on an RFP that closed the prior week
that would provide more opportunities like the one offered
by Credit Union 1.
Mr. Weitzner replied that AIDEA had received bids on the
RFP.
Representative Tuck asked how the bids were determined. He
understood that Credit Union 1 had a $7 million contract.
He asked if the RFP was on volume served. Alternatively, he
asked if it was a flat contract or the lowest bid.
Mr. Weitzner answered that under the program, the
processing fee earned by the program operator was based on
the volume of grants funded. He explained it was not a flat
fee on services provided, but on the amount of grants
issued. He elaborated that AIDEA issued the amended RFP on
the same basis, but one of the evaluation criteria allowed
parties to bid on the processing fee in order to reduce
program costs. He shared that the program's operating
procedures, guidelines, and underlying agreements had
already been defined with the initial program operator,
Credit Union 1.
3:23:42 PM
Representative Tilton asked about the applications that had
been declined. She referenced Mr. Weitzner's testimony that
the primary reason applications had been defined was
because the applicants had already received some SBA funds.
She asked if the majority of the declined applicants had
received a $1,000 placeholder on the EIDL [Economic Injury
Disaster Loan] program.
Mr. Weitzner answered that AIDEA did not have the exact
information to answer the question. He shared that
applications were denied based on the fact that the
applicant stated they had received federal funding. He
elaborated that the application asked whether an applicant
had received any other funding through the SBA PPP, EIDL,
or other. He clarified that the application did not ask for
a specific amount received.
3:24:59 PM
Representative Tilton understood that people had received
$1,000. She shared that when the committee had heard about
the issue during its last meeting, she had wondered why
someone would only receive $1,000. She had learned that in
the EIDL program, $1,000 was sent to business owners as a
placeholder grant until their applications were reviewed.
She clarified that it was the reason she wondered whether
the majority of applicants fell under that category.
Representative LeBon stated his understanding that 83
applications had been approved at a total of $2.5 million.
He asked how much had been dispersed to approved
applicants.
3:26:18 PM
Mr. Weitzner answered that $2,094,494 had been dispersed.
The full amount had not been dispersed because in some
cases the parties had indicated they were not ready to
receive the funds or they had not signed the grant
agreement.
Representative Tuck provided a scenario where someone
received EIDL funds and paid the money back at a later
date. He asked if it meant those businesses would qualify
for the Alaska CARES Act money under the SBA.
Mr. Weitzner deferred the question to Commissioner
Anderson.
Co-Chair Johnston stated her understanding that
Commissioner Anderson would be giving a follow up report in
terms of changes that would be made. She asked if AIDEA or
the department had created a portal for all of the
applicants and data to go through that could be used by
Credit Union 1 and other banks to determine if there was
already an applicant through another bank in order to
combat fraud.
Mr. Weitzner replied that AIDEA was setting up the portal
as described by Co-Chair Johnston. He relayed that AIDEA
had discussed how to integrate a new program operator into
the plan. He explained that the portal was a necessary step
to ensure a single party did not apply to each of the
different grant distribution channels or the grant
provider. He added that it was one of the elements of
verification AIDEA was establishing for the program in
addition to following up, ensuring expenditure eligibility,
and verifying applicants' business licenses. The idea was
to create an initial firewall for elements of fraud, which
were starting to crop up in the programs in other states as
they rushed to put things in place to get relief to small
businesses.
3:29:23 PM
Co-Chair Johnston asked for verification that the portal
would belong to AIDEA or the state and would not be
contracted out to a non-state entity.
Mr. Weitzner replied that the portal was a way to ensure
that AIDEA had a central file between what one program
operator had and another program operator had. He detailed
that each of the operators would be checking the
information and AIDEA would clean the information up to
ensure there were no duplicate applicants to attempt to
prevent an individual business from receiving two grants
for the same submission.
3:30:56 PM
Commissioner Anderson addressed the gap left between the
SBA PPP and EIDL programs. She detailed that the program
was initially designed to provide funds for the small
businesses that could not apply for the larger programs and
due to one reason or another they were unable to access
program funds. She relayed that federal programs were
continually evolving, and the original intent may not have
occurred. The department was proposing changes to address
the issue.
Commissioner Anderson stated that after the legislature had
approved the RPL [Revised Program Legislative] and the
AIDEA board had reviewed the recommendations, AIDEA had
provided a recommendation to expand the flexibility of the
program. The recommendation was made because the time span
between the approval of the RPL and when the department
began hearing from small businesses about the intent to
apply for $30,000 and receiving $1,000, created a
substantial gap in the program and some unintended
consequences. Although the AIDEA board recommended
expanding the flexibility, the expansion had been
constrained by the RPL language. The department had worked
with the governor's office and had asked DOL to review the
language to determine what flexibility existed for DCCED to
administer the program within the confines of the law,
while meeting legislative intent. She shared that following
the DOL guidance, DCCED was making changes to the
eligibility program. The first change the department was
making was to modify the eligibility criteria to allow
small businesses who have secured PPP funds or EIDL funds
to be eligible for Alaska CARES grants provided they have
not received more than $5,000 in grant funds from these two
programs. Additionally, the department would have some type
of verification in place to ensure there was no double
dipping and that applicants had not received more than
$5,000 from grants from the two programs.
Commissioner Anderson relayed that the department was
proposing to limit exclusions to small businesses that had
directly received funding from the federal PPP and EIDL
programs only. The change would permit small businesses to
qualify that had indirectly received CARES Act money
through a municipal small business relief program or small
business owners who individually received some other source
of federal relief. She noted that the last time DCCED had
spoken with the committee, the department had mentioned
that some people had received unemployment insurance and
were questioning whether it disqualified them from the
Alaska CARES program. She reported that the answer was no.
The change would clarify that applicants could apply for
the Alaska CARES program and small business relief programs
established by communities as long as the applicant was not
looking to fund the same expenses.
Commissioner Anderson shared that DCCED had determined that
501(c)(6) entities (primarily trade and industry
associations) were eligible for the Alaska CARES program.
Lastly, the department was giving entities that received
funds from the PPP or EIDL loan program the ability to
return the funds, subject to verification, if the amounts
did not meet the applicants' needs and they wanted to be
eligible for the Alaska CARES program.
Commissioner Anderson reported that the department's
primary concern was to ensure there were processes in place
to prevent fraud and to open up the program to more
eligible Alaskans. She highlighted that approximately
14,000 Alaskan businesses had received some form of SBA
funds under the PPP and EIDL programs. The department was
unable to determine how many of the businesses received
$5,000 or less. She was confident the changes would open up
funding opportunities for many of Alaska's small
businesses.
3:35:53 PM
Commissioner Anderson turned the floor over to DOL to
explain the process used to determine the ability to expand
the program.
BILL MILKS, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
(via teleconference), discussed that as DCCED and AIDEA
worked through the first stage of the program, they and
others had identified certain limitations on the program.
He detailed that DCCED had come to DOL to try to assess
what could be done within the scope of the law to address
whether or not the program was too limited or restricted in
its eligibility. He elaborated that DOL looked at the Small
Business Relief program adopted by the legislature. He
explained that the process that had established the program
was unusual, which began with the Legislative Budget and
Audit Committee (LB&A) and the passage of HB 313. He
elaborated that the grant program had been passed into law
and DCCED had been assigned with administering the program.
Mr. Milks continued that DOL had looked at a couple of the
issues that had been raised and DCCED Commissioner Anderson
had shared some steps that could be taken. For any state
department like DCCED charged with administering a program,
the process involved looking at the underlying legal basis
for the program to sort out how much flexibility existed.
He reported that the primary issue raised was that the
program was being administered in such a restricted manner
that small businesses that received small amounts of money
from the federal CARES Act PPP and EIDL programs, were
excluded. The department had reviewed whether the
restrictions could be loosened in any way and had
determined that the approach described by Commissioner
Anderson was reasonable and within the agency's discretion.
The Department of Law had specifically determined that if a
small business received $5,000 or less it should not be
excluded from participation in the program.
Mr. Milks highlighted ways DOL made its assessment
including looking at the underlying program, the
legislative history behind the program, the purpose the
legislature was trying to accomplish, and what constituted
a reasonable approach. He explained that DOL did not just
apply the "plain meaning rule," which considered the words
in the RPL alone. The department considered the intent as
well. The department's review looked at the legislative
history and explanation, which specified there would be
some room to make modifications to a program. The intent
showed interest by legislators to prevent small businesses
that received only small amounts [of funding] from being
precluded from participation. He highlighted the background
and the unprecedented nature of the pandemic and the fact
that the programs had been adopted quickly. Additionally,
he pointed out that the federal CARES Act program was the
heart of the issue and the federal government had issued
new federal guidance several times to the U.S. Treasury on
how to administer the program.
3:41:22 PM
Mr. Milks relayed that DOL had determined that certain
limited modifications, such as the ability for small
businesses that had received $5,000 or less in federal
funds to participate appeared to be consistent with the
overall purpose and legislative history. He highlighted
another important modification in the administration of the
program pertaining to an issue that DOL believed was being
administered too stringently. He explained that if a small
business indirectly received CARES Act funds through an SBA
support program that the business was automatically
excluded. The department believed the intent of the program
was looking at small businesses that were directly
receiving money from the federal government, rather than
indirectly from Alaska's municipalities and their programs.
Mr. Milks relayed that issues had been raised about whether
or not a business could just return the money it had
received from the federal government in order to be
eligible to participate in the state program. The
department determined it was not prohibited under the small
business program and the RPL. He relayed that the changes
were limited and DOL found them permissible under the
administration of the program by DCCED. He noted that any
new programs would require legislation, but DOL determined
there was a reasonable legal basis for making adjustments
to increase the flexibility of eligibility requirements.
3:43:53 PM
Vice-Chair Ortiz asked how the $5,000 threshold had been
selected.
Mr. Milks responded that DOL saw in the legislative record
that the LB&A Committee had talked about not penalizing
businesses that received up to $5,000. The department had
seen the amount referenced by a couple of legislators.
Additionally, the program was providing funding to
businesses from $5,000 up to the cap. He explained it was
the basis for the department's conclusion that $5,000
seemed to be reasonable and consistent with the purpose of
the program.
Vice-Chair Ortiz asked if the changes made fell within the
confines of the original RPLs approved by the legislature.
He asked if the RPLs had been too restrictive to do the
kinds of things needed to provide more access to the $290
million. He asked if DOL had done what it could within the
confines of the RPLs. He asked for verification that if
anything more were to be done, action would be required by
the legislature or the LB&A Committee.
Mr. Milks replied that the program had an unusual
background in terms of how it became law, but it was now
considered law. He explained that the law assigned the
administration of the program to an agency. He detailed
agencies were given deference in terms of how the program
was applied as long as there was a reasonable basis. He
elaborated that courts had said that Alaska does not apply
the plain language rule when looking at words in a statute,
but instead they looked at the purpose, intent, language,
the background, adoption, and legislative history. He
relayed that DOL was comfortable that the changes
identified by Commissioner Anderson, fit within the ability
of DCCED to make and did not drift farther into an area
that would require legislation.
3:47:57 PM
Vice-Chair Ortiz mentioned the reference to a change that
would allow businesses that had received more than $5,000
from the PPP program or other to return the funds in order
to be eligible for some of the $290 million. He asked how
cumbersome the process would be to return the money. He
asked if it was feasible.
Mr. Milks believed Commissioner Anderson had spoken about
the importance of having certifications within the process
because it was necessary to ensure that the funds were
spent appropriately. He deferred the question to DCCED.
3:49:29 PM
Commissioner Anderson answered that DCCED was currently
researching how the department would have the ability to
identify that applicants had returned the funds. She agreed
that the process may not be as simple as desired, but the
department believed it was an important point to pursue.
The department would do its best to make the process as
efficient as possible, while providing some level of
verification and protection against fraud.
Representative LeBon suspected the originating bank could
help with verification of monies returned because they
helped with the original disbursement. He believed that the
process likely did not have to get too complicated. He
referenced a small business in Fairbanks that depended
heavily on tourism. He explained that the business owner
had received a PPP loan. He elaborated that the individual
had not spent the money, which was somewhere between $5,000
and $10,000. He asked for verification that returning the
money would make the individual eligible for the Alaska
CARES grant program.
Commissioner Anderson replied in the affirmative. She
emphasized that the department did not want to be in the
position of advising people on which program to apply for.
The department was trying to make its guidelines easy to
follow. She confirmed that if a person returned the funds,
they would be eligible for Alaska CARES grant funds.
Representative LeBon thanked Commissioner Anderson for her
response. He planned to let his constituent [in the above
example] know that he could apply for the state grant and
return the PPP loan to the originating bank.
3:51:35 PM
Co-Chair Johnston noted Megan Wallace with Legislative
Legal Services was available for questions.
Representative Wool referenced talk about the need for a
special session to change the RPL or pass a new law to
amend the RPL in order to expand the Alaska CARES loans to
people who had received PPP and EIDL loans of less than
$5,000. He asked if there would be a legal challenge or if
the interpretation by the DOL was sufficient to change the
programs. He referenced Mr. Milks' mention of 501(c)(6)
entities. He asked if any other states had the condition
that prevented a business from receiving a loan if they had
also received a PPP loan.
3:53:35 PM
MEGAN WALLACE, DIRECTOR, LEGISLATIVE LEGAL SERVICES, ALASKA
STATE LEGISLATURE (via teleconference), stated that part of
the difficulty with the analysis of the issue was the way
the program had come into existence through the RPL
process. She highlighted the legal challenge that followed
and the subsequent ratification by the legislature. She
elaborated that the RPL and eligibility requirements had
been ratified by law by the legislature. She explained that
an argument could be made that the only way to change the
eligibility requirements was for the legislature make the
changes in a special session via legislation. She stated
that the program had been established under unprecedented
circumstances; therefore, it would be a matter of first
impression for a court to consider if there was a
challenge. She stated that while there was a strong
argument that the criteria should be changed by law, there
was room for another argument to support the changes that
had been proposed by Commissioner Anderson as discussed by
Mr. Milks.
Ms. Wallace relayed that the likelihood of a [legal]
challenge and the success of such challenge was difficult
to predict. She believed there was some risk associated
with moving forward, but whether the risk was overwhelming
was difficult to say. She stated that there was no dispute
that the legislature could choose to make changes that
differed from those proposed by DCCED if it chose to do so.
3:56:29 PM
Vice-Chair Ortiz stated the proposed change was to allow
individuals who had received less than $5,000 in assistance
like PPP to apply for the program. He asked if the amount
was a critical legal question. For example, he wondered if
the number was $10 million [thousand] whether it would make
it more paramount for the legislature to approve the
change.
Ms. Wallace replied that the language of the RPL outlined
general programs, information, and requirements, which had
been accompanied by an attachment from AIDEA outlining
eligibility criteria. She detailed that the language in the
AIDEA attachment was pretty plain that an applicant would
be excluded if they had obtained some other federal
funding. She supposed that a court may look at the minimum
threshold loan amount of $5,000 and determine a department
had the flexibility when determining how much discretion to
give a department to execute the program. She relayed that
there was some risk that the interpretation conflicted with
the eligibility criteria outlined in the RPL and ratified
by the legislature. She believed the risk was lower at
$5,000 threshold versus $10 million.
Vice-Chair Ortiz clarified he had meant to say $10,000.
Ms. Wallace replied that she believed the risk would be
lower to coordinate with the minimum loan amount versus
something else. She highlighted that risk existed
regardless.
3:59:40 PM
Representative Tilton asked if there was a mechanism
available to return funding received through an SBA
program.
Commissioner Anderson answered that there was a mechanism
to return funding and DCCED was working to determine how
cumbersome the process would be. She noted that based on
the advice given by Representative LeBon, she would follow
up with him after the current hearing to work together to
determine the most efficient process.
Representative Tilton provided a scenario where a business
had received $5,000 and was then approved for $20,000
through the Alaska CARES program. She asked if the $5,000
received would be deducted from the amount the business
would receive from the Alaska CARES program.
Commissioner Anderson answered in the negative. The intent
was that a business would be eligible to cover additional
expenses not previously covered by the $5,000. She
clarified there would be no deduction.
4:01:34 PM
Co-Chair Johnston referenced a statement the department
would start accepting applicants in anticipation of putting
the new regulations in place.
Commissioner Anderson answered that the department had some
details to work out to provide to program operators. The
department would be finalizing the details and establishing
an effective date that would allow people to begin applying
for Alaska CARES grant funds under the new guidelines. The
department wanted to ensure there was clarity and that any
potential fraud issues and unintended consequences were
covered. She communicated that DCCED was expecting to have
the updates rolled out within the next several weeks. She
added that the guidelines should be finalized within a
couple of days.
Co-Chair Johnston asked if there was a timeline for the
RFP. Additionally, she wondered if the RFP would be changed
to account for the new changes. She asked if there a
timeline for setting up the portal that had been discussed
earlier in the meeting.
Mr. Weitzman answered that AIDEA was issuing an addendum to
the RFP to identify the specific changes to the program and
ensure all parties were aware of the changes. He explained
that if it changed any potential party's decision to
participate, the party would have an opportunity to give
AIDEA a response. He elaborated that AIDEA was looking to
expedite the timeline as quickly as possible later on that
evening. The goal was to have a response by Monday and
determine how quickly the data received from the bids could
be incorporated into the program. He noted that the how
quickly the responses could be incorporated depended on the
responding institutions' ability to receive applications by
a defined date.
4:04:19 PM
Mr. Weitzman moved to the second part of the question
related to how quickly AIDEA could put up the referral. He
shared that earlier in the day, AIDEA had spoken to the
current program operator, Credit Union 1, about what
information was needed in order to create a working list
that could be worked between them and the future program
operator/operators. He relayed the intent to put the portal
in place as quickly as possible and to work with the timing
of bringing on the program operator.
Co-Chair Johnston thanked the presenters. The committee
would move on to invited testimony.
4:05:19 PM
JOHN BITTNER, EXECUTIVE DIRECTOR, ALASKA SMALL BUSINESS
DEVELOPMENT CENTER (via teleconference), planned to speak
about the latest update on the [federal] PPP and EIDL
programs, which tied into the Alaska CARES program. As of
June 12, Alaskans had received 10,365 PPP loans worth a
total of $1.22 billion. There was about $100-plus billion
remaining in the program. He detailed that the application
period was open until the end of the month. He noted that
although the application period was still open, the time
was running out rapidly.
Mr. Bittner relayed that several changes had recently been
made to the PPP program. He detailed that the term of the
loan had been extended from two to five years and the
forgiveness period for qualified expenses had been extended
from 8 weeks to 24 weeks. Additionally, if a business made
a good faith effort to get their employees to come back to
work or hire new employees of a comparable skill set, but
had been unable to do so, the business could get the wages
excused. The amount a business was required to spend on
payroll had been changed from 75 percent to 60 percent in
order to enable a business to spend more on operating
costs.
Mr. Bittner discussed that Alaska had been slow to deploy
the Economic Injury Disaster Loans (EIDL), but things had
improved and as of June 12, 3,900 EIDL loans had been made
for a total of $252 million. He noted the total was more
than Vermont, North Dakota, and Wyoming, and was comparable
with Montana. He explained that the EIDL program was a more
traditional loan program with a fixed rate open to
nonprofits and small businesses. The program was also
connected to the EIDL Advance program, the up to $10,000
grant that businesses and nonprofits could apply for based
on their number of employees. He shared that 7,877 Alaskans
had received funding through the grant program worth a
total of $26.3 million. Previous testimony mentioned that
quite a few businesses had only received the EIDL grant for
a few thousand dollars. He was encouraged to hear of the
changes announced by Commissioner Anderson, which he
believed would help numerous people. The average EIDL grant
awarded was about $4,000. He believed there were a large
number of businesses that would be helped by the changes;
however, there would still be a significant number that
would be left out.
Mr. Bittner reported that the Alaska Small Business
Development Center (SBDC) had been receiving a substantial
amount of feedback over the past two weeks and the tone had
been bleak. Many businesses had reported running out of
funding, being on the verge of collapse, being despondent
over the inability to find the right combination of funding
and opportunity to keep their businesses going. He believed
many of the changes highlighted in the current meeting
would help, especially changes allowing for municipal
funds, funded through the CARES Act, to be deployed to
businesses without excluding them from the CARES Act
program. He thought the specific change would be beneficial
because several communities SBDC worked with to develop
programs had indicated they would push back the launch of
programs to avoid conflicting with the state's program. He
explained it would hopefully allow funds to be deployed
faster on a local level. He thought it would help many of
the businesses that were more difficult to reach and had
less ability to access some of the more complicated
programs.
Mr. Bitter believed there was a huge need to get as much
funding into the hands of business owners as possible. He
highlighted that the EIDL program had recently reopened to
small businesses and the PPP program was still available
for several weeks. He encouraged doing as much as possible
to enable businesses to access as many pots of funding as
possible.
4:10:15 PM
Mr. Bittner pointed out that there was not enough money in
any one of the programs to solve the problem Alaska
businesses were experiencing. He was hopeful there was a
solution that would not involve people giving back money
they had received. He wanted to see some way to augment or
amplify funding the state was receiving because all of the
projections on the economic situation over the next 6 to 12
months indicated it was a marathon, not a sprint. There
would be a long period where businesses would need
assistance and all the help they could get. He stated
whatever could be done collectively to get money into the
right hands to enable businesses to remain open and keep as
many people employed as possible, the better off Alaska
would be.
Mr. Bittner referenced an earlier question about how
complicated it would be to return EIDL or PPP funds. He
explained the process was simple for EIDL funds. He
detailed that the process involved making a check payable
to the SBA with the words "EIDL return," with the ten digit
EIDL application number, and the business name, borrower's
name, or tax ID number. The return check was then mailed to
an SBA office located in Denver, Colorado. He was less
clear on the process for returning PPP funds. He reported
that fewer people had indicated a desire to return the
funds, primarily because many had already spent a portion
of the funds in order to get the repayment. He detailed
that originally the funds were meant to be deployed eight
weeks after receipt. He was happy to work with Commissioner
Anderson and the SBA to try to find the mechanism. He
suspected it was not terribly complicated. He was hopeful
the money could be kept in businesses' hands and
supplemented somehow. He stated that how to make the
particular change happen was above his paygrade.
Mr. Bittner believed that in previous meetings there had
been a question about the Mat-Su and other areas in terms
of their coverage because they did not have an ARDOR. He
thought some information had gone out. He reported that the
SBDC was stepping in to try to cover all of the communities
that were not currently in an ARDOR region. He elaborated
that there had been a comparatively large number of
applications from Palmer and Wasilla. He had counted about
125 using the AIDEA website and information he had
collected from the SBDC in the Mat-Su. He shared that the
deployment was under $200,000 thus far. He believed the
application process was moving along more rapidly now that
the money was being deployed and learning from the first
week.
4:13:33 PM
BARB NICKELS, KAWERAK INC., BERING STRAIT DEVELOPMENT
COUNCIL (via teleconference), explained that she was with
Kawerak Inc., representing the ARDOR, Bering Strait
Development Council (BSDC). She thanked everyone involved
in making the available State of Alaska funds grants
instead of loans. She reported that the few businesses that
had been successful in her region in receiving small
amounts from the PPP and EIDL programs wished they had
known receiving the funds would make them ineligible for
the state funds. She shared that the businesses were
hopeful the stipulation could be amended to allow them to
apply. She was encouraged to hear Commissioner Anderson and
others address the issue as a potential change for
businesses that received under $5,000.
Ms. Nickels had developed and completed two COVID-19
economic impact surveys for business owners in the region.
The results had been gathered in early April and late May
through the current day. She stated it was likely no
surprise that 98 percent of the survey respondents had seen
negative impacts and disruptions due to COVID-19. She
reported that revenues were down on average by 90 percent
when compared to the same time in 2019. Many businesses had
reported that supply chains had experienced disruptions
from vendors and service providers - items normally
purchased were sold out and unavailable. She relayed that
because applications were accepted online only, BSDC had
been contacted by businesses that did not have access to
the internet to apply. She communicated that BSDC was
working with businesses that had reached out to assist them
in submitting their applications.
Ms. Nickels relayed that there were some businesses with
multiple owners and one or two of the owners had received
other CARES Act funds for other businesses, which appeared
to make the joint company ineligible to apply. She asked if
the changes would be available for joint owned businesses.
She stated that trying to track down business owners was
generally challenging. She detailed that many businesses on
the active business licenses list used cell phone numbers
that were not listed in phone directories. She explained
that BSDC was resorting to social media and planned to send
a mass mailing to track people down. She informed the
committee that Nome and many other outlying communities
were under heavy travel bans and restrictions with
mandatory quarantines on each side. The restrictions made
it nearly impossible for BSDC to travel to assist people
one on one. She understood there was no control over the
timing; however, the application process was taking place
during the months when subsistence was in full swing. She
explained that cell phones did not have service in many
areas out in the field where people were providing for
their families.
Ms. Nickels shared that many business owners worked full
time and provided valuable services to the community. She
explained that because the individuals worked and it was
considered their primary income, they were ineligible to
apply for funds to support their businesses. She
highlighted the expensive nature of running a business or
providing for a family in rural Alaska. She reported that
of the businesses BSDC had spoken to, their small business
income was equal to nearly half of their annual income. She
elaborated that many of the business owners were regional
artists who spent large sums of money on materials and were
currently unable to sell during the previous Iditarod,
upcoming craft fairs, cruise ship passenger stores. She
asked for consideration of offering funding to business
owners/sole proprietorships who also worked to cover
expenses incurred while maintaining their business, as well
as providing much needed services in the region.
Ms. Nickels communicated that BSDC was continuing to
actively assist people with their applications and
advertising the opportunity region-wide as it could. She
thanked the committee for its time and efforts to assist
small businesses and for listening to concerns and
suggestions. She thanked Credit Union 1 in Nome for its
outstanding assistance. She expressed appreciation for
AIDEA's assistance and its map identifying people who had
applied by zip code. She supported a proposal to change to
community as Nome, Diomede, and Golovin all shared the same
zip code. She explained that the initial map had all 99762
applications designated as coming from Diomede, while BSDC
believed many of the applications had come from Nome.
4:19:13 PM
BRITTANY SMART, SPECIAL ASSISTANT TO THE MAYOR AND STAFF TO
THE ECONOMIC DEVELOPMENT COMMISSION, FAIRBANKS NORTH STAR
BOROUGH (via teleconference), introduced herself and noted
that the Economic Development Commission was the ARDOR for
the Interior Alaska region. She explained that the Economic
Development Commission was structured slightly different
than other ARDORs throughout the state. She detailed that
the Economic Development Commission did not work directly
with the businesses as some of the other ARDORs did. The
commission did not have as much feedback to provide as some
of the other ARDORs did. The commission was in the process
of accepting the ARDOR funding, which was up for assembly
approval the following evening. The commission's intent was
to secure a contractor to help with the marketing and
business technical assistance for the state program, any
additional remaining federal funds, and the program the
commission was establishing at the borough with municipal
funding.
4:20:37 PM
TIM DILLON, EXECUTIVE DIRECTOR, KENAI PENINSULA ECONOMIC
DEVELOPMENT DISTRICT (via teleconference), thanked the
committee for the opportunity to testify. He reported that
over the past month the Kenai Peninsula Economic
Development District (KPEDD) had counseled or met with
several hundred businesses on the Kenai Peninsula. He
detailed that a little over 50 percent of those businesses
were ineligible because of the current guidelines. As of
the previous day, there were 108 applications from 14
different communities on the Kenai Peninsula for the Alaska
CARES program funds. He elaborated that $257,589 had been
dispensed to businesses on the peninsula.
Mr. Dillon looked back a month or so and pointed out that
business owners had done exactly what the congressional
delegation, the state administration, state legislators,
the Small Business Administration, the ARDORs, and local
government specialists had told them to do. The businesses
had been instructed to apply for the PPP and other program
funds. He emphasized that businesses were now being
penalized. He appreciated the work being done by
Commissioner Anderson and Mr. Weitzman to try to make
changes. He did not believe anyone was purposefully trying
to exclude different businesses, but it had occurred.
Mr. Dillon stated that the RPL had originally specified
that small business relief would be in the form of loans.
He elaborated that fortunately several "of us" in charge of
ARDORs had been able to explain to the administration that
according to the Treasury guidelines, the funding could not
be structured in that way; therefore, the funding had been
changed to a grant form. Unfortunately, when the change had
been made, he did not believe the RPL had been fully
adjusted for grants. He had heard from a variety of
legislators with questions about why certain businesses
were being excluded and why the federal government had done
some of the things. He shared that he had given
presentations across the peninsula in the past several
weeks. He recalled giving a presentation in Cooper Landing
where a legislator and staffer had been asking the
questions. He had to explain that the state had created the
situation, it had not been caused by the federal
government. He stressed the importance of fixing the
problem.
Mr. Dillon highlighted that Commissioner Anderson, DCCED
staff, and AIDEA had been very receptive and helpful in
working through the dilemma. He was glad to hear DOL's
interpretations. He stressed that no one was getting rich
or being made whole by the funding. He stated that every
day that passed without making the necessary adjustments
was negatively affecting businesses in Alaska. He shared
that KPEDD appreciated the interim step to allow businesses
that received a low amount of money through PPP and EIDL
the opportunity to apply for the grants, but he did not
believe things were finished at that stage. He believed
they needed to continue to chart things in the next couple
of weeks. He stated that AIDEA and Credit Union 1 were
doing a great job keeping KPEDD informed with the status
and how many dollars were spoken for. He thought the funds
should be available to all businesses with less than 50
staff members.
Mr. Dillon explained that one of the reasons for the
structure and the steps being currently taken was to avoid
leaving people out from receiving any money. He thought
that at the end of the next phase there would still be
money remaining. He stressed that the last thing Alaska
wanted was to be the only state to return money [to the
federal government] because it could not figure out how to
give out free money. He wanted to see funding being opened
up to the rest of the businesses. He stated it was the
right thing to do; some of the small businesses could be
salvaged. He was happy to see that the 501(c)(6)
organizations were still able to receive funding between
the different chambers and trade groups.
Mr. Dillon emphasized that the goal should be for the state
to be able to say "yes" to people for a grant. He
underscored that the goal was to avoid saying "no." He
shared that KPEDD had done two surveys and the scariest
thing that had come up was the number of people and
businesses that were unsure whether they would have the
ability to remain open. He detailed that over 700
businesses on the Kenai Peninsula had responded to the
survey. He elaborated that 24.2 percent reported being at
risk for closing permanently and 44.1 percent were unsure.
Whether the businesses closed depended on the funding and
how quickly it arrived. He stressed that the quicker the
money was distributed, the better off the state would be.
He thanked the committee for its time.
4:27:08 PM
KRISTIN CARPENTER, EXECUTIVE DIRECTOR, PRINCE WILLIAM SOUND
ECONOMIC DEVELOPMENT DISTRICT (via teleconference),
reported that businesses in Prince William Sound were
interested in changing the eligibility criteria so that
people who already received PPP or EIDL funding could
access the Alaska CARES funding. She knew one person who
had received $1,000 after being encouraged by the Alaska
delegation, who was now being penalized for applying. She
thanked Commissioner Anderson and AIDEA for working on the
issue. She reiterated previous speakers' support for
allowing business owners who received their primary source
of income from a job to be eligible for the money. She
highlighted that people wore many different hats in Alaskan
communities, and it was important for individuals to have
access to the Alaska CARES Act funds.
Ms. Carpenter had heard a lot about 501(c)(6) trade
association organizations being eligible for the funds. She
explained that the organizations employed people, but their
members were not able to contribute because the businesses
had no money to contribute at present. She stated it was
important to support the role the organizations played in
the communities' economies. She thanked the committee.
4:29:27 PM
ROBERT VENABLES, EXECUTIVE DIRECTOR, SOUTHEAST CONFERENCE
(via teleconference), introduced himself and relayed that
Southeast Conference was the ARDOR for Southeast Alaska. He
planned to briefly discuss the efforts Southeast Conference
was taking in concert with DCCED to get the funds quickly
dispersed. He reported that Southeast Conference was just
completing a business climate survey to understand where
businesses were in the region. He detailed that to date
there had been over 400 respondents, representing 8,000
workers who typically had 12,000 employees. He detailed
that about 48 percent of the responding businesses had
already received PPP, which had been a source of
frustration with the CARES program. He relayed that the
announced changes in the current meeting would be well
received.
Mr. Venables reported that respondents had laid off 1,900
staff due to COVID-19 and did not bring on an additional
3,500 employees they planned to hire. He elaborated that
most of the businesses during the summer months were
seasonal tourism and fisheries related. The businesses had
been able to maintain staff levels to a certain degree with
the support the businesses had received to date; however,
over 20 percent anticipated making additional employment
cuts if the situation persisted. He shared that about 25
percent of the businesses were not certain they could
survive. He stressed that no one was being made whole by
the funding. He highlighted that revenue had decreased by
57 percent compared to the prior year.
Mr. Venables relayed that Southeast Conference was
utilizing every media possible in order to get the word out
about the support the state was providing to small
businesses. He acknowledged the good work and
responsiveness of DCCED, AIDEA, and Credit Union 1. He
thought there was a bit of concern on the timeliness of
processing applications at present. He stated that the
announcements made during the current meeting addressed the
other concerns expressed by the business community. He
thanked the committee.
4:32:27 PM
Vice-Chair Ortiz thanked Mr. Venables for his testimony. He
asked whether the $5,000 was an amount that would be
helpful to many people or if it was insufficient.
Mr. Venables answered that Southeast Conference did not
have a good handle on that issue. He believed $5,000 was a
good benchmark. He stated that the pittance below the
$5,000 had been an insult to intelligence that it would be
a disqualifying factor. He relayed that they would know
shortly whether the federal funds including the EIDL, which
was below that amount, were barriers for other businesses.
Southeast Conference would communicate it to the
legislature and DCCED if so.
4:34:07 PM
Shirley Marquardt, Executive Director, Southwest Alaska
Municipal Conference{ read from a prepared statement:
I want to thank you for the opportunity to testify on
unintentional small business negative impacts related
to the PPP and EIDL restrictions to CARES Act
eligibility. Our ARDOR represents the Alaska
Peninsula, the Aleutian Islands, Bristol Bay, Kodiak
archipelago, and the Pribilof Islands. We have over
29,000 residents working in 54 communities in our
region. Many of our small businesses are family-owned
and operated year-round and some seasonally. The
shutdowns of nonessential businesses and the
restrictions on essential businesses mandated by the
State of Alaska and local governments were for the
public good and played a critical role managing the
curve of COVID-19 in Alaska. However, success has come
with a high price for many.
Numerous small businesses in our region revenue
streams are shut off completely or drastically reduced
for the past 14 weeks, while expenses continue to
stack up with little or no relief in sight.
Outstanding vendor invoices usually paid with revenue
generated during this time will need to be paid often
maxing out owners' credit cards to do so. Insurance
payments came due, utility bills continue to be
generated, and rent mortgage and loan payments
continue to come due each month. April 3rd, the PPP
loan forgiveness plan was launched, and small
businesses were encouraged to apply for eight-week
funding that could be forgiven by 75 percent. The
funds were used for payroll and employee retention.
EIDL funds were loans, not grants that could be used
to pay rent and obligations as well as payroll with a
30-year payback at 3.75 percent. By the time a $30,000
loan was paid off, a business paid $50,000.
You also had a forgivable advance payment of anywhere
from $1,000 to $10,000. The small businesses that
successfully applied for one or both of the programs
in late March through mid-April, in order to keep
their employees and help pay for their current bills,
would never guess that three months later they would
be wondering how they would stay in business. They
were now ineligible for robust grant funding that
could literally keep their doors open and bills paid
as they struggle to recover.
On April 28th, a survey sent out by the Kodiak Chamber
of Commerce, the Kodiak business community revealed
the following: 76 percent of the small businesses who
responded were approved for EIDL or PPP grant funds,
were now ineligible for CARES grant funding. Sarah
Phillips, the executive director said "many businesses
received a minimal amount of funding meant to relieve
a short timeframe. The persisting conditions and the
restrictions created by the Alaska CARES grant
program; businesses that have already received funds
could be forced out of business. While the intent of
the Alaska CARES program is to help those who have not
yet been helped and to exclude possible fraudulent
activity, restrictions are potentially causing more
harm than help for our struggling business community."
She urges the removal of restricting grant funds to
businesses that have received PPP and EIDL funds.
In Unalaska, three of the four very successful
longtime family-owned and operated restaurant/bars
applied for PPP funding in the early stages of the
pandemic as encouraged. Now they're not eligible to
apply for Alaska CARES grant funds. By receiving
minimal funding to keep their employees whole for
several weeks, they were now contemplating closing
their doors. Those same employees are now at
significant risk of losing their jobs altogether.
In the greater Bristol Bay region, the fishing lodges'
multiple local hire opportunities, such as fishing
guides, maintenance positions, hospitality workers,
airplane and dock support, traditionally run May
through mid-September, have evaporated due to a
catastrophic number of cancelations. A number of those
lodges applied for minimal PPP funding to keep a very
small core of employees maintaining the lodges and
preparing for the short but absolutely critical
visitor season. Those lodge owners have lost anywhere
from 70 percent to 100 percent of their revenue, but
they still have annual bills and expenses to pay. But
now, they have no way to pay them.
As a cautionary note on the $5,000, from what I am
hearing from the businesses in my community, a $5,000
limit to previous federal funding will leave a great
majority of those small businesses in the exact same
situation they are in now. Significant negative
consequence to many businesses has been identified and
broadcast loud and clear across Alaska. The
possibility that millions of dollars in COVID-19
funding could be unspent while any number of Alaskan
owned and operated businesses permanently close, some
with personal savings accounts completely depleted, is
dispiriting and tragic. Hopefully, it's avoidable.
Please find a way to fix what was clearly not the
governor or the legislature's goals in this CARES Act
funding.
Ms. Marquardt thanked Commissioner Anderson and her staff
at DCCED for their responsiveness and helpfulness. She
stated that the PPP and EIDL funds had been a "floatie" for
small businesses. She stated that the businesses now needed
a life raft to keep from going under. She thanked the
committee.
4:40:44 PM
Co-Chair Johnston thanked the testifiers.
^PUBLIC TESTIMONY
4:41:11 PM
Co-Chair Johnston OPENED public testimony. She asked
testifiers to limit their testimony to two minutes.
CHERYL HICKSON, BUSINESS OWNER, ANCHORAGE (via
teleconference), shared that she and her husband had owned
the Anvik River Lodge in the Yukon-Koyukuk region for 25
years. They felt that they were being penalized for being
proactive and responsible by pursing the short-term funding
from the Small Business Association (SBA). She stated that
the EIDL program was extremely random in its allocations
and there was currently no way to request additional
funding. She remarked that the program was a loan and she
did not believe it should have any baring on the ability to
apply for the grant program. She highlighted that the
interest on the loan was almost 4 percent and did not
constitute a great deal. The PPP rules had changed a couple
of weeks after they had received the loan. She shared that
they had based their loan on the original program that
talked about the seasonal requirements versus the 12-month
requirement. After the change was made, they had discovered
they could have been eligible for twice as much funding;
however, the bank had informed them it was too late.
Ms. Hickson informed the committee that the lodge would
likely not open during the current season due to location
and travel restrictions. The business had ongoing costs and
overhead and they could not leave the facility without any
maintenance or core crew for at least a portion of the
summer due to animals, weather, and potential vandalism.
They did not have the ability to leave the facility empty
due to animals and potential vandalism. She explained that
the lodge was located 70 miles upriver from the village.
She asked the legislature to do everything possible to help
them out.
4:44:10 PM
KYLE GARDNER, BUILDING BLOCKS EARLY LEARNING CENTER,
ANCHORAGE (via teleconference), relayed that he and his
wife owned the Building Blocks Early Learning Center in
Anchorage. He was excited by the news that they may be able
to relinquish their PPE funds in order to apply for the
grant. He shared that they had felt cornered by having to
quickly apply for the PPP and now they were past the eight
weeks of coverage and up a creek without a paddle. He
wanted to return the funds to apply for the grant. He
shared that a childcare program office had made a funding
broadcast to all licensed childcare providers throughout
the state to provide three months of capacity coverage, but
the money ended up not being available. He and his wife
were advocating to try to get the funds because it had
officially been offered and then the offer had been
withdrawn. He did not know how much longer they could
continue without any additional funding.
Mr. Gardner relayed that in February they had 52 kids from
40 different families with a waitlist of about 14.
Currently, he could only find about 25 kids to come to the
center. Through no fault of their own, the business had
experienced a U-turn. He elaborated that they worked with
kids between one and five years old and loved the work. He
informed the committee that without some help from the
state, many providers would have to close their doors,
which would hinder the state's ability to reopen.
4:47:06 PM
LORI BERRIGAN, CHILD CARE FACILITIES, PALMER (via
teleconference), shared that she is the owner of a
childcare center in Palmer. She was feeling incredibly
frustrated. She had applied for the PPP loan as directed
when it had first come out. She had hit the eighth week
when the funds were exhausted. Her enrollment had been cut
in half. She was starting to see enrollment increase some
but did not expect to get to full enrollment until August
or September, depending on COVID-19 numbers. She expressed
frustration that childcare providers had been told they
would receive capacity building grants and now they were
being told the funds would not come to fruition. She had
built the funding into her budgets. She stressed that in
order to be ready to take in children when the economy
reopened, childcare businesses would need help. She added
that she had sent in written testimony as well. She thanked
the committee.
4:48:52 PM
PAUL LORENTZ, SELF, HAINES (via teleconference), shared
that Southeast communities had been suffering due to COVID-
19 because the Alaska Marine Highway System (AMHS) had not
been operating correctly for close to nine months. He
stated that the Coast Guard had designated mariners as
essential personnel. He had heard that mariners were
possibly being classified as hospitality workers, which was
far from accurate. He stated that he had a memorandum from
the Coast Guard specifying how the workers should be
classified. He stressed that people who lived in Haines
could not travel to Canada to go to the grocery store. He
stressed it was difficult to get to Juneau and to get
needed supplies. He asked why the situation had continued.
He stressed that the people needed the ferry service in
Southeast Alaska. He underscored that Pelican just had its
first ferry in nine months. He urged the committee to ask
the questions [of the administration].
4:51:33 PM
VIVIAN MORK, SELF, JUNEAU (via teleconference), shared that
she owned Planet Alaska, the only Alaska Native women-owned
shop in downtown Juneau. She detailed that every item in
the shop had been made by Alaskans. She explained that the
shop supported numerous individuals throughout the state
and the business was hurting. She shared that when the
situation had started, they had done all of the right
things to protect people by shutting their doors. She
relayed that 2020 was supposed to be one of their best
economic years because tourism had been increasing. The
business had the purpose of perpetuating culture; it used a
portion of its proceeds to create classes for locals
including traditional foods and harvesting, medicine, small
cottage industry. She reported they had received the short
end of the stick the entire time. The business contributed
to Alaska's economy. Her business had done what it had been
told to do and now it was being penalized. The business
wanted to survive, and it needed transition time.
4:54:15 PM
STEPHANIE BERGLUND, CEO, THREAD, ANCHORAGE (via
teleconference), shared that the organization was a
nonprofit working across the state to increase access to
high quality and affordable childcare. She stated that
licensed childcare is an essential state infrastructure and
a vital part of the state's economic recovery; working
families could not continue to go to work or return to the
workplace without it. She elaborated that licensed
childcare needed support through the CARES Act funding to
weather the situation, reopen, and retain businesses to
support the state's communities in the short and long-term.
Prior to COVID-19, childcare businesses operated on razor-
thin margins and have few resources beyond their tuition
revenue. She stated that the pandemic had pushed many of
the small businesses to the brink of closure. She was aware
of at least five programs in Anchorage that had permanently
closed, while others were considering the possibility.
Ms. Berglund emphasized the importance of ensuring
childcare was available to support Alaska's families,
businesses, and ultimately community economies. The
organization estimated that childcare in Alaska needed $10
million per month throughout COVID-19 in order to stay
solvent. She reported that the businesses were incurring
additional unexpected costs due to major business
interruptions and shifting to provide care and learning
safely and responsibly. She explained businesses were
required to implement new health and safety measures for
the physical and mental health, safety, and well-being of
children, staff, and families. Centers also needed to hire
new staff to replace others exiting the field due to health
concerns, increase staffing to cover employees who were
out, and accommodate for additional sanitizing and health
checks. Centers were providing smaller group sizes and more
space to ensure physical distancing. Centers also needed
access to cleaning supplies, personal protective equipment,
and other.
Ms. Berglund shared that most childcare providers did not
apply for federal support and needed additional support
beyond what was available through the current, state, and
local avenues. The organization was requesting that the
legislature set aside a childcare fund with CARES
resources. She stated that any repeal or modification of
grant eligibility discussed during the meeting should be
sure to offer maximum access and reduce barriers, such as
other access to federal funds. She stated it would allow
childcare to qualify for more financial support needed. She
stressed that an investment in childcare would produce one
of the highest returns for generating the state's economic
recovery. For example, every childcare teacher that
returned to a licensed childcare program, helped an average
of eight parents return to work. She thanked the committee.
4:57:31 PM
JUDITH MILLER, SELF, HOMER (via teleconference), shared
that her six-plex rental had been damaged in the [2018]
earthquake and she was still working on making the fixes.
She had applied for EIDL in March/April and had been told
at the time she would get a call to discuss what her loss
was. She had eventually received a $2,000 advance, but she
and her bank could not figure out what it was for. She
eventually received a letter declining her for EIDL because
she had not made her economic damages known and stating
that they hoped her advance would help. She highlighted
that it had done nothing but hurt - she was in the same
boat as everyone else. The $2,000 she had received meant
she could not apply for the AK CARES funding, which she had
tried to do. She encouraged that repayment of SBA disaster
loans, particularly for Anchorage, would be treated the
same way that other SBA loans were being forgiven through
various EIDL-type funding programs.
Ms. Miller shared that she was also supporting an air taxi
business in Homer that depended on bear tours in the
summer. She stated that the only checks were the ones going
back out as refunds [to customers] because no one was
flying. She elaborated that for a relatively small PPP
grant to the company, it was also unable to apply for AK
CARES funds. She thanked the committee for its time.
Vice-Chair Ortiz asked if the $5,000 for small businesses
would be suitable in Ms. Miller's situation and for other
businesses she was familiar with.
Ms. Miller answered that she did not believe $5,000 or
$2,000 was anywhere near enough to deal with her financial
challenges. She had received $2,000 and she believed many
people had received $1,000 to $2,000. She did not know the
magic number and had not heard the entire discussion during
the current meeting. She detailed that in her personal
situation the $5,000 limit would not preclude her in any
way because she had only received $2,000. Whereas the air
taxi business she was supporting had come up with $59,000
from PPP, which was a pittance for the business in the big
picture. She elaborated that even though the amount of PPP
funds to be used for expenses other than employees had been
increased, it represented a small percentage of the costs.
Ms. Miller relayed that the air taxi business had just had
its insurance increased the previous year and the current
year, through no fault of their own. She explained that
because it was a flying business there was a huge insurance
increase. She emphasized that it was staggering to try to
remain in business. The premium to keep one airplane flying
was $380,000 a year. For a business that typically
generated $1 million to $2 million per summer, the cost was
difficult but doable; however, it was a different story
when the business was not operating, and it cost $100,000
to park the airplane. She stressed that $5,000 was a drop
in the bucket.
5:02:27 PM
Vice-Chair Ortiz clarified that the adjustment being made
was for individuals who had received less than $5,000 from
things like PPP to allow them to qualify for part of the
$290 million in small business relief. He noted that if a
business had received more than $5,000, it would continue
to be ineligible for any of the $290 million. He wondered
if the cap was reasonable for the businesses Ms. Miller was
dealing with. He believed Ms. Miller implied that some of
the businesses had received much more than $5,000 in things
like PPP funds.
Ms. Miller answered that "they" had more than $5,000. She
thought she had heard discussion about the possibility of
returning PPP funds in order to qualify for AK CARES. She
was fully supportive of the concept. In the case of the
business she was referring to, the amount was $59,000. She
noted the business had not yet accepted the loan from its
bank to start spending the funds out of hopes they could
return the money and apply for AK CARES funds. She stated
that $59,000 was not enough to do the business any good.
She stated that the business would be out of business - the
amount was insufficient.
5:04:04 PM
RUSS RENO, INDEPENDENT TRAVEL BUSINESS, ANCHORAGE (via
teleconference), shared that he owned Anchorage Downtown
TourGroup and was representing the independent travel
businesses in downtown Anchorage. He relayed that the
$5,000 was good for some businesses; however, others needed
to return the money they had received. He stressed that it
was not enough money. He had returned the money and had
been told that he was still not eligible for the other
programs. He believed there were some people who would like
to return the funding. He hoped the option would be
considered. He discussed travel businesses in downtown
Anchorage that did not want to be represented by Visit
Anchorage or the Anchorage Convention and Visitor's Bureau.
The group was comprised of mom and pop organizations that
could not afford the fees and dues associated with the
visitor groups.
Mr. Reno stated that the EIDL funding initiated to provide
emergency money up to $10,000 had been changed to $1,000
per employee. He elaborated that tourism businesses had
reduced or no employees during the winter season. He
discussed that PPP had been designed to provide emergency
relief and business expenses such as rent, mortgages,
utilities, and more. He detailed that 65 percent of the
funding was to go towards employee funding. He stressed
that several of the businesses only had one employee. He
had personally been eligible for $1,000.
Mr. Reno stated that independent travel businesses and
small businesses relying on 80 to 95 percent of their
income from summer tourism were devastated by the
convoluted relief process. He stressed that the businesses
had followed the rules, which had been changed in the
eleventh hour. He remarked that it gave the businesses the
impression that leaders considered them to be nonessential
or a casualty of war on COVID-19. He emphasized that some
mom and pop organizations lived transaction to transaction.
He stated that the constant changes resulted in confusion
that resulted in people finally giving up. The businesses
were frustrated about the lack of local representation in
the process, although there had been stellar support from
Senator Tom Begich and Representative Zach Fields, their
hands had been tied in the entire process.
Mr. Reno underscored that his business had received $1,000
in EIDL funds and he was now excluded from all other forms
of relief to date. He was disqualified from the AK CARES
Act due to the funding he had received. He had tried to
give the funding back, but he was still disqualified
because he had qualified for the $1,000 and was expected to
take it. He did not qualify for PPP due to his lack of
employees. He stressed that if he did not receive some form
of relief grant by July 1, he would be forced to close his
business of nine years permanently and would lose his
downtown Anchorage condo as well. His company Anchorage
Downtown TourGroup was still considered nonessential and
had been without a source of income since February. He had
refunded close to $50,000 in sales, lost close to $150,000
in anticipated income, and faced a potential loss of
$250,000 by the end of the season. He appreciated the
committee's time.
Co-Chair Johnston asked if Mr. Reno had heard the earlier
testimony regarding the changes that would be made to the
Alaska CARES Act.
Mr. Reno replied in the negative. He assumed the cap would
be increased to $5,000, which would allow businesses that
had received up to that amount to be eligible for the
Alaska CARES Act funds. He relayed that the change would
help many, but some people would not be helped out. He
cited the previous testifier who had said a business wanted
to give $59,000 back in order to get its real bills
considered.
Co-Chair Johnston stated they [DCCED] would be helping
businesses to return the funds in order to apply for CARES
Act funding.
5:08:46 PM
NATHAN VALLIER, OWNER, ALASKAN YUKON TOURS, JUNEAU (via
teleconference), thanked the committee for its time. He
shared that he had followed all of the instructions and had
been under the impression that if the business received
EIDL advance, which would randomly appear in a bank
account, that they would still qualify through an
exemption. He stated that the exemption was somehow removed
at the last minute by the credit union or the department.
He had assumed the exemption had still been in place. He
requested that as DOL and DCCED rebuilt the exemption, that
they did not penalize businesses that had already applied.
He highlighted that the application process had been
tedious. He suggested that if businesses that had already
applied were able to remain in the application pending
category it would be helpful for many.
Mr. Vallier relayed that he had applied March 22 for the
EIDL and had listed only two employees because most of his
staff were independent contractors. He elaborated that the
funds had appeared in his bank account in the middle of
April with no notice given. He noted that it was
challenging that AK CARES funds would be processed by
check, which meant that businesses without a Credit Union 1
in their community had to wait one to three weeks. He
pointed out that those living in rural Alaska who tried to
deposit the funds with their phone, faced monthly limits on
the amount that could be taken. He stated that anything
over $10,000 would slow "us" down. He requested to have the
ability for funds to be transferred electronically.
Mr. Vallier relayed that his business dealt with payroll
services programs and software companies that did not allow
checks; everything had to be done electronically. He
elaborated on the electronic process. He reiterated his
request for electronic funds and transfers. He thought it
was a great idea to provide funding to businesses; however,
if they were unable to use it or it took another month to
get, he believed it would impact more businesses.
5:11:40 PM
SCOTT HURSEY, BUSINESS OWNER, PETERSBURG (via
teleconference), thanked those involved for addressing the
issue of eligibility for the Alaska CARES grants. He shared
that 30 years back he had sold his fishing business and had
started Alaska Passages Adventures, a boat-based charter
business. He elaborated that the business had survived the
2008 financial recession; however, the current situation
was much worse. He detailed that he had shut down the
business for the current year. He highlighted that bookings
had already been way down due to the terrible state of the
Alaska Marine Highway System (AMHS). Due to COVID-19, any
of his bookings had already been canceled. He was looking
at zero income for the year, but he still had the expenses.
Mr. Hursey had applied for the EIDL the morning it became
available and had still not received any funding. He was
currently the sole employee so he would likely only receive
$1,000 if he got the money. He had been told by Credit
Union 1 that he was ineligible to apply for the Alaska
CARES funding because he may receive the EIDL funding. He
had been told that he could possibly return the EIDL
funding and then apply. He asked how he could return
funding he had not received. He stated that if he did
return the funds, there was no guarantee he would receive
Alaska CARES funding. He had not applied for the PPP due to
spending restrictions. He pointed out that Alaska CARES
funds could only be applied to expenses incurred after
March 11; however, many of his major expenses for the year
came in December through February such as advertising and
things that were critical for staying in business. He noted
that his business had a difficult time fitting into the
requirements of the funding programs.
Mr. Hursey asked the state to change the requirement to
allow businesses that had received previous funding to
still be eligible for the Alaska CARES funding. He thought
they may be headed in that direction based on the
discussion to increase the cap to $5,000. He thought it was
a good idea. He questioned having only one place to apply
through Credit Union 1. He thought the credit union could
be overwhelmed if numerous businesses applied. He
underscored that Alaska businesses needed the funding
sooner rather than later. He stressed the need for AMHS
funding.
5:16:20 PM
SUSAN DELOACH, CORPORATE ADMINISTRATOR, BRIGHT BEGINNINGS
EARLY LEARNING CENTER, ANCHORAGE (via teleconference),
shared that the business had four childcare centers in
Anchorage and Eagle River with a licensed capacity of 400
children. She detailed that in February the centers had
been operating at 95 percent capacity. She elaborated that
when COVID-19 struck, the state had issued mandates that
were impossible for childcare centers to adhere to. The
facilities had closed temporarily to ensure the safety of
children and employees. The state had issued a broadcast to
licensed childcare centers informing them that it would pay
building capacity grants for March through May, which was
welcome news. She reported that the business had based its
budget on the capacity grant. The business was grateful for
the grant it received in March and had heard nothing else
from the state since that time.
Ms. Deloach relayed that once the mandates from the state
were issued in a manner that the business could uphold, the
centers reopened at the beginning of June. She shared that
it had been a relief for the 180 families they were caring
for. She expressed concerns about the ongoing financial
stability of their program. She detailed that during normal
operating conditions, the profit margins for the industry
were about 4 percent. She shared that more than half of the
business's families would not be returning in the immediate
future. Additionally, the safety protocols necessary to
operate during the pandemic required more supplies and
additional payroll. The centers were certain to operate at
a loss for many months to come. The business's goal was to
remain financially stable and for all of the families to be
able to return to the programs when the pandemic was over.
Without additional funding she was concerned about the
business's ability to provide long-term childcare and to
remain open.
Ms. Deloach asked the legislature to allocate funds for the
remaining two building capacity grants to licensed
childcare centers. She reported that the funds would
provide the financial relief to operate quality childcare
into the future. She thanked the committee members for
their concern about the state's children.
5:18:48 PM
ANDY HEDDEN, SELF, HAINES (via teleconference), shared that
he and his wife owned an outfitting business in Southeast
Alaska. With the closure of the border and the loss of
cruise ships, their business was looking at a 90 to 100
percent decline in revenue. He relayed that between the PPP
and EIDL funds, they had received over $5,000. He noted
they could not return the PPP funds as they had been using
the money for payroll and rent. He stated that keeping the
EIDL funds and paying interest for 30 years was a bitter
pill compared to a grant; however, it was scary to consider
returning the loan, given the slow response and uncertainty
surrounding the CARES Act funding.
Mr. Hedden relayed that access to state grants would not
make the business whole; it would take a variety of
strategies to get them and similar companies through the
winter. He hoped the legislature would reconvene and expand
the eligibility to allow additional funding. He thanked the
committee.
5:20:00 PM
BLUE SHIBLER, DISCOVERY PRESCHOOL, JUNEAU (via
teleconference), shared that she had a large childcare
center. She had received PPP and EIDL loans at the
beginning of the crisis when it was the only funding
available. She reported that she would not be open without
the funding; however, she was very disappointed to learn
that the loans disqualified her for the grants. She stated
that the funding she had received had been used and without
additional funding from the Department of Health and Social
Services that had been promised but not received, childcare
programs around the state would close. She was in contact
with hundreds of childcare programs throughout the state on
a Facebook group and they were all struggling. She was
concerned about how it would impact the ability for
families to return to work. She hoped the public testimony
would lead to actionable change to the grant program. She
thanked the committee.
5:21:21 PM
LAURIE WOLF, PRESIDENT and CEO, THE FORAKER GROUP,
ANCHORAGE (via teleconference), relayed that The Foraker
Group served as Alaska's nonprofit association and the
capacity building organization for nonprofits across the
state. She thanked the committee for the opportunity to
speak on behalf of the almost 6,000 nonprofits in Alaska
that partnered with federal, state, and local governments.
She highlighted that nonprofits were an economic driver
that delivered essential services, leveraged public funds,
invested in communities, and ensured community well-being
and quality of life. She elaborated that Alaska nonprofits
were an economic driver as employers and revenue
generators. She informed the committee that prior to the
pandemic nonprofits were living on thin to no margins. She
reported that nonprofits with reserves were spending them
to survive or were scrambling to request philanthropic
support that could not fill all of the gaps.
Ms. Wolf relayed that without significant CARES funding and
a generous outpouring of donations, nonprofits would face
major changes, deep cutbacks, and some closures. Nonprofits
were feeling the economic impact deeply and differently
than their for-profit counterparts. She stated the
differences needed to be recognized. She continued that
thankfully nonprofits were included in the CARES Act. She
asked the legislature and everyone supporting the relief
effort to recognize the direct and indirect ways nonprofits
were impacted in order for the organizations to be a part
of Alaska's recovery.
Ms. Wolf reported that the Foraker Group supported many of
the proposed changes to the AK CARES funding presented by
Commissioner Anderson. She recognized that relief efforts
were a puzzle that required many pieces, allowing access to
funding like PPP, EIDL, and other local government funds
was critical to fixing what was broken. She strongly
encouraged the changes proposed earlier in the meeting. The
organization echoed the sentiment that the goal should be
to get to "yes." She encouraged the state to establish a
set of benchmarks for transparent, high-level tracking of
the CARES funding. The organization had volunteered to work
alongside the state and other groups to establish a set of
metrics to track the total number of nonprofit
organizations and dollars going to nonprofits across the
state. She stressed that the data would ensure the state
was honoring the intent of the federal CARES program to
include nonprofits. She thanked the committee for its time.
5:24:54 PM
SHAUNA DONNELLY, IMAGINATION STATION EARLY LEARNING CENTER,
ANCHORAGE (via teleconference), shared that childcare
centers were experiencing a funding shortage as a result of
promised building capacity funds that had not been
received. She highlighted that childcare centers were
losing between $50,000 and $100,000 per month due to being
closed or reduced capacity. Centers were also losing money
from other grants due to attendance-based funding.
Additionally, if centers closed down, it was approximately
5,000 staff that would be out of a job. She shared that if
every household had to stop working to care for their
children, it would be another 24,850 parents who would be
out of a job. She stressed that it was a lot of people in
the workforce to be without work.
Ms. Donnelly communicated that childcare centers needed the
legislature's help to establish funding to support the
workforce. Centers were also at limited capacity numbers
due to static groups. Their center had lost 30 spots at the
beginning of the pandemic due to group size changes and
regulations by the state and municipality. Childcare
centers had been promised three months of funding and they
had discovered much later that the funds would not be
available. She stated that ensuring staff were available
when the workforce was ready to go was very difficult when
the anticipated funding did not come to fruition. She
shared that she employed 40 staff and she chose to keep
them employed; however, if they had to lay staff off, they
may not return. She stressed that it was already hard
enough to hire in childcare due to all of the regulations
and low pay.
Ms. Donnelly stated that she had gone from having two
closing staff to four or five at each center in order to
accommodate the static group sizes. She emphasized that it
cost a minimum of $1,000 per day on the lower end of the
pay scale. The business was well over $100,000 to $200,000
in losses and many centers would be unable to hang on much
longer. She stressed that if people wanted to work, the
state needed to help support childcare centers.
5:29:05 PM
JOANNA LITTAU, OWNER, PLANET ANCHORAGE BED and BREAKFAST,
ANCHORAGE (via teleconference), was a bed and breakfast
owner in downtown Anchorage. She detailed that she had
owned the business since 2007 and had hosted 3,000 to 4,000
people over the years. The business operated year-round,
but the majority of activity took place from May to
September. She had no business remaining as everyone had
canceled; she did not anticipate any income for the rest of
the season. She shared that she had received a PPP loan of
$1,900, which was appreciated but was spent quickly. Her
income from the bed and breakfast was not large, but it
carried her through the rest of the year. She relayed she
would be ineligible for Alaska CARES funding because her
business would be considered a secondary income due to her
day job. She stressed that the bed and breakfast was an
important part of her income. She highlighted that more and
more people were cobbling two or three jobs together to
make a living.
Ms. Littau wanted Credit Union 1 to have the flexibility to
look at people on a case-by-case basis to determine who
needed help. She hoped the state would just let Credit
Union 1 do its job. She believed the credit union could
help people more if it had more freedom to make decisions.
Vice-Chair Ortiz asked if further CARES assistance was
unlikely to go her way because her business was considered
a secondary income.
Ms. Littau answered in the affirmative. She clarified that
businesses considered a secondary income source were
ineligible for CARES funding.
Vice-Chair Ortiz asked for verification that even though
some CARES restrictions had been reduced, they did not
apply to Ms. Littau's business even though she had only
received $1,900 in PPP funds.
Ms. Littau answered it was the way she was reading the
eligibility clause. She stated that the bed and breakfast
had been her business for several years and the income was
important to her.
5:34:36 PM
SHARON ANDERSON, VALDEZ CONVENTION AND VISITORS BUREAU (via
teleconference), reported that as a 501(c)(6), the Valdez
Convention and Visitors Bureau was not eligible for federal
or state stimulus funding. She urged the committee to
support the addition of 501(c)(6) organizations as eligible
for the Alaska CARES grant program. The organization could
not promote Valdez as a tourism destination without help
from outside its regular funding sources. The organization
relied on a city bed tax for about 85 percent of its
funding, but due to COVID-19, Valdez hotels were seeing a
30 to 50 percent occupancy. The organization would lose
between $229,000 and $320,000 in funding for the next year.
The remaining 15 percent of funding came from membership
fees and advertising funds from its tourism related small
businesses.
Ms. Anderson emphasized that tourism related businesses had
also taken a tremendous financial hit due to the pandemic.
She reiterated the bureau's request for the inclusion of
501(c)(6) organizations as eligible for the Alaska CARES
grant program. The long-term impact of the pandemic
included laying off two full-time staff, not having summer
employees, leasing a smaller building for a lower rental
cost, and no visitor center. The cuts would leave one staff
person with a pay cut to do membership business support,
promote on social media, and cooperative advertising for
the final product of the Valdez visitor guide.
5:37:10 PM
SALLY ANDERSON, SELF, FAIRBANKS (via teleconference),
shared that she owned Arctic Wild, a wilderness guide
service in Fairbanks. She thanked the committee for the
opportunity to testify. She reported that their business
was down by 66 percent and continued to decrease. She had
received PPP and EIDL loans that exceeded $5,000;
therefore, the current proposal would not help their
business. She elaborated that she was an early recipient of
the PPP funds and she had budgeted and spent the funds
within the original eight-week period to rehire employees
for the season. She noted that the changes that eventually
came to the PPP program came far too late to help her
business out. Any existing cash reserves had gone towards
refunding client deposits and to pay for workers'
compensation insurance and payroll taxes - things that were
costly and not covered by PPP.
Ms. Anderson explained that they were trying to salvage
some of their season and to do so, they would have to pay
for auto insurance, general liability insurance, labor,
food to feed clients, and equipment. She elaborated that if
they had to use the EIDL loans for the costs because they
were ineligible for the state grant, they were looking at
having their income affected for 30 years. She relayed that
changing the Alaska CARES Act parameters to include
businesses that had received other disaster relief funds
would be a huge help. The funds would allow the business to
pay off their Visa bills, rent, COVID-19 testing, and
other.
5:39:36 PM
ALICIA BERKA, THRIVE ALASKA, FAIRBANKS (via
teleconference), shared that she had worked at THRIVE for
36 years and due to the pandemic, it was the worst year
they had endured. She remarked that there were needs in
every sector. She did not believe the state could reopen
successfully without support for childcare. She reported
that THRIVE had staff who could not come back to work
because they had children at home and had no care
providers. She gave detail about the services provided by
THRIVE. She shared that in Alaska, half of the early
childhood programs had closed in the past several months
and all of the Head Start programs had closed. She
explained that Head Start served the families most in need
and they were trying desperately to reopen the program,
which was a major challenge. The program had reopened
earlier in the week with only 10 children. She detailed
that the program had to enhance its health and safety
requirements, impose physical distancing, and purchase an
abundance of supplies.
Ms. Berka discussed the challenge facing the labor force at
present - some people were medically fragile and could not
work. She spoke to the need to provide mental health
support. She shared that THRIVE had received one month of
funding from the state, but it had not received funding for
two additional months as promised. She was advocating that
state legislators would implement an early childhood relief
fund. She did not know how businesses could be successful
unless families had places to take their children. She
noted that most children had two working parents and the
early childhood field contributed over half a billion
dollars of economic activity in Alaska. She hoped the
legislature would consider the huge impact early childhood
had. She relayed that THRIVE had reached out locally to
community leaders. She did not believe people understood
the grave impact of early childhood and how many centers
would be unable to remain open. She thanked the committee
for its time.
5:43:22 PM
Co-Chair Johnston noted that Representative Josephson had
joined the meeting at the beginning of public testimony.
CHRISTINA EUBANKS, HILLCREST CHILDREN, ALASKA (via
teleconference), read from prepared remarks:
Funding is required to ensure that there are childcare
spaces available for families who will need them to
return to work. Gratefully, Hillcrest was able to
obtain a PPP loan and the partially funded capacity
building money through the childcare program office.
These funds have allowed us to continue providing care
through the hunker down, to serve essential personnel
and at risk families. With the continuing changing
requirements, the PPP funding that we got, was not
used to ensure our business's sustainability
throughout COVID, but to guarantee full forgiveness of
the funding because we could not afford to have to pay
back any of that money.
Ms. Eubanks shared that their application had been
submitted prior to current changes and the bank had not
been able to provide the full amount they qualified for.
She explained that the rule changes had left their business
lacking and frustrated. She continued reading from prepared
remarks:
The lack of committed, flexible funding for care
providers has caused our energy to be put on deciding
if it is feasible to continue offering care instead of
how to best provide care to meet our community's needs
moving forward through the pandemic. Hillcrest has had
to adjust our budget from a slight profit to a
$100,000 deficit for our next fiscal year, compared to
what we had budgeted pre-COVID due to lower enrollment
and substantially increased staffing costs to meet
state mandates to ensure children and staff health
safety and minimize community spread.
As a nonprofit, Hillcrest's purpose is to meet our
community's childcare needs. Our facility usage has
evolved over the past 50 years to provide daily care
for those as young as 6 weeks and as old as 12 years.
On top of the budgeted operating loss, we are in
desperate need of an additional $100,000 to install a
ventilation system to ensure clean air in the
classrooms once the temperature drops and the windows
close.
I expect that Hillcrest is not the only facility in
the state with a similar concern. Profit margins like
you've heard, were razor thin before COVID and now the
operating costs during COVID have us working at a
loss. Once a facility closes, it is too late. We
really ask that you make a significant, unprecedented
investment and provide the funding to honor CCPO's
commitments that they sent out with the capacity
building so that we can make sure that we stay open.
Thank you for your time.
5:46:30 PM
GREG WHITESIDE, ROMPER ROOM OF FAIRBANKS, FAIRBANKS (via
teleconference), shared that Romper Room of Fairbanks had
been mandated to be closed since the beginning of March. He
reported that the childcare facility still could not open
due to CDC guidelines. He explained that social distancing
on the facility's inflatable devices for young children was
currently impossible. He shared that the business had been
advocating for changes since the beginning of May. He
elaborated that they had been arguing against the
disqualifying factors for businesses in regard to the
Alaska CARES Act funding. He explained that having another
full-time job automatically disqualified a person. Another
disqualifying factor was having accepted any monetary
denomination.
Mr. Whiteside informed committee members that because the
business had been mandated to be closed, it was going on
120 days of no revenue. He shared that they had planned
over 20 events outside for the summer, some were
fundraisers for nonprofits. He explained that the events
had all been canceled due to the pandemic. He had been
urging the legislature to reconvene to make changes. He
supported changes to help businesses with zero revenue and
potential future revenue. He stressed that the business
provided substantial support for the community - it had
given $60,000 to $80,000 back to nonprofits in the past
four years.
Mr. Whiteside reported that the business could likely
qualify for an SBA loan; however, he did not think it was
right that he would have to pay a 30-year debt for
something that had nothing to do with how the business had
been run. He stressed that the business was facing
inevitable bankruptcy. He shared that it was very scary for
a business that had four successful years to be in the
current position within just four months' time. He spoke to
the devastating effect of the pandemic.
Mr. Whiteside relayed that he had spoken to Credit Union 1
and had learned that the Alaska CARES Act process was slow
because the credit union was required by the state to audit
every dollar that people were asking for in financial
relief. He thought it was crazy. He thought that perhaps 50
total applications had been processed thus far. He hoped
the mandate changes would help businesses. He stressed that
the business was in desperate and dire need. He expressed
empathy for other struggling businesses. He thanked the
committee for its time.
5:50:14 PM
Representative Wool thanked Mr. Whiteside for calling in
and reaching out to his office. He felt for all of the
businesses currently suffering. He referenced Mr.
Whiteside's testimony about adhering to CDC guidelines and
that the business had also been mandated to not open. He
asked if the state was mandating enforcement of CDC
guidelines or mandating the business to close.
Alternatively, he wondered if the business was being
prudent and following the CDC guidelines.
Mr. Whiteside answered that at first it had been the state
mandating closure. The second issue was that CDC guidelines
made it impossible for their type of facility to be able to
reopen and successfully remain profitable. Additionally,
the issue was about the welfare of the youths who used the
facility. He stressed that it was very difficult to open
and ensure safety.
Representative Wool communicated his understanding that the
state mandated closure had come to an end and that Mr.
Whiteside was being a responsible business owner by
following the CDC guidelines. He surmised the business was
not able to have kids maintain a six-foot distance at its
facility.
Mr. Whiteside agreed. He explained that their goal was not
to inject COVID-19 into the community; the objective was to
have an open facility that families felt safe in. He
elaborated that with CDC guidelines it was impossible for
their business to be able to do so.
5:51:51 PM
DEBRA RODRIGUEZ, BRIGHT BEGINNINGS EARLY LEARNING CENTER,
ANCHORAGE (via teleconference), shared that her business
partner had provided testimony earlier in the meeting. She
detailed that the business had four centers in Anchorage
and Eagle River that had been greatly impacted by the
pandemic. She elaborated that enrollment had dropped to 25
percent capacity almost overnight in March. Coupled with
the lack of clear mitigation guidance, the business had
been forced to close for two months. Bright Beginnings had
been promised by the state's Childcare Program Office that
it would receive three full months of substantial funding.
As a result, the business had reopened at lower capacity
with increased expenses. She listed various expenses. They
were currently operating at a loss. She stressed that they
desperately needed the building capacity funding that had
been obligated to the business.
Ms. Rodriguez highlighted that quality licensed childcare
was an essential part of the state's economy. She implored
the legislature to act quickly to stabilize the childcare
industry in Alaska. She thanked the committee for its time.
5:53:49 PM
COLEEN GOLDRICH, OWNER, ANNIE KAILL'S, JUNEAU (via
teleconference), thanked the legislature for the
opportunity to testify and for its work on the topic. She
wanted the legislature to reconvene to change the
eligibility guidelines to allow small businesses to receive
additional funding in the form of grants. She had received
PPP funding and an EIDL loan, in addition to a City and
Bureau of Juneau loan. She stated that the loans had
enabled the store to make it through the last several
months. She elaborated that the store had closed for two
months as it had been mandated to do. The store had
reopened as soon as it felt safe to do so. She was thankful
for the loans; however, the business would have difficulty
making it through the next couple of years. She shared that
her own cash reserves had been depleted. Sales were 30 to
40 percent of the normal levels for the current time of
year. She noted that there was no tourism business and she
was incredibly thankful locals were out shopping.
Ms. Goldrich had been hopeful that she would be able to
apply for a grant from the CARES Act funding and had been
dismayed to learn that she was ineligible to apply because
she had received loans. She shared that she was 56 years
old and found herself in an incredible amount of debt over
the next 30 years. She understood there was an incredible
amount of need out there. She stressed that the situation
was desperate and dire for her business. She knew that many
other small businesses in Juneau had received PPP funding
and now the were all just stuck with huge debts. She
employed about 12 people and typically about 6 people
during the current time of year. She represented 150
artists and small businesses, approximately 75 were
Alaskans. She explained that the trickle out from her
business impacted numerous people. She begged the
legislature to reconvene to fix the problem. She thanked
the committee for its time.
5:57:24 PM
HEATHER DELOACH, BRIGHT BEGINNINGS EARLY LEARNING CENTER,
ANCHORAGE (via teleconference), relayed that the childcare
industry provided a foundational infrastructure for the
rest of the economy. She shared that she had worked at
Bright Beginnings for about eight years and the current
year was the most devastating financial year the business
had seen. At the beginning of March, Bright Beginnings had
been operating at 95 percent capacity, serving about 400
children, and employing about 100 staff. The business was
now operating at 30 to 40 percent capacity. She reported
that about 80 staff had returned to work. Bright Beginnings
had been required to hire additional staff to meet space
needs for checking kids in and out, taking temperatures
upon entry, and intensifying cleaning schedules to maintain
a safe environment.
Ms. Deloach stated that Bright Beginnings had temporarily
closed for the months of April and May, due to the
inability to ensure a safe environment for staff and
families. She reported that in mid-April they had been
promised three months of capacity building funding from the
state to help the business function as an essential
service. After making some crucial business decisions based
on the funding, including rehiring staff, they had been
told they would only receive the funding for one month.
They were grateful and felt lucky because some programs did
not receive the funding for one month. She stated that the
childcare industry provided vital infrastructure to the
rest of the economy.
Ms. Deloach shared that they had struggled to find PPE
[personal protective equipment] gear and cleaning supplies
due to high demand and other restrictions from vendors. She
shared that she could not purchase hand sanitizer or
disinfectant wipes from Amazon because she was not a
healthcare facility or government agency. They were doing
their best, but it often required making multiple weekly
trips to make the center safe. Bright Beginnings had spent
two to three times what it had been spending on the
supplies prior to the pandemic. The increase was partly due
to the need for increased supplies, but primarily due to
inflated prices. The business was trying to operate on less
than half its income and greatly increased operating costs.
Additional funds were vital to the business's ability to
remain open and provide care to families. She thanked the
committee for its consideration.
6:01:14 PM
BRITTANY FORD, SELF, FAIRBANKS (via teleconference), shared
that she had two group homes in Fairbanks. She relayed that
childcare facilities had been told they would receive a
given amount of funding, but it had not come to fruition.
She shared that it had taken her about six months to obtain
a license for her second facility, which had been an
expensive process. The second facility was open by March 1
at full capacity. She reported having to close by March 30.
She had been unable to get any help because she had only
been open for one month, despite paying for six months of
overhead in the process of getting the facility ready to
open. She had received the one month of funding from the
state that was supposed to be three months of funding.
Additionally, she had received a very small amount in EIDL
and PPP funding. She was now unable to receive anything
from the Credit Union 1 grant because she had received the
loan funding. She shared that the miniscule funding she had
received was not enough to go very far.
Ms. Ford relayed that she had reopened one of the
facilities at 25 percent capacity. She was hoping to have
the rest of the families return; however, people were
scared [due to the virus]. She stated that the small amount
of money had helped keep the rooves over their heads, but
that was the extent of the help it provided. She shared
that if she had to close, she would be taking out two very
loyal families who had worked for her for six years and
lived in the facilities (as required by the state). She
spoke to her need for additional funding support. She would
prefer not to receive loans because going into debt would
be hard. She wanted to be available to help families
returning to work, but she was faced with turning away five
families a day. She was not completely comfortable taking
on new families and wanted to be there for her existing
families.
Ms. Ford stated there had already been a shortage of
daycares prior to the pandemic. She knew many people had
not been able to reopen their centers. She hoped some
reconsideration could be made in terms of the building
capacity funds that had been promised. She also hoped that
eligibility requirements for the grant funds would be
expanded. She thanked the committee for the opportunity to
testify.
6:05:06 PM
LEEANN GARRICK, CHIEF OPERATING OFFICER, COOK INLET TRIBAL
COUNCIL, ANCHORAGE (via teleconference), appreciated the
voices of childcare providers who had expressed their
challenges. She spoke from the perspective of an employer
and emphasized the importance of opening childcare in order
for businesses to open. She detailed that Cook Inlet Tribal
Council is a social services provider in Anchorage and it
was imperative that its employees and clients had available
childcare. She stated that if the CARES Act authorized
funding to keep childcare programs open, distributing a
limited amount of the available funding would prevent
childcare providers from reopening or staying open. She
urged the department to deploy all of the funding to keep
the essential support systems available for the people of
Alaska. She stressed that opening childcare meant
businesses could open. She thanked the committee for the
opportunity to testify.
Co-Chair Johnston highlighted that the public could email
testimony to the committee. She thanked the presenters and
public for their time. She remarked that it was helpful to
hear from people affected by the devastating economic and
public health crisis. She hoped some of the changes
announced during the meeting would have a positive impact.
She asked the public to continue sharing its concerns and
ideas with the committee.
ADJOURNMENT
6:08:07 PM
The meeting was adjourned at 6:08 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CARES Act HFIN Pub Testimony Packet 2 rec'd by 061820.pdf |
HFIN 6/17/2020 3:00:00 PM |
HFIN CARES Act mtg |
| CARES Act HFIN Pub Testimony Packet 1 rec'd by 061720.pdf |
HFIN 6/17/2020 3:00:00 PM |
HFIN CARES Act mtg |
| CARES Act HFIN Pub Testimony Packet 3 rec'd by 061920.pdf |
HFIN 6/17/2020 3:00:00 PM |