The borough manager has proposed a budget for the upcoming year that would hold big-ticket spending roughly steady, but would pay for it, at least in part, with significant spending from savings.
In one of few larger spending changes, the manager has proposed a roughly 4% bump in school funding, on top of the increase approved by the assembly last year.
The increase, which comes out to an additional $101,000 over last year, would bring the borough’s spending on the school to $2,668,000.
That’s still short of a 12%, or $295,000, increase requested this year by superintendent Lilly Boron, said borough manager Alekka Fullerton.
The increase in borough school spending comes as a response to shrinking state funding.
In recent weeks, Boron told state lawmakers that the district is in dire financial straits, warning of potential “insolvency” if state funding levels continue to stagnate.
District officials in the last two years have said their top priority with new funds is to increase teacher salaries. Under a newly-negotiated collective bargaining agreement, teachers in the district will see a 5% pay bump this year, followed by a 4% and 3% increase in the two years following.
The district’s issues, of inflation-fueled cost increases and declining state-funding, have been problems for the borough as well, Fullerton said. “We have a very lean budget already and have battled inflation in every department over the last few years,” Fullerton wrote in a letter accompanying the budget.
For a number of reasons, it has not been easy for the borough to pull in new revenue to match increasing costs.
Property taxes are just about tied with sales tax as the largest sources of borough revenue. Raising property tax rates, however, is politically unpopular and capped by borough code.
This year, Fullerton’s budget would actually drop property tax rates. As written, the rate in the townsite would drop 8% from last year and the borough-wide rate would drop 11%.
Property tax rates are often expressed in mills — the dollars taxed per $1000 of assessed value. Haines’ rates in the proposed budget, 10.09 mills in the townsite and 5.74 boroughwide, come in below the 2025 state average of 10.58 mills, according to the Office of the State Tax Assessor.
In recent months, borough leadership has sought to increase revenues outside of direct taxation of locals.
New revenue streams approved by the assembly include a cruise ship head-tax and zero-balance ambulance billing, each projected to bring in low-to-mid six-figure sums annually. The revenue generating effort also included the seasonal sales tax, which voters approved last year, but which remains controversial, and a potential new severance tax on exported raw materials.
Even with these new funding sources, revenue in the proposed budget falls about $2.7 million short of spending. To close the gap, Fullerton proposes dipping into borough savings.
That would come from a number of different savings accounts, all of which are restricted to specific types of spending except for the unrestricted areawide general fund. That general fund, the largest of the accounts, funds items like the school, library, pool, and borough administration.
The proposed savings draw would pull $1.1 million from the areawide general fund, which is expected to have $4.3 million in savings by the end of June 2026.
The rest of the savings draw would largely come from the townsite-services fund and the economic development and tourism fund, each of which currently contain more than $1 million.
The manager’s proposal is headed to the assembly, which controls final decisions on the annual tax-and-spend plan.
Last year, the assembly approved additional spending beyond the manager’s plan for services like the school and the pool, which it could once again do this year.
Assembly members will likely also comb through the budget to find cuts, like last year’s cancellation of a handful of new borough vehicle purchases.
The manager has also left what she says are more political decisions to the assembly. For instance, there’s no money in her budget for non-profits or for the Freeride World Tour, which has asked to be paid $150,000 to return next year.
The assembly’s deliberations will include three committee-of-the-whole meetings dedicated to the budget on April 21, April 28, and May 14. Then the assembly will hold public hearings on the budget on May 12 and May 26. If the budget is not passed at the May 26 meeting, the assembly will hold a third public hearing on June 9.
According to borough charter, the assembly must pass the final budget by June 15.