With the Legislature adjourned and legal issues surrounding the distribution of federal relief money, at least for now, on pause, municipalities across the state are awaiting their first payment under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.
Payments were set to go out Friday, according to Jeff Turner, spokesperson for Gov. Mike Dunleavy. But as of late Friday morning, that money still hadn’t arrived in Juneau’s bank account, according to City and Borough of Juneau Finance Department Director Jeff Rogers.
Rogers added he didn’t think there was a cause for concern and expressed confidence it would arrive over the weekend. There were, however, still some concerns about how the money can be used.
“There is still a fairly high level of uncertainty on what those funds can be spent on,” Rogers said, but there are significant guidelines expected from the U.S. Treasury Department.
The biggest issue municipalities now face is that CARES money can’t be spent on cities’ lost revenue, but there’s federal legislation in the works that could change that.
“We are expecting U.S. Congress to amend those guidelines,” Rogers said. “What we are expecting to get traction is whether or not cities can use it on lost revenue, which means basically we can spend it on anything.”
Earlier this month Sen. Dan Sullivan, R-Alaska, introduced the Coronavirus Relief Fund Flexibility Act which would retroactively expand the use of already distributed federal relief money. Sullivan said in a May 13, video statement he had a productive conversation with President Donald Trump regarding the matter, and had bipartisan support for his bill, including from Sen. Lisa Murkowski, R-Alaska.
Even with limited uses, city officials already have a good idea of what needs to be addressed immediately once the money is available, namely salaries for first responders, business grants and support for child care, Rogers said.
He said members of the City and Borough of Juneau Assembly were relying heavily on the advice of the Economic Stabilization Task Force set up by Mayor Beth Weldon on April 6.
[After nearly a month, CARES Act funding is heading out]
“We’ve seen harm in two significant areas, one is people,” said Max Mertz, a professional accountant and task force co-chair. “A lot of people have lost their jobs, we have some pretty generous unemployment insurance but that runs out July 31.”
A significant part of Juneau’s economy is tied to the tourism industry, Mertz said, and without as many visitors coming this summer, business owners and employees who rely on tourist dollars are going to be in a difficult situation.
“The other side was business, the harm that’s come to the business community and business owners,” said Mertz. “That’s huge, these are families, we’re talking about folks who have invested their life savings, and they’re the job providers.”
Those things are intertwined, Mertz said, which is why business grants and support for child care follow right after salaries for first responders.
“We’ve covered a lot of bases,” Mertz said. “At the worker level; what can we do to help there? Lost income, housing being threatened; what can we do to keep these businesses around so they can continue to provide jobs and pay taxes and all those things we need them to do?”
Under Dunleavy’s allocation plan, CBJ will receive a total of $53,288,390 over several months, according to plan documents. The first allocation, originally meant for May 1, will include $25,031,720. It is expected to be followed by two payments of $14,128,335 on July 1 and Oct. 1.
While the Assembly has yet to adopt any official plans, there was fairly broad agreement among members the items suggested by the task force were acceptable, according to City Manager Rorie Watt.
“Public safety wages and the costs that we’ve incurred across the city for all the emergency operations that we’ve been doing,” were likely to receive priority, Watt said.
According to projections for the Fiscal Year 2021 budget, Rogers said, that’s going to mean about $17 million for salaries and benefits, mainly for the police and fire departments, but for other staff critical to combatting COVID-19 in the city as well.
After that, the task force had suggested setting up a business grant program with roughly $2.3 million during this first payment round and about $1 million for support to child care facilities, Rogers said.
Child care facilities were in deep need, Mertz said, because, “they’re low-wage, operate on a shoe string and have significant financial need because they haven’t been able to operate and they had need of PPE and other things.”
Getting child care centers running again was critical for allowing parents to return to work, Mertz said.
“Our child care situation was bad before the pandemic and it’s been revealed to us how challenging our child care situation is here and how difficult it is for parents to get back into the workforce,” Rogers said.
Cities can’t make it on current revenues
Combining the proposed costs of salaries, child care and business grants comes out to about $20 million, which asks the question what’s to be done, and when, with the rest of the money.
“There’s no real race to spend all that money. We’ll need to stabilize the economy into the fall and next year,” Rogers said. “It’s just a balance. There is some urgency to get some money onto the streets soon, some expediency to stabilize the local economy. We will come back at a later date to see how the economy’s going to respond.”
But looking ahead, officials can already see some areas that are going to need attention in the future.
“A lot of individuals and business earn their money in the summer, so what is that going to look like in the fall?” Mertz said. “We have some federal programs that are going to be going away. Right now, (unemployment) expires July 31. What happens after that? What are those workers going to do?”
During the pandemic the city has had to rely on non-profit organizations to provide certain services, particularly for housing the homeless, Watt said.
“A lot of nonprofits have been hit really hard,” Watt said. “We have far more unsheltered people than we do sheltered capacity in the traditional infrastructure.”
Nonprofits like the Glory Hall and St. Vincent de Paul Society which have been providing those services will need to be reimbursed, Watt said.
The city was already planning some reductions, Watt said, though only one city employee has lost their job. Some empty positions already budgeted for will be eliminated and other positions will be reorganized, according to Watt. The position being eliminated is the plan reviewer in the Community Development Department, Watt said, but that’s largely because there’s been a decline in construction in Juneau even without the pandemic, making the position hard to justify.
Aside from cuts, the city’s other option for money is raising property taxes, Watt said, but with real-estate values likely to fall, that might prove difficult.
Juneauites take in the sun downtown on Friday, May 22, 2020. For the foreseeable future, locals will be the main source of revenue for businesses that typically rely on tourism money. That’s among financial concerns raised by the coronavirus, city officials said. (Peter Segall | Juneau Empire)
“If the economy takes a big hit and property values go down, which seems entirely possible, does the Assembly want to raise property taxes?” Watt said. “If property is worth less, if values went down 10% you’d need a 5% (property tax increase) increase to remain revenue neutral.”
All city officials said the biggest problem, however, is the uncertainty surrounding the entire pandemic which makes it difficult to plan in the long term.
“I just can’t believe how far we’ve come in two months and how much the world has changed,” Watt said. “We’ve been whipsawed from fear of virus spread and standing up health care, to no tourist season, to relief money and not knowing how we can spend it.”
Conditions surrounding relief money may change and additional funding may come from the federal government which could change the city’s calculus, Watt said.
“If Congress expands the applicability of the funds or the deadlines, that might change our horizons” Watt said. “I think it’s going to be really dynamic over the next couple months.”
• Contact reporter Peter Segall at psegall@juneauempire.com. Follow him on Twitter at @SegallJnoEmpire.
