The assembly approved a budget on Tuesday that had been mostly balanced before unexpected losses of outside funding opened a significant deficit. Assembly members attempted to close the gap, but in the end only passed one cost-cutting amendment.
Since last year’s budgeting, the borough has lost significant outside funding, first with the planned expiration of Biden-era federal stimulus money, then with the loss of over a quarter million dollars in federal Secure Rural Schools funding this spring after the program was not renewed by Congress. Tuesday night’s assembly meeting revealed another significant cut that had not been previously reported in Haines: the unexpected loss of almost $278,000 in school bond debt reimbursements.
The borough is entering its final year of paying back a bond issued in 2005 for new school construction.
When the bonds were issued, the terms included the state covering 70% of debt repayments, said borough finance officer Jila Stuart. That’s what the borough had been budgeting for.
However, the state’s proposed budget this year includes major cuts to the state program that pays those reimbursements. Stuart said she only learned about the possible cut in late May from a non-government source.
Stuart notified borough officials about the potential change on May 28. In that email, Stuart wrote that the state’s Department of Education was waiting on final approval of the budget before notifying communities.
Gov. Mike Dunleavy signed the budget bill into law on June 12, but he vetoed more than $122 million from it. Both the Senate President and Speaker of the House said lawmakers will not likely consider an override until January.
Assembly member Cheryl Stickler said Tuesday night that “(the assembly) does not agree with the state’s action.”
The assembly has now amended what had been a mostly-balanced budget to reflect this lost revenue. Assembly members in the past month have also amended interim manager Alekka Fullerton’s proposed budget to add spending on two causes they deemed important to the community – increasing school district and borough pool funding.
With increased costs and decreased revenues, assembly members spent the final budget hearing Tuesday night looking for places to cut, so as to close the deficit. In the end, they were only partially successful.
The one significant cut to go through was eliminating the purchase of a number of new borough vehicles and equipment scheduled for the upcoming year: a police car, a fire pickup, a public works flatbed, an excavator, and solar-powered speed limit signs. The total cost for those items was projected to be $317,000.
The cut was proposed by assembly member Craig Loomis, whose original intention was to delay the vehicle and equipment purchases by one year, rather than eliminating them.
However, adding items to the 2027 budget can only take place next budget season, and it will be up to next year’s assembly to approve the vehicle and equipment purchases.
The assembly also voted to redirect $40,000 from development of a pump track – a course for biking and skateboarding – to the Haines Sheldon Museum.
Museum director Brandon Wilks has consistently made his pitch to the assembly during public comment periods in the last two months. This week he brought reinforcements in the form of museum board members John Carlson and Michael Marks, and a letter from former museum director Cynthia Jones. They spoke to the museum’s need for additional funding, and its importance to the community. Wilks said the additional funding will go toward retaining current staff and maintaining curatorial efforts, like the redesign of the main gallery.
Other proposed cuts that failed to pass were removing community purpose property tax exemptions and cutting the police force to four officers.
The total shortfall in the approved budget comes out to $1,055,820, Stuart said. The borough will cover that amount using its savings. The borough ended last year with $4,129,618 in unrestricted savings. Other available, but category-restricted savings bring the total to just under $9,000,000.
Mayor Tom Morphet referenced a state auditor’s report from this year that said Haines has enough savings to fund over ten months of borough expenditures. Morphet said that was more than the state recommendation of seven months.
Others besides just Morphet agreed that unique challenges this year merited using savings to close the deficit.
“We collect the taxes not to sit on them, but to appropriate them in the most equitable and fair way that we can collectively decide on,” said Stickler. “Saving just to save doesn’t speak to the core issue of why we even pay taxes. As hideous as I think taxes sometimes are, they are necessary to run our essential services and roads and schools.”
Mayor Tom Morphet gave the assembly what he described as a pep talk, which came with a whole stack of recent newspapers from around the state. Morphet flipped through front page after front page, reading out headlines that talked about spending on issues like housing, education, and childcare.
“Many other communities are forging ahead with solutions to their finances, despite the fact that the majorities in (Washington) D.C. and Juneau have more or less abandoned this community,” said Morphet. “We have to move ahead in helping this community out.”