It is the hallmark of candidates for political office to express great hope in the future, to say what people want to hear, and more importantly, what people want to believe: “Happy Days Are Here Again” and all the jazz.

At the risk of alienating voters who prefer more optimistic talk, I have penned the below piece because I believe it needs to be said, and because our borough government is not having a sober discussion of the town’s future, considering what appears to be the greatest challenge on its horizon.

I will walk through an account of the town and its economic history in the past three decades because knowing our history is critical to understanding how we got to where we are today, and where we might go in the future.

I believe the borough budget should be the top assembly concern, right now. I’m afraid that in the near future our government will be faced with financial decisions that will make issues like heliskiing boundaries and the minor offense ordinance seem like child’s play, in comparison.

           Further, I feel that if we wait until a crisis to tackle our pending budget challenges, our decisions will be poor ones.

           Thank you and remember to vote on Tuesday! – Tom Morphet

 

Haines is a remarkable place. It offers services, facilities and a retail sector rarely found in towns its size: three grocery stores, two lumberyards, a furniture store, a modern health clinic, free ambulance service, a full-sized swimming pool, an accredited museum, a world-class performing arts center.

It’s no wonder that one of the first questions asked by visitors is, “What do you do here?” What powers our town – and its economy – are not immediately apparent. Judging by our patchwork Main Street, newcomers are justifiably surprised that there’s much of a town here at all.

Our community’s success draws from a diversity of internal sources: the energy of young entrepreneurs, the commitment of longtime families, the passion of volunteers, the serendipity of a transportation corridor, magnificent scenery, and rich natural resources, among others.

Perhaps the largest single, external source has been the State of Alaska, which since the early 1980s has blessed the town with its largesse: In addition to its own offices, state money built our swimming pool, visitor’s center, senior center and schools. And the state is the source for most of our planned $37 million harbor expansion.

The state also has provided good-paying jobs building and maintaining highways, managing wildlife resources, enforcing public safety and justice, and providing for needs ranging from public broadcasting and public health to forest management.

In addition, the town has benefitted from elected representatives in key positions – think U.S. Sen. Ted Stevens and Alaska state Rep. Bill Thomas and the government money they secured for various local efforts and causes.

Private-sector forces also have played a vital a role.

When the Lutak sawmill closed in 1984, people worried the town would dry up. A steep drop in state oil royalties in 1986 slashed municipal budgets and cut state services, making the town’s future appear grim. About one year later, Ed Lapeyri re-opened the Lutak mill as Chilkoot Lumber Co., providing more than 100 full-time jobs at an operation that continued until 1991.

Also starting in 1987 and continuing through 2003, village Native corporation Klukwan, Inc. began a policy of generous disbursements to its 253 original shareholders, sums of money that pumped up the town’s economy annually, reaching $16.4 million in 1995. Besides jobs for shareholders in its various subsidiaries, Klukwan, Inc. provided a free, annual basketball camp for local youths and bought an ambulance for the City of Haines.

The roaring 1990s were good to Haines, beginning with the $14 million filming of Walt Disney’s “White Fang” here. Local tourism promotion and an expanding economy in the Lower 48 kindled the local real estate market, spawning new realty companies, contracting firms and carpentry jobs.

With the opening of the expanded Port Chilkoot Dock in 1995 came four-per-week visits of large cruise ships, launching new local tours and boosting local shops.

Cruise line Royal Caribbean’s departure in 2000 and the “dot-com” bust shortly after slowed the local economy around 2000, but a bumper traffic in stay-near-home tourism after the Sept. 11 attacks and the spiraling Lower 48 real estate bubble perked things up, peaking in 2008 with about five real estate agents operating locally.

In the years since, a spike in oil prices, the opening of two mines south of Haines, a steady stream of retirees relocating, and consistent salmon values have been among economic factors that have kept us afloat.

Looking back three decades, the pattern seems to be this: We muddle along, and every once in a while something arrives as a “savior” of sorts that makes our situation better or covers losses in other areas. Lapeyri’s sawmill, White Fang, and the real estate boom were unpredictable windfalls. As they dried up, others materialized.

After years of “saves,” it’s as though our collective mantra has become: “Don’t panic. Something will come along. Something always does.”

Maybe that’s why none of us seem too alarmed by the State of Alaska’s current “fiscal crisis” and warnings from Anchorage and Juneau that the effects of resolving the state’s $4 billion deficit will hit Alaskans hard, and likely bring changes on a scale unprecedented since the state became rich with oil in the late 1970s.

Maybe we’re all convinced that won’t really happen. Maybe we’re hoping for discovery of a new, huge oilfield or an exponential surge in oil’s value due to some distant war. Or that someone will open a big factory or a mine. Or that life will get so bad in the Lower 48 that our population will overflow with refugees who will bring money and jobs with them. Or that we can elect a representative who will shower us with cash.

But none of that is happening, or is projected to happen at this time.

In the past two years, the state has eliminated five Haines-based jobs, including two at the Division of Forestry office, two at the Public Health Nurse office and our local magistrate. State cuts also forced the closure of Lynn Canal Counseling as an independent non-profit.

These cuts have removed at least $500,000 of payroll and benefits from the local economy, but perhaps more ominously, they have eliminated services that the state provided here before the Alaska oil boom of the 1980s.

And the state must still cut $4 billion, or make up some portion of that amount with revenues such as an income tax. (Alaska Gov. Bill Walker’s income tax proposal would have raised a paltry $200 million.) The state holds about $50 billion in its Permanent Fund and $7 billion in its Constitutional Budget Reserve, the latter a piggy bank we’re draining.

The picture at the Haines Borough isn’t rosier. Including the borough employees’ pay raise approved by the assembly in July, our municipality is spending over $500,000 more per year than it brings in. At our current rate of spending, borough savings will be depleted in three years.

Furthermore, the state provides $3.2 million of the borough’s annual $12 million budget, including about $400,000 annually in vulnerable revenue-sharing disbursements, so our deficit might grow. In addition, the state in recent years convinced the borough to assume ownership of some of the state’s large infrastructure here, including harbors downtown and at Letnikof Cove (in 2005) and the Klehini River Bridge, Chilkat Lake Road and Porcupine Road (in 2000).

Combined with projects like fixing the Lutak Dock, these commitments represent huge obligations for a municipality with a comparatively small tax base.

Over at the Haines Borough School District, the financial picture also is a concern. Carrying an annual deficit of $400,000, the district will deplete its savings in an estimated two years, at the current rate of spending.

All of which is to say: Unless something significant and unexpected occurs in the next two or three years, our community is approaching a turning point in its recent history, when every budget decision will be difficult. Spending will go down or taxes will go up, and both will likely be necessary for our town to survive as an attractive place to live.

To weather such a storm, we will need to work together, as a community, like we haven’t worked for decades, if ever. We’ll likely have to sacrifice, to give up some things we love about this town in order to hold on to others that are more critical. In short, we may have to be our own savior.

Other Alaska communities – particularly where schools have been closed or cut deeply – already are responding to the contraction in state funding.

In Sitka, an ad hoc Citizens’ Task Force is working on its budget, projected to be $2.5 million short in two years. The group recently recommended selling surplus municipal land, cutting city and school spending $900,000, raising property taxes and instituting a vehicle registration tax, but also eliminating sales tax on groceries.

Sitkans have discussed such options as returning paved roads to gravel surfaces.

In Haines, we needn’t panic. Our cushion of savings has bought us time to begin discussions, but those discussions need to begin right now. They could begin informally, between leaders and citizens, in a relaxed, rational manner.

Questions we might ask include: What are our top priorities? How do we fund them? Could we trim services, provide them more efficiently, or fund them differently than we do now? Are local taxpayers willing to pay more for local services? If so, through what kind of fees or taxes, and in what increments? Or would residents like to see cuts in government? If so, where? Is it the will of citizens that the borough’s permanent fund to remain as it is, an investment used to hold down property taxes?

There are many other questions that can be asked and issues that can be raised about how government functions in our town, and how it might in the future with less state support. Out of those discussions might come the skeleton of a plan to put in place when our savings are depleted.

Our town has many things going for it. By virtue of its setting, its resources and the attraction it holds for us and others, Haines won’t dry up and blow away. But for us to continue to enjoy the quality of life we’ve had here for decades, it’s appears we’re going to have to do some things – perhaps many things – differently.

We either can begin that conversation now, or we can wait and hope for a savior.

Sept. 5, 2016