A new budget draft discussed at Tuesday’s Haines Borough Assembly meeting proposes cuts including a one-month closure of the library and a year-long closure of the museum. The assembly has yet to officially adopt the new draft. It will have the opportunity to do so at its next meeting on May 12.

Borough manager Debra Schnabel drafted the new budget at the assembly’s request, including roughly $325,000 in additional cuts to account for a 50% reduction in sales tax revenue due to COVID-19 impacts to tourism. The original manager’s budget draft was built on a 40% reduction.

Cuts in the new draft include elimination of two part-time tech library positions, reductions in hours for two other part-time positions and an anticipated one-month library closure in the fall or winter; elimination of two part-time positions at the museum with the understanding that the facility will close for one year; elimination of seasonal employees in the tourism department as well as a decrease in the advertising budget; restructuring the planning department after Savannah Maidy leaves in August and a $98,000 cut to the capital improvement budget.

Schnabel said the museum board came up with the proposal to shut the facility for a year. Under this plan, staff would be reduced to two full-time positions and the museum would be accessible by appointment only. Schnabel said the community would be surveyed to determine a more permanent solution for the museum.

Schnabel said despite new cuts, the draft does not account for the loss of the state’s share of school bond debt. Before the governor vetoed school bond debt reimbursement from the state’s budget, Haines had been expecting roughly $400,000 to augment the borough’s $700,000 portion of the debt repayment.

Schnabel said Sen. Jesse Kiehl told her there’s a 40% chance the legislature will return to Juneau to address issues including school bond debt reimbursement. Without state funding, the borough will need to find another way to fill the hole in the budget.

Currently, the borough levies 2.2 mills of property tax to fund its portion of school bond debt. In order to cover the state’s portion as well, the borough would need to levy a total of 3.89 mills or make up some portion of the $400,000 through additional budget cuts, Schnabel said.

At the meeting, assembly members discussed the need to make further cuts. Haines Economic Development Corporation (HEDC) funding and the museum were focal points of the discussion.

Assembly members Paul Rogers and Brenda Josephson said they would support eliminating borough funding for HEDC. The current budget draft proposes a 20% cut to HEDC funding.

Josephson said HEDC has been controversial since its creation. The borough has spent $90,000-$100,000 each year to fund what many view as studies that restate the obvious, Josephson said. She used HEDC’s childcare study as an example. It told residents that childcare is expensive for people with kids and “we all intuitively know that,” she said. 

During public comment, HEDC director Margaret Friedenauer she said she wished she’d received feedback about HEDC’s perception in the community earlier to give the organization time to address concerns. She said, ultimately, even if the borough cuts 100% of HEDC’s funding, the decision of whether or not the organization continues to operate will fall to its board.

Cutting the borough’s investment in economic development during a time when local businesses are suffering would be counterproductive, Schnabel said. “It doesn’t have to be HEDC, but it’s wrong for us to say that we just don’t want to fund economic development.”

When the borough receives CARES Act COVID-19 relief funding, it will need programs to administer funds to local businesses and nonprofits, Schnabel said. She said she’d always assumed HEDC would be able to serve this function. If HEDC is gone, the borough will need to create its own program.

Josephson said the Haines Chamber of Commerce provides a similar service to the community and could assist the borough in distributing CARES Act funding.

Friedenauer said she feels like the community often pits HEDC and the chamber against each other, but that the organizations’ missions are complementary. HEDC originated from a chamber proposal, she said. Schnabel was the chamber director at that time.

Assembly members and borough staff discussed the possibility of incorporating economic development into the mission of the tourism department.

Assembly member Stephanie Scott said folding economic development into the tourism department and renaming the department could be a viable way to save the borough money.

Addressing economic development in a more interdisciplinary manner could be beneficial, Schnabel said. She said the borough has typically treated tourism, land planning and economic development as separate efforts.

Assembly member Zephyr Sincerny said he disagreed with the idea of cutting HEDC funding completely, but if the assembly moves forward with the idea of renaming the tourism department and eliminating HEDC, it would be beneficial to redefine the way the department functions, rather than just applying a new name.

Discussion of further cuts to the museum included a proposal from Josephson to have the manager communicate directly with the museum’s board to come up with a plan to absorb a 50% reduction in borough funding (roughly $100,000). She said a 50% cut would only represent 25% of the museum’s overall budget as roughly half its funding comes from the governing nonprofit.

During public comment, museum director Helen Alten said although in a normal year the borough’s funding would account for roughly half of the museum’s budget, this year, the museum will have almost no revenue outside borough funding due to loss of tourism and other missed fundraising opportunities resulting from COVID-19.

“I want you to understand that we are in a dire situation,” Alten said. A 50% cut to borough funding for the museum would reduce the facility to one full-time position, at best, she said.

Library director Carolyn Goolsby could not be reached for comment on proposed library cuts by press time.

The possibility of using other revenue sources to offset cuts was raised at the meeting. Schnabel said the borough has a 4.62 areawide mill rate, the lowest it’s had in decades. A 1 mill increase would raise an additional $328,000 in property tax revenue.

Sincerny said the borough should consider revenue including a mill rate increase and taking money from the borough’s permanent fund.

An increase in sales tax was another option raised by museum board member John Carlson during public comment.

Assembly member Gabe Thomas said he thought the public would reject the idea of either higher taxes or breaking into the permanent fund to resolve the borough’s budget issues. The permanent fund was designed for an emergency, something catastrophic like a landslide, rather than the current situation, he said.

During public comment, resident Diana Lapham said the borough should function like any family during times of economic hardship—it should prioritize funding for essentials. “Fun stuff is way at the bottom.”

“We have got to tighten the bootstraps,” Lapham said. The borough should cut to “bare bones,” and if the summer goes better than expected, it can start to add things back slowly.

The next opportunity for public comment on the budget will be at the May 12 assembly meeting.