Dedication of One Percent Sales Tax for Tourism and Economic Development

The Haines Borough sales tax includes, by statute (HBC 3.80.22(a) ), dedications for 4 specific purposes. Expenditures for one those purposes, economic development and tourism (allocated 1% from the tax collected areawide), has been questioned by Borough resident, Sally McGuire. She requested that the Assembly place a question on the October 4 ballot, that, if passed, would remove the dedication and reallocate the 1% for areawide general municipal purposes. She did not advocate for removal of the tax amount altogether; nor did she argue that dedication of taxes in general is misguided fiscal policy.

On Tuesday, August 9, the Assembly considered and then rejected ordinance 11-07-271 (by a 3-2 votes) to place the question on the ballot. Instead, they sent the issue to the Government Affairs and Services Committee. That committee will meet Tuesday, August 16, 5:30 PM in the Assembly Chambers.

I believe that the Assembly made the correct decision. During the public hearing for the ordinance I testified that I believed that the community was frustrated, not because a tax was dedicated per se, but because there was no apparent program for economic development and because there is no public cost/benefit analysis for tourism expenditures. Borough Code 2.54 stipulates that there will be a Department of Economic Development and that it will have a director appointed by the manager and provided with a job description and responsibilities. There is an Economic Development Fund ($165,469 for FY12) and it does include $26,000 for a part-time employee who has recently resigned. One of the expenses allocated to this fund is the update of the Comprehensive Plan, estimated at $100,000.00. The Tourism FY12 budget is $352,085.

My position is that the problem lies in the utilization of the tax. Removing the dedication and kicking the problem down the road to the annual budget process delays and possibly obscures the problem. The problem is that the Haines Borough does not have a vigorous program of economic development, even though a department is stipulated in code. Nor does it have a clear handle on the benefit of expenditures for tourism development. And just as we should measure the benefit of the cost for tourism promotion, so should we measure the benefit of the cost for an economic development program. Valid measurements should be built into each program and reported at least quarterly to the Assembly. The rule of thumb, "You can't manage what you don't measure," applies. I hope you will have time to discuss this topic with the Government Affairs and Services Committee, Tuesday, August 16, 5:30 PM, Assembly Chambers.