July 26, 2012 | Volume 42, No.30

Hess: Consider using head tax for shuttle ferry

Should the Haines Borough use cruise ship head tax funds to subsidize a shuttle boat that brings cruise passengers to Haines from Skagway?

The question is one of several raised by tour operator Karen Hess in a letter to the borough dated July 9. The borough also should look at buying the former Chilkat Cruises dock, Hess wrote.

Hess is a partner in the privately-owned Haines-Skagway Fast Ferry. The letter was discussed briefly at Tuesday’s assembly meeting.

In an interview this week, Hess cautioned that the letter was “just throwing out ideas” aimed at maintaining the shuttle service.

“I see this as the first step in a discussion process. I don’t want this looking like Karen Hess and Haines-Skagway Fast Ferry wants a bunch of money. I want it to be discussed. The (shuttle) is a lifeline,” Hess said.

In the letter, Hess described the shuttle business as marginal and one that increases the cost of Haines shore excursions for cruise passengers debarking in Skagway.

The cruise shuttle was launched in 2008 as a for-profit business, but operators are discussing making it a non-profit, Hess said.

“If we are a non-profit business, then we could apply to the Haines Borough and possibly to the State of Alaska, for cruise ship head tax money to subsidize the ferry service. We believe that since the ferry provides a service, for the Haines and Skagway ships, the cruise ship head tax money would meet the criteria,” Hess wrote.

If the shuttle were subsidized for cruise ship passengers, Haines tour operators would be able to reduce their net rates to cruise lines, which would result in increased sales, benefitting the borough, Hess said.

“Since the (Haines) tours are in competition with, not only Skagway tours, but tours all over Southeast Alaska, it is hard to compete when we have a high net due to the ferry portion of our tours,” she wrote.

In the letter, Hess also proposes that the borough lease the privately owned Chilkat Cruises Dock in the short term.

The Port Chilkoot Dock’s lightering float is too small for dockings of the small cruise ship American Spirit and during recent rough weather departed Haines early without allowing passengers to disembark, she said.

“The American Spirit will be docking for at least seven more times this season and we run the risk of this being a problem all season, given the current weather pattern,” Hess said.

With reconstruction of the Port Chilkoot Dock pier in 2013, use of the Chilkat Cruises dock also would allow the shuttle ferry to dock there without interfering with the pier project. The smaller dock would be a “revenue generator, not just another borough building that needs to be maintained,” Hess said.

Mayor Stephanie Scott this week told the Haines Borough Assembly that an “examination of statutes” leads borough staff to believe that a subsidy of the shuttle wouldn’t be allowed. “We pretty much determined the head tax couldn’t subsidize the fast ferry in any way, but that’s up to legal interpretation.”

Scott said she’d need more information before supporting use of head tax funds for the shuttle.

“I have an ethic of using public funds for public purposes. I would need to hear how everybody is going to benefit from having public money underwrite the expense of the ferry… Karen has said they are as lean as they can be, but we don’t have access to their books,” Scott said.

The question “falls under the concept of the borough’s role in economic development” and the rightful use of cruise ship head tax revenues. The tax revenues will bring $137,000 into borough coffers in the coming year.

“The question is how do we share (head tax revenues) with the public? Are we content with the trickle-down theory that the more tourism accelerates, the better it is for everybody?” Scott said. “We have to be unified that this is what we want to do. It can’t be seen as benefitting any one business. It has to be seen as a benefit to the entire community.”

Scott said she would be interested in a discussion of a port authority or other entity operating a public shuttle between Haines and Skagway. “If we could transform the (shuttle) into a public conveyance… and nobody was required to make a profit, maybe that would be different,” she said.

Scott said she opposed buying the Chilkat Cruises dock, saying she didn’t want to see the municipality acquiring additional property. Instead of leasing the private dock, Scott said she’d first look into using head tax revenues to improve the lightering float to accommodate larger boats like the American Spirit.

Assembly members Tuesday said they might discuss potential borough purchase of the private dock at an upcoming commerce committee meeting, independent of shuttle ferry considerations.