Haines Borough sales tax revenue in 2016 took its first dip in more than five years, led by a 4 percent decrease in retail revenue.
According to borough sales tax receipts for the 2016 calendar year, total revenue decreased by .1 percent, an amount equal to about $2,600. Sales tax makes up about one quarter of the borough’s income.
The decrease was fairly small in the scope of nearly $3 million the borough has earned in sales tax each year since 2011, but borough figures also show a slowdown in growth in lodging and restaurant sectors.
Sales tax income from lodging saw a 4 percent increase, compared to a 13 percent increase in 2015. Sales at bars and restaurants increased 1 percent in 2016, compared to an 8 percent increase in 2015.
Fireweed Restaurant owner Adam Richard said sales in 2015 were bumped by a surge in business from heliskiers and film companies in March and April of that year. “It was so amazing that year. All the major film crews were here because our mountains were the last mountains of the world to have snow on them.”
Borough chief fiscal officer Jila Stuart said sales tax on lodging can fluctuate independently of other sales tax. The ferry schedule can be a significant factor for lodging tax, Stuart said.
Chamber of Commerce executive director Debra Schnabel said the drop in retail sales may be attributable to increased Internet shopping. The retail category includes “groceries, liquor, hardware, fuel and all other storefronts.”
“I think the decrease in retail sales tax collected is a reflection of people’s preference to cybershop using amazon.com and others,” said Chamber of Commerce Executive Director Debra Schnabel. “People are less inclined to trek to a shop and look around than surf the net and click a button.”
Doug Olerud, owner of Olerud’s Market Center and Alaska Sport Shop, made a similar estimation. “Amazon is growing leaps and bounds. It would be absurd for us to think people in Haines aren’t using it.”
Joanie Wagner, owner of Skipping Stone, agreed that online sales have affected her business. “Customers want to know where you buy something and try to get it cheaper online. That’s a part of being a small business owner,” she said.
Stuart provided some other possible factors: “I believe a significant factor in the decrease of retail is the lower price of fuel in 2016 which would have translated to less sales tax collected on fuel sales. Another factor may be the strong U.S. dollar compared to the Canadian dollar, which may decrease spending in Haines from our Canadian neighbors.”
Tourism – “tours, charters, transportation and art galleries” – saw a 6 percent increase from 2015. The category also grew by 7 percent between 2014 and 2015, on par with statewide trends.
Sales tax revenues from construction increased 10 percent for the second, consecutive year. Glenda Gilbert, who co-manages Haines Home Building, said those numbers don’t surprise her. Recent low interest rates and TV networks like “HGTV” that promote upgrading have a positive effect on building, she said.
An aging population in Haines also means that homes change hands more often here than in some other places, Gilbert said. “If you go through building permits, you can see it. It’s a natural instinct to make (a house) your own. It’s never what they want.”
Construction includes “general contractors, carpenters, plumbers, and handymen.”
Gilbert said she believes sales tax numbers have become more accurate due to the borough more aggressively pursuing business licenses and sales tax it’s owed. “That hasn’t necessarily skewed the numbers, but I think they’re more accurate numbers. And (the borough) has leveled the playing field.”
“Services,” a category of sales that includes “automotive repair, utilities, professional services, and personal services” saw a 1 percent drop in 2016, and an identical drop in 2015.