The City of Bethel will be receiving $8.4 million in CARES Act funding from the federal government, but the city can only spend it on COVID-19-related expenses. The funds cannot be mixed with the normal operating budget, even though the city is expecting hundreds of thousands of dollars less in sales tax revenue this year because the pandemic has slowed down business.
City Manager Vincenzo “Vinny” Corazza said that a formula based on Bethel’s population determined how much the city would receive in CARES Act funding. The $8.4 million amount is almost 80 percent of the city’s yearly operating budget.
According to the CARES Act, Bethel must spend every dollar before December 30, 2020. Any money the city doesn't use by that time must be returned, something Corazza doesn’t want to do.
“I do not like to give federal money back,” Corazza said. “I mean, our senators work hard to give Alaska its share.”
But council member Mark Springer said that it’s probably more realistic to expect some money to be left over.
“I don't think there's any way that we're going to be able to spend $8 million on COVID-19 planning, preparation, and response between now and December 30,” Springer said.
The CARES Act spells out that these funds can only be used for expenses caused by the COVID-19 public health emergency. Corazza said that, for example, the city couldn’t use it to hire more general assignment police officers, but it could pay for police officers dedicated to responding to coronavirus calls.
“So it has to be related to COVID-19,” Corazza said.
City Attorney Elizabeth "Libby" Bakalar said that if the city breaks the rules and uses the funds on non-COVID-19 expenses, it could be fined up to three times the amount it is found to have misspent. Springer said that the city should have its accountant and attorney on speed dial to make sure any purchases made with the funding can pass an audit.
“There are going to be an awful lot of auditors working very hard for years after the pandemic is over,” Springer said.
Mayor Perry Barr said that the city has already spent $75,000 to keep the Bethel Winter House open; he expects that amount to be reimbursed with CARES money. He also suggested that the city could stock up on personal protective equipment.
“That's a lot of PPE for the amount of money that we have,” Barr said.
Corazza told the city council on May 26 that he would implement a cab voucher program for Elders, paid for with CARES funding. It would allow Elders to take cabs by themselves without picking up other passengers. The Elder would pay the normal flat-rate cost, and give the cab driver a voucher that would compensate for not picking up additional passengers. Corazza said that he hopes to implement this program by June 1. He also wants to use the money to purchase and renovate two buildings: one to use as a quarantine shelter, and the other to use as an emergency operations center for the city’s staff to respond to future COVID-19 outbreaks. Another idea is to provide residents extra water deliveries for free.
“Because of hand washing and sanitation, residents need to order extra water, so that is definitely COVID-related,’” Corazza said.
But $8.4 million in 7 months requires a lot of spending, and Corazza said that he’s open to any suggestions.
“I do plan to have some sort of a forum to solicit input from the public,” Corazza said.
Corazza said he has a town hall scheduled for June 18 to gather ideas from community members, and he plans to have an itemized budget to submit to the state for approval by July 1.
Assembling that budget may be difficult because the city is without a sitting Finance Director or Assistant Finance Director. After former Finance Director Christine Blake quit on May 22, Corazza named himself Acting Finance Director and appointed an acting assistant. He said that he will use the CARES funding to contract a bookkeeping firm to help him keep track of the CARES budget, which he says needs to be kept independent of the city’s normal operating budget.
“Like a separate accounting system and staffing because I don't want the money to be commingled,” Corazza said.
While the CARES budget may have too much money, the city’s operating budget has the opposite problem: too many expenses, not enough funds. Corazza said that the city is expecting a 10 percent drop in sales tax revenue this year, a loss of about $700,000.
“There's less travel, people aren't going to the store and buying things,” Corazza said. “So yes, we do anticipate a decrease in taxes and revenue.”
That deficit can't be filled with CARES funding. Although the city council has not yet approved the budget, Corazza said that his general plan is to make up the difference by eliminating raises for employees and postponing proposed road projects.
Council is also considering taking some money this year from the general fund, a fund built up in budget surplus years. According to city staff, the general fund currently has millions of dollars in it. Council will have to approve the finalized budget before the deadline of June 15.