The borough estimates its revenue loss due to the pandemic and its hit to economic activity in town could total almost $2.2 million by June 30, 2022. That total for lost revenue at The Marine Service Center, port and harbors, utilities, the Nolan Center and museum and other borough accounts does not include an estimate for any drop in sales tax revenues.
The $2.2 million covers fiscal years 2020-2022.
To help fill the pandemic-caused drop in borough revenues, Wrangell is scheduled to receive $485,000 in federal aid under the American Rescue Plan, which Congress approved and the president signed in March. “We can use that to offset lost revenue,” Borough Manager Lisa Von Bargen said.
Wrangell’s share will come from $230 million allocated by the federal legislation to Alaska cities and boroughs.
In addition, the borough is looking to receive further assistance from the state, which will get more than $1 billion in discretionary aid under the same federal legislation.
Von Bargen sent a letter to Wrangell’s legislators last month, listing where the borough is seeing a drop in revenue and asking the Legislature to direct a share of the state’s federal aid “to help those communities in the state hardest hit by pandemic impacts.”
How much Wrangell might receive from the state is unknown. The Legislature this week is in the final days of a special session to set out a spending plan for the fiscal year that starts July 1. Lawmakers face a Friday adjournment deadline.
Although the House and Senate budget conference committee settled on appropriating $50 million of the state’s federal funds as “grants to local governments with significant revenue loss due to COVID-19,” the budget bill does not specify a formula for distributing the money to cities and boroughs.
The money would go through the Alaska Department of Commerce, Community and Economic Development. But even before adoption of an allocation formula, the $50 million appropriation will need the governor’s approval.
Under Alaska law, a governor can eliminate or reduce any budget item.
The Legislature also directed that $30 million of the federal aid go to nonprofits to offset their revenue losses, $90 million as grants to tourism-related and other businesses, and $7 million to help cover delinquent accounts at utilities.
The Alaska Municipal League, which represents cities and borough across Alaska, has been pushing for the state to share some of its federal money with communities that are still in a deep hole, even after their own federal allocation.
The municipal group refers to communities such as Wrangell, Skagway and the Denali Borough, which depends heavily on visitors to the hotels at Denali National Park, as “disproportionately impacted” by the drop in tax dollars, said Nils Andreassen, AML executive director.
“If you want economic recovery … if you want local governments to be in a position to support economic recovery,” the state needs to ensure that those communities are financially stable, Andreassen said. A solid step in that direction would be to help those municipalities hit hardest by the drop in cruise ship passenger tax revenues, fish taxes shared by the state, sales and hotel bed taxes, and other revenue losses, he said.
The league is compiling a list of municipalities and their revenue losses through the next fiscal year, looking at what the communities received last year under the federal CARES Act, what they will receive this year under their direct allocation through the American Rescue Plan, and how big of a gap remains.
Among the municipalities with the deepest holes are large cruise ship-dependent towns of Skagway, Sitka, Juneau, Ketchikan and Hoonah.
The Wrangell borough received $3.25 million last year in CARES Act funding, but much of that went back out as grants in the community, Von Bargen explained. Some of the money was spent on COVID-related expenses, such as testing, leaving the borough short of fully covering its lost revenues since the pandemic’s impact started spreading through the economy early last year.
Looking back to the start of the economic upheaval, and looking ahead to next spring, the borough predicts about $1 million revenue losses at its port, harbors and marine service center, the manager said in her letter to Sen. Bert Stedman and Rep. Dan Ortiz, who represent Wrangell.
Over fiscal years 2020-2022, the borough expects the Nolan Center will see a revenue drop of $465,000 in visitor and rental fees and movie tickets.
Borough assembly approval will be needed to spend whatever the community receives in the latest round of federal aid.
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