Should the Haines Borough repeal its 1 percent tourism and economic development tax? That’s the question one Haines resident wants put on the ballot this fall.
Of the 5.5 percent sales tax consumers pay in the Haines Borough, 1 percent is automatically banked to the municipality’s tourism and economic development fund. The tax was established in 1985 and is expected to bring in $536,000 in the upcoming fiscal year.
Resident J.R. Churchill thinks the time has come to let voters decide if they still support the tax and its allocation.
“It has been over 10 years since the voters have been given the opportunity to vote on this tax, and with no sunset clause, it is time to give the taxpaying voters the opportunity to let their voices be heard,” he said.
Churchill said the tax amounts to a subsidy of one industry over others.
“The community of Haines has been very generous to the tourism industry. The taxpayers have bonded and rebuilt the cruise ship dock, we paid for a $1 million restroom, rebuilt sidewalks, curbs, and signage from the cruise ship dock to downtown, and on top of all that for the last 30 years we gave 1 percent of every dollar we spend in town specifically to one industry,” Churchill said.
“While short-term incentives to help fledgling businesses succeed can be a useful economic tool, at some point this tool can go from an incentive to a subsidy. And after 30 years, we are well past that point,” he added.
Churchill, a commercial fisherman, compared the tourism industry to the fishing industry, pointing out that fishermen tax themselves 3 percent of their annual income for a regional aquaculture association that produces more salmon for fishermen to catch.
“As fisherman we have to ask ourselves why has the tourism industry alone been granted this special economic status above all other industries in Haines,” he said. “After voluntarily taxing ourselves 3 percent of our gross annual income to strengthen and grow our own industry we should not then be taxed 1 percent of every dollar we spend in Haines to subsidize an industry we have nothing to do with and are often at odds with.”
According to clerk Julie Cozzi, there have been four elections concerning different aspects of the tax, including the 1985 proposition that established the 1 percent tax for “tourism development and promotion” on a 230-207 vote.
In 1987, the city voted to retain the 1 percent tax (240-186) and in 2001, decided it should be dedicated to tourism and economic development (475-266).
The most recent vote came in 2005, when residents voted to make the 1 percent tax boroughwide instead of only in the townsite.
In 2011, resident Sally McGuire made a request similar to Churchill’s, asking the assembly to put the question on the ballot to remove the tourism dedication and instead reallocate the revenue to the areawide general fund. The assembly in August 2011 rejected the ordinance that would have put that question on the ballot.
The assembly briefly discussed the issue Tuesday after referring Churchill’s request to the Finance Committee.
Assembly member Mike Case said while Churchill’s letter to the group was “articulate” and his idea “worth considering,” he was leery of putting an item on the ballot just because one person requested it.
“There is only one person that has proposed it and I would be very hesitant to want to put something on the ballot because one person proposed it. I would sure like to see if there is more public support rather than just jump in and decide to put something on the ballot,” Case said.
Assembly member George Campbell warned Case against using that rationale. “I think what will happen is with that statement, we will see a swell of more than one person. I think this is a bigger issue than most people realize,” Campbell said.
The idea will be discussed at a Finance Committee meeting set for 5 p.m. Monday, June 27.
Tourism director Leslie Ross said she is going to look into what repeal of the tax would mean for her department, as that is where her entire budget comes from.
“If there was a decision to not have the tax, I’m not sure where that would put us as far as having a department or a tourism entity that was supporting the industry,” Ross said.
Ross uses revenue from the tax to market the entire community of Haines, not just tour companies or hotels, she said. For example, Ross just purchased a backpage ad in “Northwest Boat Travel” magazine to promote the Small Boat Harbor.
“To me, it extends to other industries as well,” she said.
Haines and Skagway are somewhat of anomalies in Southeast, Ross said, because their tourism departments aren’t membership-based. Other communities receive funds from the local government, but also bring in revenue through membership fees.
Ross said that likely wouldn’t work here, as Haines is too small. That also narrows the businesses and organizations the department is allowed to promote to those that are members, she said.
Though it might jeopardize her budget, Ross said she believes residents have the right to choose how their money is spent.
“I’m always supportive of having the public speak what they want funded,” she said. “I think if that is the case, it should be clear that it is the tourism budget. There wouldn’t be a tourism department if we didn’t have that.”
Clerk Cozzi said in order to get the question on the ballot as a referendum, the assembly would have to introduce the accompanying ordinance by its July 26 meeting and pass the ordinance by Aug. 23.
Churchill said he has faith the assembly will place the question on the ballot. “I think it is just a fair thing to do,” he said.
Residents can also put questions on the ballot via initiative, which involves collecting hundreds of signatures. Churchill said he doesn’t think it will come to that.
“If they do not pass this on, there will be repercussions. Either they can work with us or not. But if they don’t, I’m relatively certain it won’t end there.”