The Legislature will soon be back in session.
Speaking to KINY after returning from several weeks on his boat, Senate Finance Committee co-chair Sen. Bert Stedman said the Legislature will return to session in order to approve new appropriations to put $1.25 billion in federal COVID-19 aid to work in the state.
“The Legislature is the appropriating body and there’ll be significant sums in there that will have to be appropriated,” Stedman said. “I would expect the we are reconvened in the next couple weeks to take action on that.”
The money has generated a great deal of speculation since it was announced as part of the federal CARE Act. Gov. Mike Dunleavy announced plans to use it to replace hundreds of millions of dollars in vetoes, which raised its own questions because such a use appears to run contrary to the federal guidelines for the money to be used on unanticipated expenses related to the COVID-19 pandemic.
The state expects the money to be delivered to state coffers sometime this week.
While the governor, legislators and Alaska’s Congressional Delegation are still waiting on additional guidelines for how the money can be spent—particularly where it might be used for economic relief measures—what ’s also come into clear focus is the governor’s limited ability to spend that money without additional legislative approval.
The issue was the subject of a legislative meeting last week where the Legislature’s financial and legal experts laid out the limited options Dunleavy has to spend the money. The governor can search for programs that already have federal funds attached to them, which in the most recently passed budget is largely limited to the realm of public health, or the Legislature can pass wholly new appropriations by returning to session and passing a new budget bill.
“That’s certainly a policy call for the Legislature but if we talk about risks involved—as we can see from this discussion today—there’s a lot a of unknowns, but what the Legislature and what the state does know is that the state will receive a minimum of $1.25 billion from the federal government,” said Legislative Legal Services Director Megan Wallace at last week’s hearing. “If we want to take out the speculation or confusion in terms of authority to expend those monies, yes, the simplest thing to do is for the Legislature to specifically appropriate the $1.25 billion. Then there’s no confusion in terms of who has the authority and where those funds go.”
Wallace noted that the federal COVID-19 aid, like all federal aid, comes with strings attached.
“Part of the reason that careful analysis and consideration should be given is that (the CARES Act) does contain oversight authority and the inspector general of the Department of Treasury does have oversight, monitoring and basically an audit function to make sure that expenditure of the funds … are spent in compliance with the use-of-funds provision, which is they are necessary expenditures for the COVID-19 emergency,” she said. “If it’s later determined that the state did not use the funds for that purpose, there is the risk that the state will be forced to repay those amounts.”
Stedman, in speaking with KINY, expressed interest in appropriating the money to schools, community assistance payments, public health programs and several other areas. Additional federal money for infrastructure and other programs is also expected through other aid programs.
“I would expect that the Legislature to take swift action on moving those monies through the process so they can get to the recipients, which is the people of Alaska, as soon as possible,” he todl KINY, adding that the infrastructure money would also likely require action. “So, I would expect the Legislature, when that money arrives in Juneau, will take swift action on that and also move those funds into construction projects in airports around the state.”
The Legislature is still technically in session though it wrapped up most of its must-pass legislation and left Juneau at the end of March. Leadership opted to leave the session open in case additional measures were needed or if the public health concerns were eased, but stopped short of passing rule changes that would allow them to hold floor votes remotely.
Stedman and other legislators did, however, anticipate that federal money would be coming to Alaska, but ultimately opted to limit the governor’s ability to expend those funds to the realm of public health. They also raised the spending limit on the state’s disaster relief fund by $10 million.
Dunleavy had requested open-ended authority for further measures but legislators, who’ve been at odds with Dunleavy for much of his time in office, were reluctant to give him additional money with no questions asked.
A return to session would give Dunleavy another opportunity to push for a large cash payment to Alaskans, akin to his campaign promise of a full dividend. However, he’s deflected on the question of turning the federal aid into a direct payment and has recently called on the Legislature to fund a $1,000 payout from the state’s dwindling savings.
It’s likely that the Legislature will conduct most of its work before returning to session, limiting the amount of time and exposure required by a return to Juneau (though some legislators and staff have remained in Juneau instead of risking travel home). Just how much of those negotiations will happen out in the open and how involved the governor’s administration will be has yet to be seen.
The Legislature has already scheduled several hearings—which will be conducted telephonically—this week.
On Wednesday, the House Finance Committee will meet to hear an updated fiscal outlook (oil prices have continued to deteriorate, with one benchmark falling into negative territory on Monday) as well as an update on the direct federal aid.
Also on Wednesday, the House and Senate education committees will be hearing a join hearing on a controversial online contract the state signed with a troubled Florida-run organization in the midst of the coronavirus, the education budget and the impacts on the University of Alaska. Later in the day, the House Labor and Commerce Committee is planning an update on unemployment insurance.
On Friday, the House Finance Committee has scheduled a meeting with an agenda still to be announced. The House Labor and Commerce Committee will be back for a hearing on the economic impact of COVID-19 and potential measures to mitigate the harm.