Local businesses stand to lose about $3.4 million in tourism-related sales, and the Haines Borough about $187,784 in sales tax revenue, as a result of Holland America cancelling most of its Haines port calls next summer, according to an analysis by the Haines Economic Development Corporation.
The numbers are based on the 55 percent projected passenger decrease for the 2020 season compared to 2019 because of Holland’s cancellation. Instead of the more than 78,000 tourists visiting and spending money in Haines, now only 30,759 will arrive in town, based on ships operating at 87 percent capacity, which is about the average for the past 10 years. It’s the fewest number of passengers since 2011, according to the report.
The report uses a 2016 McDowell Group study finding that the average visitor spends about $111 on goods and services. “This spending estimate was taken from a sample size of 332 out-of-state visitors departing Haines between May and September 2016, 69 percent of who were cruise ship passengers,” the report says.
The borough also receives Commercial Passenger Vessel excise tax revenues from the state each year. The $5 per passenger head tax is distributed to Haines based on the number of eligible cruise ships, and is meant for spending on infrastructure that will improve services in the community. Based on 2019 numbers, Haines will receive an $317,000. Based on the 2020 figures, it will receive half that, according to the study.
In light of the revenue losses, the tourism advisory board is pushing back against harbormaster Shawn Bell’s proposed fee increase to the lightering float used by tour companies and cruise ships.
The float, used exclusively by the tour industry, charges $250 to cruise ships that tender passengers to and from their anchored vessels to the dock. Bell proposed increasing that fee to $500, which would double borough revenues to $16,500, according to 2018 figures.
The borough also charges a $25 docking fee to companies such as the Haines-Skagway Fast Ferry, Alaska Excursions and Alaska Fjordlines. Bell proposed to charge a per-passenger fee of 50 cents, which would add an additional $18,000 in revenue. By comparison, Skagway charges 96 cents for the same service.
At a meeting last week, TAB member and part owner of the Haines-Skagway Fast Ferry Sean Gaffney cited concerns that raising the lightering fees will make the borough less competitive. “We’re making a choice to be less competitive into the future at a time that the market is the most competitive that it’s ever been in history…The sale tax generated by the visitor industry, it’s half our sales tax. You’re going to go take this thing that is the primary driver of our economy now and make it less competitive at a time it needs to be nimble, agile and competitive.”
Former assistant harbormaster and assembly member Gabe Thomas told TAB members that, in general, user fees need to cover costs. “If your user fees don’t equal out, then you have to increase user fees,” Thomas said at last week’s TAB meeting.
“There’s no chance it’s ever going to cover its cost by fees,” Gaffney said. “You’re never going to touch depreciation by fees…You drive additional money through our economy. We win at the macro level.”
Bell said there’s a constant conflict when it comes to budgeting enterprise funds like the harbor.
“To what degree are they supposed to fund themselves and to what degree should it be funded by the community?” Bell said. “I’m trying to make that work and it’s up to the assembly to make that decision; do you want the users to support and fund this facility or do you want others in the community to?”
No general fund money or property taxes pay for harbor facilities operation, borough finance director Jila Stuart said. User fees cover those costs, but not for capital projects such as major repairs or upgrades. “We don’t raise enough to pay for the capital expenditures, which is major for all of those (enterprise) funds,” Stuart said. “The infrastructure is a huge portion of the total cost.”
The borough has transferred between $40,000 and $50,000 in tourism and economic development sales tax revenues during the past three years to help pay for the Port Chilkoot Dock and attached lightering float. That money offsets the 50 percent cruise ship dockage discount that’s set to expire at the end of the year.
Commercial passenger vessel (CPV) funds, collected and redistributed by the state, also help pay for the Port Chilkoot Dock.
The TAB board unanimously recommended that the borough assembly not increase the lightering float fees “until such a time as we can do a further analysis and get more information” regarding compounding financial losses associated with the proposed fees.
The assembly will hear the recommendation and consider the harbor fee increases at its Dec. 10 meeting.
In the meantime, tourism director Steven Auch said he’s working to pin down meetings with cruise line executives in an effort to entice them to Haines. He said he won’t likely have any meetings until February. “I think we need to show them that we are open and want them to be here,” Auch said.
In December 2000, Royal Caribbean International announced the cancellation of three of its large ships, which contributed to a host of cancelled dockings and a projected 79 percent drop in cruise passengers. The losses prompted a Haines delegation of borough staff, including the Mayor, to travel to Miami to lobby the industry for more ships.