Lawsuit seeks to block small business relief, alleging it doesn’t follow approved plan

Lawyer Joe Geldhof talks on the phone in the second floor hallway of the Capitol in Juneau in February 2019. Geldhof said on Tuesday that a filing by his client Eric Forrer seeks to block some small business relief due to Gov. Mike Dunleavy’s administration failing to follow its own legislatively approved plan. (Photo by Skip Gray/360 North)

A lawsuit is seeking to block the state from sending COVID-19 relief to at least some small businesses that would have benefited from changes announced last week.

Juneau resident Eric Forrer made the filing on Monday in Juneau Superior Court. It’s an amendment to the lawsuit he filed in May that led to the Legislature reconvening in Juneau. 

At that time, the Legislature approved Gov. Mike Dunleavy’s plan to spend federal CARES Act money. 

But Dunleavy’s administration announced changes to the plan last week that would expand the number of small businesses that could receive relief. 

And it is these changes that Forrer is seeking to block. 

Joe Geldhof, Forrer’s lawyer, said the state should be following the standards the Legislature approved in the plan. 

“The chief executive can’t start deviating from the policies because they found a more interesting or creative or better way to spend the money,” Geldhof said. “The public deserves to have the standards applied.”

The changes would allow businesses that received up to $5,000 in federal aid from two federal programs — the Payroll Protection Program and the Economic Injury Disaster Loan program — to also receive AK CARES grants. 

Geldhof said Forrer doesn’t disagree with the substance of the changes, but said they must follow a constitutional process.

The Department of Law released a statement saying that the state stands by its position to distribute federal funding “to help businesses and communities mitigate the devastating impacts from the pandemic. These funds are needed now, and the State stands ready to defend the actions the Governor and Legislature have taken to get funds to those who need it.”

Geldhof said Forrer isn’t seeking to force the Legislature to reconvene again. He said the Legislative Budget and Audit Committee could meet to address the issue. 

Committee chair Rep. Chris Tuck, an Anchorage Democrat, said he believes the type of change the administration is seeking should be made by the entire Legislature. 

“It seems like all we’re trying to do is circumvent the proper process,” Tuck said. “And because that’s happening, things are all messed up and it’s a ball of mess.”

Tuck said he would support a different approach to COVID-19 funding that would target aid to mortgage and rent relief. He said many small businesses would benefit from that approach, and it would fit within the authority of the committee. 

Senate President Cathy Giessel, an Anchorage Republican, said in emailed statement that senators “supported the governor’s decision to expand eligibility for grants to small Alaska businesse.”

Giessel said she’s encouraged by state efforts to work with local financial institutions to address the backlog of AK CARES applications.

“If further legislative action is needed, we will take action,” she said, adding that at this time, senators support the governor’s plan and believe it needs a chance to work.