The Haines Borough Assembly has begun its review of the interim manager’s proposed fiscal year 2018 budget. In the first in a series of budget stories, we’re looking at the two central funding pools and the deficits projected for them in FY 18.
The borough has over 20 different funds that keep things running. The two big ones are the areawide general fund and the townsite service area general fund. Together they make up almost 50 percent of borough revenues.
The areawide general fund pays for services that benefit the entire borough. The school district, library, public facilities, solid waste, and borough administration, to name a few. Residents throughout the Haines borough pay for these services through taxes.
Chief Fiscal Officer Jila Stuart says she and interim manager Brad Ryan originally expected a half a million dollar deficit in the areawide fund.
“That’s just not what we’re seeing for FY 18,” Stuart said.
That’s good news. State funding that seemed to be at risk looks safe for now, and Ryan was able to trim some expenditures. So, the areawide fund shortfall is expected to be $113,000, way less than half a million.
But it’s still a deficit. Luckily, the borough has accumulated a significant fund balance over the years in both the areawide and townsite funds. Ryan proposes drawing from savings to cover the shortfall. It would bring the fund balance down to $2.5 million.
So, for the areawide general fund, the picture looks brighter for next fiscal year than this one, with an only about $100,000 shortfall. But the townsite service area is a different story. The deficit there is expected to be larger than FY17: about $240,000.
Much of that comes down to additional police expenditures. Ryan is proposing to increase the force from four officers to five. People who shop in the townsite and residents who live in its boundaries pay additional taxes for police, public works and animal control services.
The townsite fund has a significant balance as well. Using it to cover the $240,000 shortfall will still leave close to a million dollars in savings.
Even though the borough can cover the deficit with savings, Ryan is proposing a 1/10 of a percent mill rate increase. That would raise about $18,000 extra for the townsite general fund.
At a workshop, Assemblyman Ron Jackson questioned raising taxes when the borough is sitting on savings.
“Just the symbolism of taking a mill rate hike when you’ve got so much money in the kitty, it seems like it would go over easier if that wasn’t the case,” Jackson said.
But Ryan said the mill rate increase would be a step toward a sustainable spending plan, especially with the potential of more state budget cuts.
“It’s not just looking next year, it’s looking long-term,” Ryan said. “You’re right, we could survive is this year, but what are we looking at the next year? [We’re] just trying to get comfortable with the fact that we have to come up with increased revenue streams.”
Fiscal chief Stuart says best practice is for local governments to have three to six months of revenue cushion. Haines is on the high end of that. With the proposed FY 18 budget, the areawide general fund would have six months of savings. The townsite fund would have more than nine months of savings.
But Stuart cautioned against getting too comfortable relying on the fund balance to cover shortfalls.
“If it took 20 years to accumulate it, is it appropriate to spend it all in one year? How do you portion out how you’re going to spend it?” Stuart said. “I feel like it makes a little more sense to have a rainy day fund so that if something happens with the school population and revenues from the state plummet, we have a little bit of a safety area.”
As the assembly continues to work through the budget, they’ll decide whether the manager’s proposal strikes the right balance between raising revenue, cutting spending, and drawing from savings.
Future budget stories will focus on the police department and the tourism and economic development tax.