Pause before the storm? Legislature awaits guidance on $2 billion in new federal money

Legislators were hustling last week to conclude required reviews of Gov. Mike Dunleavy’s appointments to various state boards and commissions, and the House Finance Committee worked to complete its proposed version of the state operating budget.

However, the big “gorilla” in the state capitol building is the pending receipt of $2 billion in federal funds for Alaska courtesy of the American Recovery Act, or ARP approved by Congress. This doesn’t include President Joe Biden’s proposed federal infrastructure program, which Congress had yet to approve.

The money that is approved , in the ARP, has yet to appear but to use it the Legislature must pass an appropriation bill as well as authority for state agencies to receive federal funds.

That means things will get very busy in the capitol next month, as the Legislature’s required adjournment approaches.

Decisions on how to handle much of this can’t be made until the U.S. Treasury issues guidance on how funds are to be spent, and that won’t come until May 11, the Senate Finance Committee was told last week. May 11 is just days from the Legislature’s required adjournment on the 120th day, making it extremely difficult for legislators to pass a comprehensive new spending bill.

The solution would be extending the session or calling a special session to deal with the federal money. About half of that, or a billion dollars, goes to the state of Alaska itself and would require appropriations to legally spend. The rest is designated for municipalities and school districts as well as state agencies dealing with health and housing. These funds require the agencies to have receipt authority from the Legislature.

Meanwhile, on the immediate budget work, the House Finance subcommittees must officially present their recommendations to the full Finance Committee, which must adopt the recommendations. However, those are already being used to start the development of a proposed committee substitute for the budget bill submitted by Gov. Mike Dunleavy earlier this year.

The House must send its bill to the Senate, which already has its changes in hand. A Senate version will then go back to the House with differences to be working out in a budget conference committee. A similar process will be followed for a state capital budget, which will be slim this year. The Senate will initiate the capital budget and send it to the House.

On another issue, the debate over an extension of the state’s public health emergency continued last week in the Legislature, this time in the state Senate. A bill extending the emergency declaration, House Bill 76, narrowly passed the state House and sent to the Senate, and the Senate Finance Committee held hearings last Monday and Wednesday.

The extension of the emergency declaration, which expired in mid-February, has fast become a hot-button political issue in the Legislature, with conservative groups telling lawmakers that it is no longer now that vaccines for COVID-19 are here and that requirements like face mask and physical distancing represent an intrusion on personal liberty, even though they are not connected to the emergency declaration.

The governor also now opposes the extension, although he originally supported it. Alaska is the only state without a formal heath emergency declaration.

Last Wednesday health care organizations lined up in the Senate Finance Committee in support of the extension, arguing that it remains an important tool in controlling the virus, noting that infections are rising again in Alaska.

Phil Hofstetter, CEO of the Petersburg Medical Center, said his community experienced a spike in new infections days after mandatory airport testing for COVID-19 ended. The declaration gave the state the authority to require testing of arriving passengers at airports instead of the tests being voluntary.

“We watched people just walking past the testing stations at our airport, and the virus quickly began to spread. We had to shut down our schools and impose restrictions on businesses for two to three weeks,” Hofstetter said.

Other support for the extension came from Peace Health, operator of Ketchikan’s hospital; the South East Alaska Regional Health Consortiums, which operates hospitals and clinics in several Southeast Alaska communities, as well as the Alaska State Hospital and Nursing Home Association.

Not everyone testifying supported the extension, however.

Mike Coons, a Palmer resident, said he thinks the declaration gives too much power to the executive branch to order restrictions, and that special interest groups are behind the bill to reimpose the declaration. “This is all for power and money,” he said.

“We’re now in the recovery phase (from COVID-19). Please don’t get in the way of that,” Coons told the committee.

However, Nils Andreassan, executive director of the Alaska Municipal League, said Alaska cities and boroughs uniformly support an extension of the declaration. “The loss of the declaration means that local governments have been scrambling to fill holes (in health services) in the absence of the state declaration,” Andreassan said.

Most Alaska municipalities do not have health powers and in the case of a pandemic like COVID-19 rely on the state declaring an emergency to give municipalities the legal authority to act.

“Many (local) health emergency declarations were tied to the state’s declaration and have now expired. Some (municipalities) are now racing to address spikes in cases. Many are looking at an uncertain future, new strains or variants, supporting vulnerable residents, planning for an economic rebound, or preparing for the lack,” of a recovery. Ultimately, it is this uncertainty that winds up being the most challenging,” Andreassan said.

“A state government that is responsive and capable at the very least assists local governments in stabilizing their current operating environment…a declaration remains just a tool at our disposal,” he told the committee.

The future of HB 76 is unclear. It narrowly cleared the House, which has a coalition organization with a thin margin, and now must pass the Senate, which has a clear Republican majority. Even if the bill were to pass the governor may well veto it.