Daily Sitka Sentinel

City Faces Challenge Using CARES Funds

By SHANNON HAUGLAND
Sentinel Staff Writer

The Assembly at tonight’s work session will discuss ideas and rules related to spending the $14 million or so in CARES Act funds designated for Sitka.

Comments from the public  generally aren’t a part of Assembly work sessions, but Mayor Gary Paxton said he’ll talk to the Assembly about taking public  comment, but only after Assembly discussion.

“We’ll need 30 to 60 minutes to talk among ourselves about a very abstract issue,” Paxton said. “We need a very broad discussion to sort things out about where and how we’re going to fund these things.” 

The work session starts at 6 p.m. at Harrigan Centennial Hall with one item on the agenda: “Discussion on CARES Act funding.”

The meeting can be viewed in real time on the city’s YouTube channel. A link is available at cityofsitka.com

The federally funded Coronavirus Aid, Relief, and Economic Security (CARES) Act is intended to provide “fast and direct economic assistance for American workers, families and small businesses, and preserve jobs for our American families,” says the U.S. Department of the Treasury.

City Administrator John Leach said the city needs to apply for the money, and must spend it by the end of the year. He said he received the paperwork for the grant Friday afternoon.

“We’re not making any decisions tonight,” Leach said today. “This is more or less a way to have an open discussion. ... I hope to get some guidance on where and how to spend CARES Act funds that align with the best interest of the community.”

He added that if the city does not follow the rules and guidelines, it risks having to return the money, a concern that’s been brought up also by finance staff.

“Right now the big thing for us is we still have very little guidance on the allowable uses for the CARES Act funds,” said city controller Melissa Haley. “It’s pretty restrictive right now.”

For some time, Assembly members and city staff have been hearing from residents about the financial damage the coronavirus lockdown is causing them. Leach said the ad hoc Economic Resiliency Task Force, representing different sectors of the economy, has been weighing in with staff of the effects on businesses.

“Those have been heard loud and clear,” the city administrator said.

The information packet for tonight’s meeting is available on the city website, under Assembly Agenda and Minutes. It includes information from finance staff for the Assembly to consider in its discussion.

“All funding must be expended (payments made) by December 31, 2020; any unexpended funds must be returned to the State of Alaska,” the finance staff says in the second paragraph. “Funding will be received in 3 tranches, and each tranche must be expended before the next tranche is received.”

There are references to the city’s “White Paper” on CARES Act guidelines and restrictions, and sections on “Important Restrictions,” “Unknown Requirements” that may impact expenditures, “Major Areas for Consideration for Possible CARES ACT Fund Use (e.g. first responder costs, small business and nonprofit grants), Administrative Resource Requirements, and “Appropriations.”

There are eight other attachments in the information packet.

“We’re at the point where the Assembly can begin making decisions on they wish to spend it on,” Haley said. “It’s going to be our job to make sure those uses are legal, and we’re not going to have to pay it back. If we have to give it back, we’re talking millions that have been spent - that will hurt the municipality.”

She cited the example of Hurricane Katrina in the eastern U.S., when five years after the disaster the federal government was recouping emergency funds spent by the local governments that were later deemed ineligible.  

Haley said more guidance has been coming in from the U.S. Department of Treasury, and she and city finance director Jay Sweeney plan to stay in touch during the process with the city’s auditors and other finance officers around the U.S.

Paxton said he and other Assembly members are certainly interested in getting information from the public about CARES Act needs.

“How to deal with businesses, how to deal with nonprofits,” he said. “This is the first broad discussion ... If we get the $14 million we’re supposed to, we will have plenty of money to help a lot of businesses, but we need to do that in a fair and equitable manner.”