By Jessica Edwards
Haines Borough revenues from areawide property tax and sales tax
each increased 11 percent during the final six months of 2008.
The bump in property tax revenues reflects a hike in the
areawide mill rate and increased property assessments; increased sales tax revenues may be
due to skyrocketing fuel and commodities prices last summer.
Sponsors of a fall ballot initiative aimed at eliminating sales
tax on automotive and heating fuel argued borough government would get fat on the revenues
at taxpayers’ expense, but borough chief fiscal officer Jila Stuart this week said
she expected tax revenues to taper off with the decline in consumer fuel prices.
Stuart said she wouldn’t know which sectors contributed to
increased sales tax revenues until the borough installs new accounting software next
month. Problems with the current software the past year prevent staff from generating
reports by sector.
In addition to a possible drop in sales tax money, Stuart said,
lower crude oil prices could mean reductions in state revenue sharing money next year, a
pot that subsidized nearly 22 percent of the borough’s general fund budget this year.
Tax revenues from tourism could also take a dive next summer, as
state tourism analysts have said communities would likely feel the hit of a predicted 30
percent drop in summer visitation to Alaska in 2009.
“If the economy tanks enough (and for the long term), the
response has to be a cutting of services,” borough manager Tom Bolen said last month.
Real and personal property tax revenues so far this year brought
in $856,187, up from $794,465 for the same months one year ago.
Stuart said property taxes were exactly on track, at about 50
percent of $1,346,625, the projected property tax income for the year.
Sales tax revenue to date is up about $74,000 for a total of
$674,607, up 11 percent from $603,531 last year.
Bed tax revenues are also up slightly to $52,429, from $49,004
for the same six months one year ago.
Stuart said the borough’s current budget projected a
deficit of $37,823 due to $165,000 in capital expenditures to repair Young Road, replace a
snow machine bridge over the Tsirku River, and construct a new water tank for Highland
Estates.
But, Stuart said, based on current revenues, she expected a
balanced budget by year’s end. “Unless revenue tanks (or the borough has
unexpected expenditures), we actually won’t be in the red.”
A $4.6 million general fund balance, money left over from budget
overages years past, also offsets the current year’s $37,823 deficit.
As general funds are usually reserved for operating expenses
such as borough utilities and employee salaries, using money from the fund balance for
one-time capital expenditures wasn’t a bad move because it didn’t signal
reliance on funds for which no income exists, she said.
“I’d be concerned if we were spending the fund on
operating costs and not (one-time) capital expenses.”
Former interim manager Bob Ward said last year the borough
should spend down the $4 million balance, returning it to taxpayers through capital
improvements.
Stuart defended the general fund balance, saying it offset
uncertain state and federal appropriations that made up a significant portion of each year’s
budget.
For example, while burgeoning state oil income last year brought
a 67 percent increase in state revenue sharing to the borough, that source was likely to
constrict significantly with the drop in oil prices, she said.
State revenue sharing this year brought in $550,000, nearly 22
percent of the borough’s general fund budget. “It really makes a huge impact. It’s
scary because it could go away.
“Because of that, it’s good to have a fund balance.”
Stuart said another area of vulnerability was the federal forest
receipts program, which augments funding for Haines Borough schools to the tune of
$550,000. Federal contributions to the program will run out in five years.
The borough assembly will begin addressing the 2010 budget next
month. Stuart said the budget would include contingencies in case the borough does not
receive state revenue sharing.