Draft budget fills $580K gap
Tax hike, cuts, savings would make up difference
Haines Borough Manager Mark Earnest on Tuesday proposed using increased property taxes, a variety of cuts and reserves to fill a $579,000 hole in the municipality’s $11.3 million budget for the coming year.
“This is the starting point. We know there are challenges here. We hope, through this process, to make it work,” Earnest told assembly members at their first workshop of the budget season.
The hole is from expected losses of $377,900 in federal timber receipts compensation and $201,268 the Alaska Legislature provided last year in supplemental revenue sharing.
It would be filled with $289,000 in increased property and sales tax revenues, $251,000 from areawide general fund reserves and about $50,000 in reduced general fund spending. Reductions to budget items include cuts of 1 percent for Haines Borough School District, 2 percent for the library, 7 percent for the Sheldon Museum, and 7 percent for the property assessment office.
The draft budget met immediate resistance from officials of the school and borough public library, who attended the meeting and questioned why some areas of the municipality weren’t seeing similar reductions, or appeared to be growing.
school board member Brenda Jones cited the borough’s origins as a funding mechanism for schools. She said she was disappointed that borough taxation was increasing while local schools would get less local dollars. The cut to schools would amount to $19,549.
The school has cut jobs while the borough has added them, Jones said. “The most important thing the borough does is educate its children.”
Library board member James Alborough questioned the fairness of budget decisions. “We have concerns the borough administration is increasing and we’re seeing cutbacks.”
Assemblyman Jerry Lapp asked why the museum was seeing a larger percentage reduction than the public library. “Shouldn’t they both be equal?” Lapp asked.
Manager Earnest said an “informal survey” was used to guide that process. Earnest was referring to a recent exercise at a strategic planning meeting where assembly members were asked to numerically rank their priorities.
Assemblywoman Debra Schnabel said it wasn’t a given to her that all areas of the budget should be cut an equal amount. “If you cut equally, equally, equally, some things won’t survive.”
Library director Patricia Brown said a $7,000 cut would reduce the budget for books and magazines by two-thirds, eliminate health benefits for one job and cut supplies by 75 percent. “The decrease is significant.”
Assumptions built into the draft include:
· A $1,200 increase in the cost of health insurance for each borough worker, half to be paid by workers;
· A .29-mill increase in property taxes inside the Haines townsite (equal to an additional $29 on a $100,000 home);
· A .96-mill increase in property taxes outside the townsite (equal to an additional $96 on a $100,000 home);
· A 20 percent increase in fuel costs compared to the amount spent last year;
· No increased costs for waste disposal;
· A 30 percent increase in Lutak Dock revenues;
· A projected 1 percent increase in sales tax revenues; and,
· Providing funds to community groups at half the amount requested. Groups requested $180,118.
The increased property tax rate will add $146,000 to the budget.
The budget forecasts that the borough will have close to $3.9 million in combined savings in its areawide general fund and townsite general fund in June 2013. That amount would be on par with savings held by the borough the past three years. The savings accounts amounted to $5.2 million in June 2009.
The borough also holds $7.47 milllion in a municipal “permanent fund,” derived from borough land sales. Money from that account can be spent only by a vote of borough residents.