Assembly member Debra Schnabel’s proposed ballot questions – which would ask voters to consider sales tax reallocation and an increased lodging tax — met resistance from other assembly members, borough staff and the public.
In a public comment at Tuesday’s meeting, Karen Hess expressed concerns about the proposed re-allocation’s impact on the tourism promotion and economic development fund. Schnabel’s suggested adjustments would reallocate half a percent of the 4% areawide sales tax from tourism to capital improvement projects. Responding to Hess’s concern, Schnabel countered that the additional revenue gained from raising the lodging tax — which she also proposed – would compensate the department.
“A lodging tax is a tax paid by guests to this community, and our lodging tax (rate) is one of the lowest in the state. There are communities all over the state of Alaska that charge eight, twelve, sixteen percent in lodging tax. Ours is four. Our proposal is to raise it to six,” Schnabel said. The added 2% would all be directed to the tourism and economic development fund.
Assembly member Paul Rogers had seconded Schnabel’s motion for the sake of discussion but said he was disinclined to support a sales tax increase – even one on the tourism sector, like the lodging tax – in the current economy.
Haines Borough manager Annette Kreitzer said she theoretically supported the lodging tax part of Schnabel’s proposal. “I do not disagree with assemblywoman Schnabel’s point about how low the current bed tax is. I think there is room for an increase there.” But she said she had “reservations” about the reallocation of existing tax, particularly Schnabel’s suggestion that they redistribute $128,000 of sales tax revenue from the general fund – which pays for facility maintenance, the school and the police, among other things – to capital improvement projects.
Haines Borough Mayor Douglas Olerud echoed Kreitzer’s concerns about taking revenue from the general fund. He said he wanted to make sure there was money available for future expenses like studies related to the Constantine Mine project. “A thorough study could cost between $50,000 to $100,000,” Olerud said.
Assembly member Cheryl Stickler drew attention to possible negative repercussions for the Haines School. “Alarm bells go off in my head when I hear that (the reallocation) could have an impact on education funding,” she said. “There could be a time when the school will need more funding from the borough. Within the next year or so, they might be coming forward and asking for that because of the phenomenal fuel prices.”
After initially saying that he didn’t support any tax increase in the current economy, Rogers at the end of the conversation floated the idea of a 0.5% increase to be dedicated to capital improvement projects, which would eliminate the need for a reallocation. That would raise the areawide sales tax from 4 to 4.5%.
The assembly will hold a second public hearing on the question at its Aug. 23 meeting.
Community members at the meeting also voiced concern about a recent KTOO radio news story involving cruise ship passengers on Holland America who were sent home from Skagway on the Alaska Marine Highway after testing positive for covid. Clay Fricke called the cruise line’s conduct “egregious” and called on borough staff to “follow up on it” and ensure that Haines has a port agreement prohibiting something similar from happening here. Olerud said he had been looking into the matter but was still waiting to hear more both about what happened in Skagway and about Haines’s own relevant contracts with cruise agencies.