At an ad hoc meeting on Monday, Haines Borough Assembly members identified five potential spending categories for the $4 million in CARES Act funding the borough is scheduled to receive—emergency and medical response, direct support for individuals, grants for small businesses, coronavirus testing and food security.

On March 27, the U.S. Congress passed the CARES Act, including direct COVID-19 relief for states. Alaska received $1.25 billion.

In early May, Gov. Mike Dunleavy released a breakdown of how the administration would like to distribute the funds including $569 million in direct relief for municipalities.

On Wednesday, May 20, lawmakers approved distribution of the CARES Act funds, including roughly $4 million for Haines.

Under current federal guidelines, these funds can’t be used by local or state government to replace lost revenue like sales tax or school bond debt reimbursement. The CARES Act requires payments be used exclusively to cover “necessary expenditures incurred due to…COVID-19” between March 1 and Dec. 30 of this year.

Accepting the CARES Act funds requires several steps on the part of Haines Borough elected officials.

Last Friday, Mayor Jan Hill signed the CARES Act grant agreement. The assembly will need to pass a resolution formally accepting funds and an ordinance appropriating the funds before the borough’s finance department can begin writing checks.

Municipalities in Alaska will receive the CARES Act funds in installments. The first payment to Haines, which should be available by the end of the month, is roughly $2 million. The borough will need to spend 80% of the money before it becomes eligible for the next payment of just under $1 million and a third and final payment worth the same amount. Any funds not spent by the end of 2021 must be returned.

The CARES Act grant includes reporting requirements and there is a decent chance the borough will be audited by the state and possibly the federal government, borough chief fiscal officer Jila Stuart said at the ad hoc meeting. The assembly must find a quick, thoughtful, legal way to disburse the funds, she said.

Assembly members discussed potential uses for the funds, identifying categories including emergency response, assistance for individuals, small business relief, coronavirus testing and food security.

To date, the borough has appropriated roughly $120,000 for emergency response including purchase of a decontamination unit. These expenses are eligible for reimbursement with CARES Act funds.

Other emergency response-related items eligible for CARES Act funding include wages for first responders through the end of the year and capital projects designed to improve public health or increase social-distancing capacity, Stuart said.

Assembly member Brenda Josephson suggested funds could be used for improvements to the public safety building which currently houses the borough’s ambulances and the morgue.

Assembly members agreed that increasing testing capacity would be a valuable use of CARES Act funds.

Emergency Operations Center incident commander Carolann Wooton said the EOC has had discussions with the SEARHC medical clinic about the cost of testing those who enter the borough. The clinic proposed testing people when they enter town, and then again a week later as the disease can take several days to reach a point where it is detectable through testing.

Wooton said a rough estimate involved testing 100 people a week. The two tests cost $350 per person, and the cost adds up quickly. Two months of testing at this rate translates to roughly $300,000.

Testing costs could be impacted by the actual number of people entering the community and whether insurance will cover some or all of the costs associated with testing for those with health insurance.

Josephson suggested setting aside an initial amount for testing and then refining future amounts based on actual numbers.

Food security is another eligible use of CARES Act funding. At the meeting, Josephson said she has heard that one of the main challenges with food security is the ability to store food produced during the summer months. Those present discussed the potential for partnering with existing food security task forces in the Chilkat Valley to come up with ideas.

Providing relief for businesses and individuals raised questions about eligibility requirements.

“Part of me wants to copy something that’s already been done, but if we do that, we’re covering the same people,” Stuart said. She said she’s received feedback from business owners who were not eligible for the federal Paycheck Protection Program because they lack employees. A borough-administered grant program could help businesses that fell through the cracks.

Stuart said it could be difficult to determine how much money to set aside for direct assistance to individuals. The borough will need to set standards for eligibility and decide how assistance applies to families with children.

Direct relief has the potential to use up a substantial portion of Haines’ CARES Act funding. While $1 million sounds like a lot, when divided among 500 individuals, it comes out to $2,000 per person. That’s not a lot for a person who has lost employment as a result of COVID-19, Josephson said.

Borough staff and assembly members expressed interest in modeling grant programs on systems set up in other communities.

The Alaska Municipal League (AML) has been tracking the CARES Act and working with local, state and national partners to understand best practices for how municipalities can utilize funds. The organization is working to compile a list of suggestions for how municipalities might want to spend CARES Act funding, AML executive director Nils Andreassen said.

Juneau’s Economic Stabilization Task Force has come up with specific ideas including a program that gives grants to local businesses to assist with debt payments and costs of retrofitting the business to operate during the pandemic. Eligibility is based on at least a 25% decrease in sales, documented through sales tax returns.

Although the Haines Borough will likely find ways to spend the $4 million by the end of the year, assembly members lamented some of the restrictions placed on fund usage.

For Haines residents, personal need will be greatest next winter, after the spending deadline for CARES Act funds, assembly member Jerry Lapp said.

At present, the borough can’t use funds for revenue replacement. Two weeks ago, Sen. Dan Sullivan introduced a bill that would broaden the use of CARES Act funding to include replacement for borough revenue lost due to COVID-19. The bill has not moved since its introduction.

Stuart said she has heard the bill characterized as “likely to pass” and said if it passes, she imagines the borough will want to spend some CARES Act funds to pay for school bond debt. When Dunleavy originally vetoed the state’s portion of school bond debt payments, he said he hoped municipalities would be able to use CARES Act funds to replace the loss of revenue.

The assembly will consider a resolution to accept CARES Act funding at its May 26 meeting.