On April 1, Haines Borough manager Debra Schnabel released a draft budget containing only modest cuts despite a projected decrease in revenue resulting from COVID-19.

Some of the more significant cuts Schnabel proposed in her draft budget include: pay freezes for non-union positions, furlough for all employees, a borough-wide freeze on travel, transfer of the Community Youth Development Program to Haines Borough School District and a three-month closure of the pool this summer. 

Overall, the draft budget Schnabel put forward is not dissimilar from the current fiscal year’s in terms of spending levels. The budget proposes a relatively similar draw from borough savings. Schnabel said much of her proposed cost savings are offset by mandatory increases in employee health care plans and other insurance costs. 

Schnabel’s budget includes an anticipated 40% reduction in sales tax revenue, the product of what is expected to be a dismal tourism season. But, overall, areawide revenue is only down by $34,000 compared to the current fiscal year. The predicted sales tax reduction is largely offset by an anticipated increase in property tax revenue, the result of a rise in property value. 

Schnabel said her budget does not propose a mill rate increase or any other tax rate increase. This means people whose properties were not re-assessed in the last year will see their taxes remain the same.

Schnabel said putting together a budget right now is extremely difficult “because the situation is so extraordinarily fluid.” In addition to sales tax, there remains uncertainty about several revenue sources including potential disaster relief from the federal government and state funding for municipalities.

Schnabel said she anticipates a need to revisit the budget near the end of the calendar year, after the true impact of COVID-19 on summer revenue is better understood. At that point, the borough can make any necessary adjustments.

Schnabel said that while conversations with the assembly this winter have centered on finding deficiencies in the budget by eliminating redundant services, she did not find many areas of overlap. She said she is reluctant to recommend that the assembly make any significant cuts to the budget before there is certainty that these cuts are necessary. Schnabel said even though times are tough, she has still proposed improvement projects like redoing the exterior of the public safety building and has largely preserved funding for quality of life services like the pool, museum, library, Chilkat Center and Mosquito Lake Community Center. 

These are services the community has, over the years, established that it wants, Schnabel said. She said she does not view it as her role to recommend programs to cut. That job falls to the community and its elected officials who, through the budget process, will define “in numerical terms what our community looks like.”

Even before pandemic concerns had taken hold, several assembly members had expressed interest in cutting the budget in response to an anticipated decrease in financial support from the state.

Assembly member Paul Rogers said he is unconvinced that a budget relatively similar to the current fiscal year’s is the appropriate response to the COVID-19 crisis. He likened the borough to a family experiencing a drop in income; “a family may need to consider getting rid of unnecessary things like recreational toys, and other ‘quality of life’ expenses that do not help the family survive in an economic downturn.”  

“People are responsible for their own ‘quality of life,’ not the government,” Rogers said. At a time when individuals and businesses are struggling, the government’s role is to lessen the economic burden by cutting spending and lowering taxes.

Assembly member Brenda Josephson said she hopes Schnabel’s next budget draft, set for release on April 9, will offer more significant targeted budget reductions and refined revenue projections. The first draft “furloughs of all employees without regard to consideration of essential versus nonessential services and (contains) an optimistic view that sales tax revenue will only be reduced by forty percent.”

The assembly will be forced to make challenging decisions this budget cycle, Josephson said. She said she is confident assembly members will approach these decisions “with a forward-looking perspective and an understanding that it is incumbent on us to develop a plan to meet the long-term essential needs of our community.”

Schnabel’s next budget draft will be included in the packet for the April 14 assembly meeting.