A lot of money is heading Alaska’s way—and no one knows how it’ll be spent

Gov. Mike Dunleavy discusses the $1.25 billion in federal COVID-19 money coming to Alaska during a March 31, 2020 update.

$1.25 billion.

That’s the minimum guaranteed amount of money coming to the state of Alaska from the federal COVID-19 relief bill passed last week. And that’s not counting additional federal money specifically earmarked for education, disaster relief, public health agencies, the National Guard, public transportation, unemployment insurance, election security, business loans or the $1,200 direct payments to many Americans.

Just what that money will go to and who gets to decide how it’ll be spent were questions legislators only began to ponder in Juneau before they brought an early end to the session in the wee hours of Sunday morning. Legislators approved the plan for how state dollars will be spent, but not these additional federal dollars.

As they wrapped up session, the Legislature stopped short of giving Gov. Mike Dunleavy the $1 billion blank check he had requested to deal with coronavirus, instead granting him authority to accept unlimited federal funds in the areas of unemployment, education, public health and the state’s disaster relief fund.

At the time, legislators bristled at the notion of handing the governor a $1 billion check, which would have come from the earnings of the Alaska Permanent Fund, without a clear plan about how it’ll be spent.

“All he wants is money in a briefcase and for us to not ask questions,” said Rep. Chuck Kopp, R-Anchorage, at the time, according to a report by the Anchorage Daily News.

But when it comes to the $1.25 billion, it’s not entirely clear what kind of limitations will be placed on the money and how broadly Dunleavy will be able to spend it. The governor even addressed the uncertainty during Tuesday’s COVID-19 update, where he was asked if he would turn the money into a big dividend payout.

“We’re going through what happened at the federal level as well as what happened at the state level, the state Legislature,” he said. “We’re having those conversations this week. We’ll come up with a plan so Alaskans can see what we’re doing with that money but our main goal has been to A, get the resources needed to build up our health care capability, that’s job number one, then make sure we stabilize the economy for the worker and small business and then other businesses as well. We’ll have a better answer in a day or two.”

Dunleavy added that the decision would be made in the governor’s office. The federal government allows for the money to pass through to local governments but doesn’t require it.

Several people we talked to about this funding had the same answer: That it’s not clear where the limit is on how this money can be spent. Things like unexpected health care costs, equipment purchases and other services are clearly the intended purpose, but what about economic stimulus measures or a big cash payment to Alaskans?

The National Conference of State Legislatures released a breakdown on the legislation with the following guidelines for costs that can be covered by the new funds:

  • Necessary expenditures incurred due to COVID-19.
  • Costs not accounted for in the state budget most recently approved by the time the federal bill went into effect
  • Costs incurred during the period that begins March 1, 2020, and ends Dec. 30, 2020.

The issue, at the very least, highlights the need for rigorous oversight of the administration, particularly one that spent much of its first year cutting what appeared to be sweetheart deals to political allies while skirting the state’s procurements laws left and right.

The Legislature added oversight language to its legislation to require monthly spending reports from the governor. Those reports are to list “the expenditures used to cope with the public health disaster emergency” and specifically all actions “directly related to the prevention, control, and status of novel coronavirus disease (COVID-19) cases in the state.”

Economic measures, like aid to affected businesses or cash payments, might not be covered by that language.

The administration has certainly been creative about things in the past and it causes legislators like Sen. Bill Wielechowski, D-Anchorage, concern as this money is set to arrive.

“I think it was a huge mistake for the legislature to get out of town without putting more solid sideboards on that,” he said.

Wielechowski noted that the state’s emergency powers give the governor broad authority to spend money and no one really knows its limits.

“I was on the phone with legislative legal yesterday trying to figure out ‘what can he do with that?’ There’s all kinds of confusion over that. Nobody understands what the parameters are, nobody understands what the legislative authority is,” he said. “If the governor comes out and just says, ‘I’m gonna use those funds and write everybody a $2,000 check,’ could he do that? Maybe, I don’t know.”

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