A proposed $225 annual increase in the base permit fee for tour operators created tension at the borough Commerce Committee meeting Tuesday, up from $25.

The Tourism Advisory Board recommended halving the fees for tour permits from borough manager Debra Schnabel’s suggested annual base fee of $250, with a maximum additional $1,000 fee for tours with more than 100 daily customers.

“Our fee was ridiculously low for a long time, obviously this is a ten-fold increase but where should the responsibility have been?” committee member Tom Morphet asked.

Board member and operator Sean Gaffney said that TAB felt the cost increase was onerous and that changing the structure to biennial was a fair compromise.

Schnabel said that the Haines community has invested hundreds of thousands of dollars into promoting the tourism industry, and that the money being charged for a permit is marginal in comparison.

“I’m embarrassed to think that after the work we have done to create the dock, to create the environment in which businesses can thrive in this industry, to say that these fees are not fair is not sensitive at all to what the community has put into it,” she said.

Since 1985 the Haines Borough has charged consumers a 1 percent (of the 5.5 percent) sales tax to re-invest into the municipality’s tourism, promotion and economic development funds.

In fiscal year 2018, the 1 percent sales tax revenue generated $581,665, according to borough fiscal officer Jila Stuart.

Gaffney said that charging his company $1,250 will inhibit his company from making capital investments.

Operator Greg Schlachter and TAB member Diana Lapham said that such a fee may be a barrier to entry for entrepreneurs, but Schnabel responded that if that’s a sincere concern, it’s possible to negotiate or waive the fee for new businesses, but that it’s unlikely for many more operators to start up in Haines given the moratorium on Chilkoot Lake.

“This is not industry standard; this is special for Haines,” Schlacter said, who operates a fly fishing business and statewide booking company. “I understand we don’t want to become like Skagway or Juneau, but we are so far away from becoming either of those places.”

According to a brief survey of municipal codes in Skagway, Juneau, Sitka and Petersburg, Haines is the only borough that charges a fee for tour operators to do business.

“My job is to generate revenue for this community and where can I look?” Schnabel said. “All of the infrastructure that we have in this community, I need to find revenue sources for. I think that the tourism industry has gotten to a place where the tourism industry is mature, healthy, growing and I think that to raise the fees for this to contribute to the general fund of our community is fair and justified.”

Morphet added that it’s important to remember that everyone who buys groceries in town pays into the tourism industry, so a hike in fees for operators is not unreasonable.

“Take the one percent,” Gaffney said. “When I hear this one percent almost become weaponized, I say take it because I think that the economy as a whole would be as strong or stronger,” he said. “You’re going to take away our ability to invest in the same way that we have. I would rather you take the one percent than look towards ongoing increases in fee structures.”

Morphet said that Gaffney doesn’t need the one percent because he’s an established business operator, but the mom and pop tour operators might benefit from the promotion.

Other substantive changes discussed at the meeting were aimed at possibly omitting language in Title 5 to “protect the public safety and welfare” and grandfathering in Greg Schlachter’s fishing business from a proposed change that would require his business be permitted on the Chilkoot Lake, which has a moratorium.

The commerce committee ended inconclusively after two hours, but will pick up conversations on the borough’s business licensing code again at the group’s Feb. 19 meeting.