If you operate a business that relies on visitors, you might have an issue with the Haines Borough.
It’s been robbing you.
Let’s start with a bit of history. Since October 1987 when it was approved by City of Haines voters, 1 percent of municipal sales tax has been dedicated to “tourism development and promotion.” The money was intended to be spent bringing visitors to town and for improvements like flowers and signage that would make the town more attractive to them.
There have been changes.
When it was approved in 1987, the new 1 percent “tourism tax” was expected to bring in $144,000 per year. Last year, the tax brought in $628,000.
Also, after government consolidation in 2002, voters expanded use of the 1 percent tax to include “economic development,” though fatefully those two words were never defined in code. As everyone knows, a lot can happen inside the loopholes created by vague wording.
Last year, borough staff – with assembly approval – took $400,000 in tourism and economic development money and used it to pay for Fort Seward road improvements, on the stretched logic that roads also provide economic development.
That of sleight of hand wasn’t the first.
The borough previously took money from tourism and economic development to clean out the fuel tanks at the small boat harbor, an expense that clearly should have come from the harbor enterprise fund.
Economic development funds also have been used in recent years to pay borough manager salaries on the apparently elastic logic that managers spend part of their time on economic development. It’s clear that as the borough’s need for money grows, so will its definition of “economic development.”
The net result will be less money spent on tourism development and promotion.
Here’s the rub.
While the total amount of money brought in by the 1 percent tax has grown significantly, the amount spent on tourism has been frozen, or reduced. In addition, the percentage of the tourism budget spent on actual promotion, that is, advertising, has declined to 20 percent or just one fifth of total spending.
In the past 32 years, as tourism directors have added department staff and other extras, real dollars available for advertising have decreased as a percentage of the budget.
In the past year, the borough allocated to its tourism department just $353,000 of the 1 percent total funds of $628,000. Of the $353,000, the department budgeted only $72,000 for advertising to bring people to town, the department’s main function.
It’s important to remember that of the $628,000 raised for tourism promotion and economic development, about $90,000 goes to the Haines Economic Development Corporation, the borough-created effort to stimulate the local economy. That’s the “economic development” part of the 1 percent for tourism promotion and economic development.
Subtract $90,000 from $628,000 and you get $538,000, which is roughly the amount that should go toward promoting Haines each year.
Subtract the $353,000 annually spent on tourism from the $538,000 amount that should be being spent, and find the amount that your local tourism business is being shortchanged each year in promotion– roughly $190,000’s worth. In addition, the amount of the total $538,000 going toward advertising should probably be a lot more than $72,000.
That is, if you think the tax should be going primarily to attract visitors to town and to your business.