The Haines Borough’s $13 million operating and capital budget for next fiscal year (FY22), proposed by interim manager Alekka Fullerton, anticipates an increase in sales tax revenue and includes full funding of facilities except Haines Sheldon Museum. With the release of Fullerton’s budget on April 1, the annual budget cycle has officially kicked off.
Last year, facing unexpected shortfalls including loss of the state’s portion of school bond debt payments, and a projected 50% drop in sales tax revenue due to COVID-19, the assembly used cuts to balance the budget, eliminating funding for the Haines Economic Development Corporation (HEDC), transferring the Community Youth Development Program to the Haines Borough School District, reducing staffing and hours of operation at the library and museum, introducing a week-long mandatory furlough for all employees, and closing the pool for three months in summer.
In a letter explaining the upcoming fiscal year’s budget proposal, Fullerton acknowledged the borough and state’s ongoing fiscal challenges due to low oil prices and the COVID-19 pandemic, but said the borough needs to find a sustainable level of funding for services moving forward.
“Last year was about treading water. This year must be about sustainability,” Fullerton said. “We cannot keep asking staff to do more with less. Last year’s staff cuts and furloughs are not sustainable. We will not be able to balance the budget by reductions to staff—we will only lose skilled, loyal employees.”
In the draft budget, Fullerton raised funding levels for several services, allowing the library to open seven days per week, eliminating the week of mandatory employee furlough and fully funding the Mosquito Lake Community Center (MLCC), which was on the chopping block until the very end of budget talks in 2020.
Fullerton’s draft budget preserves some of the current fiscal year’s cuts including the three-month summer closure of the pool and elimination of funding for HEDC. It also completely eliminates borough funding for museum payroll.
The museum is currently quasi-governmental, staffed by borough employees who are overseen by a nonprofit board. For the past year, the board has been exploring the idea of separating from the borough.
“This budget presumes the Sheldon Museum and Cultural Center will reorganize independent from the Haines Borough. We intend to work with the community to make the transition workable and to support access to our shared history for all,” Fullerton said in her letter.
Fullerton’s recommendation doesn’t adhere to the budget proposal submitted by museum trustees, who said they wanted to postpone separating from the borough in FY22 and asked for $112,055 to cover payroll for a drastically reduced staff. In the past, when discussing the potential separation, trustees said they expect the borough to continue funding payroll post-separation.
Fullerton said this wasn’t her understanding of how separation would work.
“That’s not what I anticipated. (Museum staff) won’t be borough employees. That’s the point of the separation,” she said, adding that her budget is just a recommendation to the assembly.
“I’m not concerned. We have some time to work on this. There’s going to be some talks with the assembly figuring this out going forward,” museum board president Kelleen Adams said.
Assembly members on Friday declined to comment on the proposal, saying they were still parsing the draft budget.
In addition to the museum, Fullerton flagged several other budget items for assembly discussion including MLCC, HEDC, police department, and water and sewer rates.
“The assembly should schedule a budget meeting solely on the issue of police budgeting in an effort to create an ongoing plan,” she said, listing overtime, standby hours, reimbursement from the areawide fund for response outside the townsite and the possibility of hiring a community service officer to assist with bear response as areas requiring attention.
Fullerton said she included funding for the MLCC, even though it was on the chopping block last year, citing recent increases in use of the center. She also recommended the assembly consider using $5,000 from the borough’s remaining CARES Act funds to support HEDC, which saw its $90,000 budget eliminated in last year’s budget and has provided support to businesses navigating pandemic relief funding.
Fullerton said sewer and water rates must increase this year to allow the borough to borrow the money it needs from the state to make necessary repairs and upgrades.
This year’s draft budget anticipates somewhat increased revenue, compared to last year, but it’s still down compared to FY19, the last full fiscal year before the pandemic. The budget for the current fiscal year (FY21) anticipated a 50% decrease in sales tax, compared to FY19, due to losses in tourism.
“The actual numbers (for FY21) are tracking closer to 60% of FY19. For FY22, we have projected 65% of FY19 sales, up 5% from FY21,” Fullerton said. She said the optimism comes from increased tourism prospects, as well as construction and mining exploration projects scheduled for the summer.
Last year, the state eliminated school bond debt reimbursement, leaving the borough responsible for an unanticipated $900,000. Fullerton said this year, rhetoric in the Alaska Legislature suggests the state will fund 35% of school bond debt, or roughly half the amount funded in years before Gov. Mike Dunleavy took office.
The borough budget anticipates a drop in fisheries business tax to the lowest level in at least three decades due to poor fish returns and COVID-19 market impacts in 2020, and a drop in property tax due to damage caused by the December storm.
The borough is expected to receive at least $490,000 from the American Rescue Plan Act passed by the U.S. Congress earlier this year. Fullerton has proposed using the money to reimburse various borough spending accounts, setting aside $125,000 for future, unspecified use.
The FY22 budget proposal also incorporates a $450,000 voter-approved transfer from the principal of the borough’s permanent fund to reimburse spending accounts for unanticipated school bond debt payments from the past two years, and spend down savings accounts by roughly $400,000.
The assembly will begin budget discussions later this month.