Amid another troubled season of state budget slashing, the Haines Borough Assembly held a sometimes-tense workshop Monday night to target its budget priorities for the next fiscal year.

Unlike years when Alaska oil was king and state money flowed, the fiscal forecast is ominous.

“We’re going to have to redo the way we run our government,” said assembly member Tom Morphet. “We’ve predicted our budget on the money we get from the state for the last 30 years. Now that’s gone. And we’re going to have to change.”

The budget for fiscal year 2017, which closes in June, is $12.3 million. The borough is running a $455,551 deficit in its area-wide general fund, a hit on the $3.1 million it holds in savings.

The goal is to find ways to balance the budget without undermining community services. The choices included significant budget cuts, raising sales and/or property taxes, creating new taxes or a combination of the three. Areas that will come under consideration include staffing, police protection, finding funds to fix Lutak Dock, the future of dedicated taxes as well as routine road and sewer maintenance.

But first the Mayor and six assembly members convened as a committee-of-the-whole to devise a method to determine which services were most important and less likely to be subjected to cuts.

Borough manager Bill Seward suggested the assembly use three committees – government affairs and services committee, finance committee, and the planning commission – to list priorities and revenue sources. But Morphet had a suggestion he said would “seriously reduce how long we chase our tails on this thing.”

Morphet, who owns the Chilkat Valley News, suggested the borough create a five-year plan to bring the deficit to zero. He said the community’s priorities were already laid out in last year’s budget.

“This process,” he said, “seems to be more involved than it needs to be.”

Jila Stuart, the borough’s chief fiscal officer, reminded the committee that a quarter of the borough’s revenue comes from the state of Alaska, but the community will not know until next year how much those funds will be cut.

She suggested raising taxes was inevitable to face the borough’s two main risk factors: aging infrastructure and revenue uncertainties.

“Services for Haines residents can’t stay the same unless they pay more for them,” she said. “Do we want less government or higher taxes and user fees?”

Yet some services were more important than others, she added. “We have to provide education and elections,” she said. “But if we run out of money for vehicle impoundment or economic development, we can just stop funding those.”

Assembly member Mike Case said the committee had to face the prospect of tax increases along with cutting some services. “We can raise revenues; that’s important,” he said. “If we want to keep all the things we’ve got, then we’re going to have to pay for them.”

The pie chart of the borough’s funding looks like this: 48 percent of revenue comes from property taxes, 17 percent from sales taxes, and an estimated 25 percent from the state. Those funds go to such areas as revenue sharing, running the jail and school debt reimbursement.

For revenues collected solely from the Haines townsite, the split is 50 percent from sales taxes, 30 percent from property taxes and 19 percent from the state.

Right now, the borough’s biggest expenses are $1.8 million to help the school system, $600,000 for public works, $500,000 for borough administration and $555,000 for the police department. The borough also pays about $400,000 each for the public library and emergency dispatch center.

Stuart said the town’s many dedicated taxes give the borough less flexibility in delegating the funds it collects.

“Haines has a lot of dedicated taxes because people are suspicious of taxes,” she said. “They like to know that it goes to something they support. But it hamstrings budgeting.”

She added: “We could get creative with sales taxes, but the bread and butter of our community are property taxes.”

Resident Debra Schnabel had suggestions she agreed were outside-the-box: one involved increasing the townsite service area to cover more households and raise more taxes.

The other was spending from the general fund for necessary projects without waiting for handouts.

“It’s shameful that we let our sewer plant go so long without attention,” Schnabel said. “We tend to think ‘Let’s save our money and get a grant.’ But the grants don’t come. Not spending money gets to the point of habit. It’s like my mother: save money and never spend it.”

Seward has until April 1 to submit his proposed fiscal year 2018 budget – for July 1, 2017 to June 30, 2018.

Morphet suggested that whatever measures the borough assembly considered, it was important to make the process public. He suggested general meetings be held at the Chilkat Center, which holds more people.

“If we’re going to have to raise taxes or cut services, we’re going to have to have monthly discussions to make it palatable to the public,” he said. “So the decisions we make are driven by numbers and not some invisible political hand.”

“The budget,” he added, “is the most important thing we do every year. And it’s in trouble right now. We need to start talking about it now.”

Sighed Seward: “This is not going to be an easy year.”

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