As the economic impacts of COVID-19 are increasingly felt by individuals and businesses in Haines and across the country, state and federal stimulus packages are coming together to offer relief.
Jeanne Kitayama and Paul Wheeler, owners of Haines Brewing Company, said their business has been greatly diminished since they converted to take-out only in order to comply with local and state social-distancing mandates. They said they have also lost wholesale business as restaurants and bars have closed. In recent weeks, Haines Brewing has stopped production and reduced hours. Kitayama and Wheeler said they are planning to apply for a forgivable loan from the federal government to help their business through.
Other businesses in Haines have experienced similar effects as social-distancing measures have been strengthened. Rhonda and Rodney Hinson, owners of Alaska Rod’s, said they switched to a curbside delivery and mail-order operation after Haines issued a “shelter in place order.” Customer numbers have been very low since then, they said. Right now, they are considering options. “Our needs will greatly depend upon how long this lasts and the effects on our busy season. We are very dependent on the sales during the busy season for the survival of our store and for our ability to hire locally,” they said.
Haines Economic Development Corporation executive director Margaret Friedenauer said that while Haines-specific unemployment numbers will not be available until mid-April, the state released a report that jobless claims throughout Alaska jumped from 687 the week of March 8 to 4,046 by March 20. This date was before eligibility requirements for unemployment were broadened and still fairly early on in social-distancing efforts. Since then, Alaska has issued a statewide “shelter in place” mandate, closing all non-essential businesses, and another mandate restricting travel between communities.
“I have talked to several businesses who are telling their employees that they should file for unemployment,” said Friedenauer, who is working to compile a list of economic resources available to those in the community. “It doesn’t hurt to put your application in and provide as much information as you can.” Recent laws passed at the state and federal level have made changes to eligibility requirements for unemployment benefits, making a much broader swath of the population eligible.
Under the CARES Act, a federal law signed by the president last Friday, unemployment eligibility is extended to almost anyone who has lost income as a result of COVID-19. This includes gig and freelance workers, self-employed workers and people who have not earned enough to contribute to unemployment benefits. It also offers benefits to people who quit as a “direct result of COVID-19,” a departure from traditional unemployment qualifications, which typically exclude those who quit jobs.
While some businesses are laying off employees, others are keeping them on payroll with the aid of federal loans. Small businesses with fewer than 500 employees are eligible for emergency grants and forgivable loans through the Small Business Administration (SBA). SBA will award loans of up to $10 million per business, and any part of the loan used to pay workers, rent or existing debts may be forgiven if employees at the business keep their jobs through June.
Friedenauer said she has heard that SBA has received a great number of applications and has heard from several local businesses that intend to apply for the loans. “The wait time is three to five weeks,” she said, “but it’s really important to get applications in.” Businesses are not obligated to accept loans if offered, but by putting in an application, a business ensures that they are in the system and more easily able to access any future stimulus measures administered by SBA.
As a growing number of businesses across the nation apply for SBA loans, it’s creating administrative problems. “The site recently crashed because it was getting so much traffic,” said Rainbow Glacier Adventures owner Joe Ordonez whose tour business has been on hold as the start of cruise ship season continues to be pushed back due to COVID-19 concerns. Ordonez said he hopes he will be able to salvage some of the season, but “there’s a chance that we won’t open at all this summer. That’s something we need to consider as a real possibility.” Part of his contingency plan includes applying for an SBA loan.
The law also defers student loan payments through September; includes funding for various industries ranging from seafood to airlines; allots, at minimum, $1.25 billion for each state to use to fund COVID-19 responses at the state and local level; adds funding for K-12 education; makes COVID-19 testing free and requires that private insurers cover treatment for the disease, including an eventual vaccine.
Communities with sizable tourist economies are going to be hit the hardest, Friedenauer said. While Haines has a more diversified economy than a community like Skagway, there are still a sizable number of tourism-dependent jobs, including a lot of seasonal workers who will be severely impacted, she said.
In an HEDC memo, Friedenauer said last March there were roughly 125 people working in a category called “leisure and hospitality,” which includes businesses like restaurants, the golf course and guiding companies. The number of jobs in this category peaked at a little over 400 last July. The typical seasonal expansion in employment may not occur in the same way this year if COVID-19 concerns persist into the summer.
COVID-19 will negatively impact industries including “travel and tourism, retail, fishing and seafood processing, and may even slow mining, oil and gas,” Friedenauer said. She said this was a topic of discussion during a recent Alaska Municipal League phone call.
The impacts to these industries will be felt by every member of the community and are likely to translate to reductions in tax revenue for local governments ranging from fish tax to sales tax to commercial passenger vessel fees. A likely scenario is a 20-50% reduction in revenue for municipalities, Friedenauer said, but it could be as much as an 80-95% reduction. “This will deplete savings, reduce overall budgets, increase the need for increased local taxes and affect local ability to pay for essential public services, including public safety and education,” she said.
Mining jobs in Haines remain uncertain for the summer. Constantine vice president Liz Cornejo has said the company is still discussing summer plans and has not committed to any specific projects.
HEDC will continue to track the economic impacts of COVID-19 in the coming months, Friedenauer said. She said it is hard to predict what the final outcome will be as the situation is highly volatile. Friedenauer is in the process of sending a survey to businesses in Haines to better understand the challenges they are facing and see if any needs are not being met. She said she will release informal results on Facebook once she has compiled responses.
Friedenauer said she will continue to update the HEDC website as new economic resources become available. Those interested in applying for SBA disaster loans can do so through the SBA website. Unemployment benefits can be applied for through the Alaska Department of Labor and Workforce Development’s website. The HEDC website contains links to both pages.