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Alaska changes rules for coronavirus aid program that locked out many businesses

Alaska’s $290 million coronavirus-aid program for small businesses will no longer exclude those who received small amounts of federal aid. The rule change follows an outcry from many businesses and some legislators who felt the rules for the program were too restrictive.

Julie Anderson, commissioner of the Alaska Department of Commerce, told members of the Alaska House Finance Committee on Tuesday that the new rules will permit applicants who received $5,000 or less in direct aid from the federal government. This includes some beneficiaries of the Paycheck Protection Program and Economic Injury Disaster Loan.

In addition, businesses will not be excluded from the state program if they received help from municipal programs funded by the federal government.

“I’m very pleased to hear the changes the commissioner announced. That’s going to help a lot of people,” said Jon Bittner, executive director of the Alaska Small Business Development Center.

In a smaller change, the state is opening the program to chambers of commerce. Some nonprofits have already been allowed to apply.

The AK CARES state-aid program is distributing grants of $5,000 to $100,000. That money can be used for rent, utilities and other expenses incurred as a result of the pandemic. The state program is generally more generous and less restrictive than federal aid programs, something that frustrated businesses that had been ineligible.

Anderson said businesses that received more than $5,000 in federal aid can return it to become eligible for the state program.

She said rules put in place when the program began June 1 “created a huge gap in the program and some unintended consequences.”

The Department of Commerce previously said it was unable to change the rules barring federal aid recipients because the Alaska Legislature had enshrined that rule in law. Democrats in the Alaska Senate had urged the Legislature to convene in special session, but on Tuesday, the Alaska Department of Law said it had reinterpreted the matter.

Assistant attorney general Bill Milks said state lawyers considered “legislative intent” and concluded that it was not lawmakers’ goal to bar federal aid recipients, even though the language ratified by the Legislature specifically stated that such businesses “do not qualify.”

“Making these adjustments to make the eligibility more flexible, we thought there was a reasonable legal basis for that,” Milks said.

Rep. Adam Wool, D-Fairbanks, asked whether that interpretation could be challenged in court.

Megan Wallace, the Legislature’s chief attorney, said the state is “essentially in uncharted territory, in unprecedented circumstances,” and she believes “there is some risk of moving forward.”

The state has already been sued over the way it handled the federal money behind the AK CARES program, and that case remains in the courts.

Attorney Joe Geldhof, representing the plaintiff in that lawsuit, was skeptical of the state’s ability to unilaterally change the rules without legislative input.

“So now we’re going with ‘legislative intent’ of an unconstitutional allocation?” he said by text message. “There is no end of dippy thinking in the governor’s office and apparently the attorney general’s office.”

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