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Big cuts could be on the horizon for Haines

 

April 23, 2020



Elimination of borough funding for the Haines Economic Development Corporation, reduced tourism office staff and seasonal operation of the library and museum were cost-saving ideas raised at Tuesday’s preliminary meeting on the budget.

At the meeting, several assembly members said they do not believe the current draft budget’s 40% reduction in sales tax revenue is accurate and that the next draft needs to incorporate more extensive cuts to compensate for a more realistic decrease in revenue.

The current draft proposes cuts including a one week furlough of all employees, reduced hours for a number of positions, a travel freeze, summer closure of the pool, a 20% cut to HEDC funding and closure of the Mosquito Lake Community Center. Even with cuts, the roughly $13 million budget requires hundreds of thousands from savings accounts to cover expenses.

Assembly member Brenda Josephson said she intends to introduce a motion at the next assembly meeting to have the manager draft a new budget that accounts for a 50% reduction in sales tax, keeps the property tax mill rate the same and leaves a six-month reserve in both the areawide and townsite funds. The proposal would necessitate more widespread cuts to services.

Josephson said she’s considering directing the manager to incorporate budget cuts including the elimination of all borough funding for HEDC and the reduction of seasonal staff in the tourism office. Since tourism is likely to be reduced this year, the year-round staff in the tourism office could be directed to take over some of HEDC’s economic development work, she said.

Prior to Tuesday’s meeting, no one had approached the HEDC board with a proposal to eliminate borough funding, executive director Margaret Friedenauer said. She said although she has been planning for a 20% cut for the coming fiscal year, a 100% cut could be difficult to absorb. 

“I don’t know what it looks like if the borough were to do more economic development on its own,” Friedenauer said. “That’s a different model than what we’ve been operating under.” She said HEDC’s five-year plan includes performance metrics to assess the organization’s impact, and that the organization has hit a number of the targets over the past three years.

Elimination of borough funding does not necessarily mean that HEDC will cease to exist, Friedenauer said. The five-year economic development plan will still be relevant. If outside funding is unable to cover expenses, HEDC’s volunteer-based board could decide to reduce staff hours or eliminate staff entirely.

At the meeting, assembly member Gabe Thomas asked why the manager would suggest making cuts to wages across the board instead of eliminating specific programs. 

Borough manager Debra Schnabel said she didn’t want to cut programs given the turbulent situation and the possibility that eliminated programs might be difficult to resurrect at a later date. Reducing staff salaries is not feasible in the long term, she said, but eliminating programs and, with them jobs, reduces the amount of money circulating in the community and could cause people to leave if unable to secure another source of employment.

Thomas suggested that a seasonal model, like the one proposed for the pool for the upcoming fiscal year, could be adopted at other facilities like the museum and the library. He said it would be worth considering reduction of staff at these facilities.

“It would be like kicking the dog when they’re down,” museum director Helen Alten said of the proposal to cut funding. The museum is a quasi-governmental agency which means part of its budget comes from the borough and the other part is supported by the nonprofit that oversees the facility. The borough’s portion of the budget supports the museum’s year-round staff—two who work between 35 and 40 hours a week and three other part-time employees who work between five and 20 hours a week. 

The rest of the museum’s expenses are covered through revenue generated by the nonprofit from ticket sales to non-residents, gift shop sales, grants and donations. For the coming fiscal year, the museum is estimating a roughly $100,000 decrease in revenue for the nonprofit due to COVID-19 impacts on the tourism industry.

Although the assembly can make cuts to its portion of the museum’s budget, because of the organization’s structure, the decision of how to administer those cuts will fall to the museum’s board, Alten said. The board could decide to implement a seasonal closure or could introduce cuts across the board. Alten said a seasonal closure would be less than ideal—in the summer, the museum generates revenue through sales to tourists and in the winter staff write grant applications, manage archives and offer educational opportunities for the school and others in the community.

In a normal year, the nonprofit might be able to absorb some of the borough’s cuts, but this year, cuts will translate to reductions in staff hours, Alten said. She said she and the museum’s other full-time employee rely on their jobs for the health benefits. If hours are reduced to a point where employees no longer qualify for benefits, she will be forced to seek other employment, Alten said.

Library director Carolyn Goolsby said she would not comment on the idea of seasonal library closure without knowing more specifics.

At the budget meeting, Schnabel said she would be hesitant to cut to a point that is irreversible before the economic ramifications of COVID-19 are fully understood, but said she looks forward to considering all budget options with an open mind.

Thomas said he would rather cut now and add to the budget later, once the borough’s economic situation has improved. He said it’s important to save funds for an emergency, and even though right now might feel like an emergency, Haines will make it through.

The budget will be introduced at Tuesday’s assembly meeting.

The current budget draft does not account for recent changes in funding from the state and federal government. After the latest draft was released, the governor vetoed funding for school bond debt reimbursement and community assistance. The governor’s administration has indicated these vetoes could be offset by as much as $4 million in federal COVID-19 stimulus funding for the Haines Borough.

 
 

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