Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966


Sales tax revenues up a hair


Preliminary sales tax figures for calendar year 2103 compiled by the Haines Borough show local sales up about 1 percent from 2012, at $49.8 million.

Borough staffers each March compile sales tax income for the previous calendar year, but late filings boost figures a bit higher, when a final, official number is calculated.

A comparison of historic March figures shows sales tax income to the borough has increased a small amount in each of the past four years, from $2.6 million in 2010 to $2.68 million in 2011, $2.71 million in 2012 and $2.74 million last year. That suggests a $2.5 million growth in annual sales during the four year period – from $47.3 million in 2010 to $49.8 million in 2013.

Those figures roughly coincide with the borough’s final, official numbers, which show sales tax income increasing from $2.65 million in 2010, to $2.72 million in 2011, to $2.78 million in 2012 – or a $1.9 million increase in total sales during a three-year period for which final and official numbers are available.

The figures also show that local sales dropped after 2008 – coinciding with the national recession – and didn’t recover to 2008 levels until 2012.

Retail sales accounted for nearly half of all sales in the municipality in 2012 and grew by 3 percent over 2012, according to the borough’s March numbers. The borough defines “retail” as including groceries, liquor, fuel, hardware, and year-round stores.

The March figures show declines in sales tax income in the past year in categories including services (minus 7 percent), eating and drinking establishments (minus 3 percent), lodging (minus 5 percent), and construction (minus 38 percent).

Sales tax from “tourism” – defined as tours, charters, transportation, and seasonal shops – increased 1 percent in the past year and accounted for $7 million in sales in 2013, according to the borough.

The borough’s “construction” category for sales tax income includes general contractors, carpenters, plumbers and handymen. It accounted for $31,234 in sales tax revenue in 2013 or $568,000 in total sales. (By statute, sales tax is charged only on the first $5,000 of construction work.)

“Services” are defined as automotive repair, utilities, professional services such as bookkeeping and haircutting, and utilities, including garbage collection and phone service. They brought in $429,000 in 2013 and accounted or $7.8 million in total sales.

Doug Olerud, manager and owner of Olerud’s, Inc ., said this week the numbers don’t necessarily show sales growth, as the annual inflation rate might more than outpace a 1 percent increase. “You might actually be seeing a half-percent loss when you’re looking at inflation.”

Olerud said his family’s stores have seen “slight growth” in the past couple years. “It’s not to say we’re doing great. It’s still difficult trying to make a decision based on what’s going to happen a couple years out.”

Strong commercial fishing seasons may have helped local sales in 2013, as have elements like heli-skiing and crews in town the past four summers shooting the “Gold Rush” reality TV series in the Porcupine. “We definitely saw quite a bit of that in the past few years,” he said.

Plans by mine developer Constantine to double its spending on exploration this coming summer could help offset the loss of sales that might come with the rumored departure of full-time “Gold Rush” film crews from Porcupine this coming summer, Olerud said. “Constantine might help balance that out, but it’s really tough when it can change so quickly year to year, depending on those kinds of variables.”

Olerud said he has heard mixed messages from other business owners on how they’re doing, suggesting the tax figures show some businesses gaining at the expense of others, instead of the overall economy improving.

“Some people say they’re doing okay, other people tell me they can hardly afford to stay open,” he said. Businesses that are open year-round and cater to a variety of customers are more flexible and generally can weather fluctuations in sales more easily that specialty stores or ones only open part of the year, he said.

The cost of fuel can be a “big driver” of sales tax revenue increases, but the local price of fuel has been roughly steady in the past year, Olerud said.

Dave Stickler of Stickler Construction said a 38 percent drop in the construction sector isn’t surprising to him. Stickler said he was building two or three new homes a year before the recession but hasn’t built one since 2009 or 2010. His company has been relying on government projects, including pouring cement for local road-building work.

“If it wasn’t for the (federal) economic stimulus spending, I don’t know what I’d be doing,” Stickler said. It’s still too early to say, but Stickler said some recent phone calls for bids on residential work make him think that part of his business is turning a corner. “I think the residential stuff will go up.”

Borough records from recent years show sales tax totals issued in March for the previous calendar year typically increase about $50,000 after money from late filings is incorporated.

Final sales tax figures for the 2012 calendar year showed increases over the March numbers in retail, services, tourism, eating and drinking and lodging categories.