Funding priorities in the upcoming budget cycle for the Haines Borough Assembly include education and public safety.
For everything else, funding levels are negotiable, assembly member Paul Rogers said.
An assembly meeting last week with borough department heads and Nils Andreassen, executive director for the Alaska Municipal League (AML), focused on ways the borough can accommodate state funding reductions in its budget.
Andreassen briefed the borough on current state legislative issues that impact municipalities. He said last year was challenging not only because of massive budget cuts, but also because the cuts were so hard to plan for. This year, he said he’s hopeful that better communication with the governor could help with planning.
Priorities for AML for the upcoming fiscal year are the Alaska Marine Highway, school bond debt reimbursement, and community assistance.
Andreassen identified school bond debt reimbursement, which was reduced by 50 percent last year and left the borough responsible for an additional $450,336, as the biggest issue for the Haines budget.
Looking into the next year, Andreassen said that local communities can expect a similar reduction to school bond debt reimbursement as well as a reduction in community assistance. He expects the state will look at redefining its relationship to local communities in areas including education, public safety, and road maintenance in the future.
Without these state funds, leaders in Haines will need to identify what the community’s core values are, which services support these values, and how to pay for the services, Andreassen said.
As a borough in Alaska, Haines has three responsibilities to its citizens according to state law: public education, taxes in order to support government services, and planning and zoning.
“Everything beyond those three responsibilities are things you choose to do as a home-rule borough,” said Andreassen. Other services listed in the borough’s charter include: control of hazardous substances, emergency medical and other medical services, emergency dispatch, ports and harbor facilities, public parks and recreational facilities, public libraries, museums, cemeteries, economic development, disaster planning and emergency response, and solid waste management.
At the meeting, assembly members categorized the borough’s services as either essential or optional. While members agreed that education and services related to public safety were essential, others including control of hazardous substances and solid waste management, which is not currently provided by the borough, were deemed optional.
The museum and public parks and recreational facilities sparked debate. Assembly member Brenda Josephson said while fully funding the museum is not essential, records storage is. She views public parks and recreational facilities as an optional, quality of life service.
Assembly member Gabe Thomas said the public pool is an essential recreational facility because of the educational opportunities it provides.
Assembly member Zephyr Sincerny said that public parks and trails are essential for the community, improving quality of life for locals and giving tourists a reason to visit.
“The question for the assembly moving forward is at what level should we fund optional or quality of life services,” Josephson said. She plans to look for cuts within borough departments with guidance from department heads.
Andreassen suggested that a way to begin thinking about areas for reduction is “to ask ourselves, what happens if we stop providing this? Who will pick this up? Will it be picked up?”
Assembly members also discussed taxes as an option for balancing the budget.
Josephson said there is opposition to raising taxes within the community. “We’re at a tax rate right now that’s tolerable for people, but there’s not a lot of room to grow.” She worries that higher taxes in the borough combined with potential new taxes at the state level and cuts to the PFD “will be what breaks people.”
Borough manager Debra Schnabel said her sense from last year’s budget process is that residents of Haines are willing to pay for maintaining the services they currently receive. Last year, she proposed a property tax increase to cover the school bond debt deficit. However, her proposed tax increase was rejected by the assembly in favor of drawing from borough savings.
“People are willing to pay more for taxes when there’s a tangible benefit to them,” assembly member Paul Rogers said. He cited previous discussions about the borough taking over solid-waste management, which he said ultimately failed because no one could demonstrate the value for the half million it would cost.
Steven Auch, Haines tourism director, noted that expansion of the tourism industry would be an alternative way to generate new revenue for the borough. “If we have 100 people in town per day, and they each spend $100, that’s a quarter of a million dollars in increased sales tax revenue. Bringing people from outside, we’re importing the funds rather than taxing ourselves.”
Thomas said he supports a seasonal sales tax to capture more tourism dollars in the summer but would be hesitant to enact a year-round increase to either sales or property taxes.
Schnabel said her budget proposal will likely contain another property tax increase, but the meeting made her aware that “the assembly is looking for efficiencies and effectiveness” rather than taxes.
“We need to face the reality that our existence is subsidized,” chief fiscal officer Jila Stuart said. “We need to either reduce services or decide we want to pay for them.”
Whichever path the assembly treads, members said it needs to do a better job engaging the public.
“Our job as leaders is to help make the community aware of the need for change,” Josephson said. She said the current fiscal climate is an opportunity for Haines to reassess and move in a new direction, which will likely involve consolidation of services. “We have to focus on who we are today. We can’t focus on what we were before,” said fire chief Al Giddings.
Assembly member Stephanie Scott said, “It’s good to have this discussion, but it’s not new. We’ve had this discussion over and over and over again. I’m trying to figure out how this will be different.”
“Achieving significant efficiencies and effectiveness may require structural change in addition to reducing expenditures. Restructuring could impact facilities and programs that have strong advocates.” Schnabel said. “We have been reluctant to change in the past. It will take political will to effect true change.”
The borough’s budgeting process will kick off on April 1 when Schnabel presents her budget proposal to the assembly.