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Juneau attorney asks court to pause Alaska’s small-business pandemic aid program

Attorney Joseph Geldhof stands on the steps of the Alaska State Capitol as legislators return to Juneau under new health mandates as they consider Gov. Mike Dunleavy's proposed use of federal Covid-19 money. (Photo by Michael Penn)

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A Juneau man is asking a state judge to pause Alaska’s $290 million program to help small businesses affected by the coronavirus pandemic.

In a filing Monday, attorney Joe Geldhof asked Superior Court Judge Philip Pallenberg for a preliminary injunction to stop the program. In the filing, Geldhof says it is illegal for the state to unilaterally change the program’s rules. He says the approval of the Alaska Legislature is required.

By phone, Geldhof said the intention is not to force the Legislature to reconvene; he would be satisfied if the new rules were approved by the Legislature’s budget and audit committee, which can make financial decisions outside of regular session.

Geldhof, on behalf of plaintiff Eric Forrer, has been in a constitutional dispute with the state since May, when he filed suit over the state’s plan to spend more than $1 billion in federal coronavirus relief. The Legislature subsequently ratified a spending plan written by the governor. Forrer did not end the lawsuit but did drop a request that the state stop distributing aid before the case was resolved.

Last week, the Alaska Department of Commerce said it was responding to public complaints by changing the rules for AK CARES, the state’s small-business aid program funded with federal coronavirus relief money. The new rules allow businesses to receive state aid even if they have received small amounts of federal aid.

Originally, the Legislature approved rules prohibiting federal-aid recipients from getting state small-business aid, and Forrer contends that only the Legislature can change that criterion. Assistant attorney general Bill Milks told a legislative hearing last week that the state believes it can change the rules because it was not the intent of lawmakers to block all federal-aid recipients.

Forrer has asked Pallenberg to consider the matter on an expedited basis. No schedule has yet been set for a hearing.

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