Translation:There is paper.
Technically, a god would be considered living, so you would say かみがいます as opposed to あります for that. That being said though, Japanese homophones can still be confusing when it's all written in hiragana. I mean, in this case there's 神 (god), 紙 (paper), and 髪 (hair) all written as かみ and the latter two are both inanimate and would use ある as opposed to いる. Kanji with furigana may be a good idea in cases like these. Same with words like はし.
It is called 連濁（れんだく） when two words combine to form a new word. The ending sound of the first original word may not match the beginning of the second one. One way of making the sound smoother is to make the beginning of the second word to the corresponding dakuon version. https://en.m.wikipedia.org/wiki/Rendaku