The state received 1,171 applications from Alaska’s smallest businesses in the first week of the $290 million grant program funded by the federal bailout bill, with 11 grants funded so far for a total of $248,264.

This is a long way from reaching the original goal of giving out $150 million a month to small businesses.

The Alaska Industrial Development and Export Authority and commerce department told legislators Wednesday of plans to hire another financial institution by the end of June to speed the process. Credit Union 1 is the contractor handling the grants now and has been overwhelmed with the volume.

Credit Union 1 approved 44 grants during the first week. All told, the 1,171 applicants have asked for $50.8 million in grants. More than 800 of the applicants have from one to five employees and are looking for money to pay rent, mortgages, etc.

One of the continuing problems is that the state set up this program to give grants to businesses that had been unable to get any other federal aid and those were the rules given to the Legislature. The Dunleavy administration wanted to allow businesses that had received small amounts to qualify, but it failed to revise the plan given to lawmakers or allow flexibility. The prohibition was spelled out and is explicit in the so-called RPL, which means “revised program legislative” process.

Rep. Andy Josephson read the iron-clad ban aloud and said, “Aren’t we at a place where we just need to fix that?”

The answer is yes, but for weeks, Commerce Commissioner Julie Anderson has made confusing and contradictory remarks to explain the Dunleavy administration’s failure to establish flexible rules.

Instead of admitting the mistake, she keeps referring to waiting on legal clarification from the attorney general to bless a degree of flexibility that contradicts the law.

She responded to Josephson’s simple question by saying: “That is, as we are looking at what we can do within the guidelines, I’m sure that is one of the items the Department of Law will be looking at. As I stated earlier, if we can find some flexibility through reviewing the intent behind the RPL approval process. We are looking to solve this problem. We hear it from everyone as much as you are hearing it.”

She said that she has heard from businesses that expected to get $20,000 or $30,000 from the federal PPP program, ended up getting $2,000, and would like to apply for a state grant. They don’t qualify.

If there is approval coming from the attorney general, it will contradict the state rules that prohibited giving grants to businesses that collected any federal aid under PPP or the other programs.

The Dunleavy administration made this policy decision, not the federal government. The administration needs to admit the error and correct it legally, whether that means a special session of the Legislature or a revised document that could be approved by the Legislative Budget & Audit Committee.

Fairbanks Rep. Bart LeBon, who worked as a banker for decades, advised Anderson during a House Finance Committee meeting to open the program to more businesses. He and Rep. Adam Wool both mentioned constituents who had received $1,000 from another federal program, making them ineligible for the state grants of up to $100,000.

LeBon and Josephson both said the Legislature is eager to do whatever is needed for a more sensible approach. The one thing the state doesn’t need is bureaucratic delay.

It makes no sense to say that because a small business received $1,000 or $5,000 from another federal program it should be ineligible for this state grant program.

“I encourage a quick and rapid action on your part to allow for eligibility in that group who received very modest funding—again I use that example of a $1,000 grant, doesn’t hardly do anybody much good,” LeBon said.

On May 20, the AIDEA board, which includes Anderson, said it would make the state grants available to businesses that had received small amounts from the federal government. But that was a day after the House wrapped up its work, having adopted rules that prohibited the approach AIDEA chose.

A May 27 press release from AIDEA contradicted the May 20 decision and said the grants are for businesses that were “unable to receive support from federal funding made available by the CARES Act.”

The governor should have acted before now to revise the rules.

The grants, ranging from $5,000 to $100,000 are to be given out first-come, first-served to businesses that have yet to receive federal bailout assistance. The businesses have to have no more than 49 employees.