Assembly offers end
to Temsco dispute

By Tom Morphet

Haines Borough Assembly members last week agreed on a settlement offer that would resolve a year-long dispute with Temsco Helicopters over permitting and sales tax remittance for tours inside the borough that originate in Skagway.

Terms include a $1 per head levy on heli-tour passengers landing in the Haines Borough and surrender of claims against Temsco for back taxes. The levy would increase 5 percent every two years and the agreement would expire after 10 years.

The assembly voted 5-0 for the offer, with Pete Lapham absent. The offer has been forwarded to Temsco manager Dave Herbig for his signature, and a deal could be struck before the end of the month.

“We’ve achieved what we were after,” said borough manager Tom Bolen, who said the borough’s overriding concern was getting Temsco to agree to borough permitting.

“The amount of (tax) money is relatively insignificant… The issue for the Haines Borough is the permit. If we have one operator denying need for a permit, it opens the door for others to do the same,” Bolen said.

Bolen said negotiations with the company centered on the permit, not tax issues that had to be resolved between the municipalities.

He said payment-in-lieu of taxes had been proposed until the borough could meet with Skagway officials and codify sales tax law for tours extending into both municipalities. Once sales tax is agreed on, the agreement would be null and void, Bolen said, and replaced by the tax rate set in law.

The borough maintains Temsco needs a tour permit to operate on the Meade Glacier within the borough’s boundaries on U.S. Forest Service lands, but Temsco has argued it needs only a Forest Service permit to operate on the agency’s land.

Bolen, who last month took settlement negotiations away from borough attorneys to speed up the process, said the agreement didn’t amount to setting sales tax policy and didn’t require a public hearing or ordinance. The agreement provides a way to collect money on the tours until the larger question of unresolved policy was settled between the two municipalities, he said.

Since the 1980s, the boroughs of Haines and Skagway have taxed tours originating in one borough but largely taking place in the other according to an informal gentleman’s agreement based on where the preponderance of the tour takes place.

Clarifying and codifying the issue with Skagway would be complicated, Bolen said, because it wasn’t clear how to rate portions of tours between municipalities.

Temsco applied for a borough tour permit last year to land on the Meade Glacier in Haines Borough but rescinded its permit request after the borough assembly tabled a decision on the company’s permit, citing lack of data in the application.

Temsco has operated glacier tours in the Haines Borough more than a decade without holding a borough business license, tour permit or remitting sales tax.

Assemblyman Scott Rossman this week provided his estimation of the agreement. “It solves the problem and we can move forward. We get our head tax and they need a permit, still. I don’t see how it doesn’t solve the problem, unless somebody wants to reach back 10 years (for back taxes), but I’m not going there. We’re starting fresh.”

Although the head tax is considerably less than the amount Temsco would pay in borough sales tax, Rossman said Temsco couldn’t be compared to any other tour operator. “Everybody else operates completely within the borough. We’re talking a tour that starts in Skagway, comes into the Haines Borough and ends in Skagway. It’s different. It’s technically a different scenario.”

Temsco’s glacier tour costs $289 per person, and guests spend about 40 minutes on a glacier. Borough sales tax on the tour, at 5.5 percent, would be about $15.90.

Assemblyman Norm Smith, a helicopter tour opponent, estimated the agreement would bring about $25,000 per year into the borough, if Temsco gets the 4,000 flights per year it’s seeking on Meade Glacier. The borough should be getting a bigger share, but Temsco has resources to fight a long legal battle, he said. 

“It’s better than no agreement at all. We’ve got bigger issues than (Dave) Herbig and his helicopters. It’s as good as it’s going to get considering the circumstances…If they were flying over the town, it’d be a whole different ball game. At least they are going to have to have a permit.”

The $1 per head figure is patterned after a similar agreement in place with the City and Borough of Juneau in which only the ground component of the tour is taxed, based on the price of the ground component as a portion of the total tour price.

Critics of that method say the tax should be apportioned by time spent in the municipality. If half a tour’s duration occurs within the Haines Borough, the borough should tax half the value of the tour, they say.

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