Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966

Tourism marketing money in cross-hairs

 


Haines small business owner Rhonda Hinson takes every advantage she can to bring tourism dollars to her arts-and-crafts store on Main Street.

As proprietor of a small retail shop, she knows the borough’s full-page ad in The Milepost, the glossy Alaska road guide is good for Haines and good for Alaska Rod’s.

“If we did it individually, we’d have to pay twice as much,” she said. “We couldn’t afford even a little piece of it.”

But starting next year, thanks to state budget cuts, Haines will share its ad in The Milepost with Juneau, Skagway and the Alaska Marine Highway System as a way to reduce the $15,000 cost.

Haines tourism could soon suffer a one-two punch of economic challenges – statewide cuts and a local call to cut tourism taxes – which would threaten the funding merchants rely on to get their collective message to the outside world.

The avalanche of Alaska budget cuts this year slashed the state contribution to tourism marketing from $5 million to just $1.5 million. Funding in past years has exceeded $20 million.

Even the money the borough allocates to tourism each year via a sales tax is under question.

Commercial fisherman J.R. Churchill believes the sales tax that pays for tourism and economic development should be reconsidered. In a letter to the Haines Borough Assembly this year, Churchill said the $400,000 spent annually on tourism isn’t fair to other industries in Haines.

Of the 5.5 percent local sales tax, 1 percent goes to the tourism and economic development fund. Established in 1985, the tax brought in $503,000 in fiscal year 2016 and $525,794 in fiscal year 2015.

Under economic development, the borough spent $104,000 from the fund this year to pay for an electrical upgrade to the fuel dock costing $15,000, matching funds for the boat launch ramp costing $75,000, and offset funds for the cruise ship dockage discount initiative costing $14,000.

Within this year’s tourism budget, the two largest outlays are salaries and wages ($111,000) and advertising ($130,000.) Down the list is money spent on supplies and postage ($9,150).

Churchill approached the borough assembly, requesting that the tax be placed on the ballot via a referendum. That didn’t happen, but he’s not giving up.

“We give fishing absolutely nothing and bend over backwards for tourism,” he said. “The commercial fishermen have long looked at this and asked, ‘What’s the deal? How did they walk away with this golden ticket?’”

Gone are the good old days when late-night television in the Lower 48 was filled with “Come Find Yourself in Alaska” advertising. Haines was able to piggyback off that high-profile campaign.

Tourism director Leslie Ross acknowledged that there is support for killing the tourism tax, which she says many residents don’t understand. She is planning a town hall to educate voters on how the money is spent.

“A lot of people think we just smile and shake hands and make pretty pictures,” she said. ‘I often refer to myself as a lobbyist for the industry. Outside Haines, I end up being the public face for the borough.”

Among her duties, she said, is representing the borough in Alaska Marine Highway meetings to protect Haines’ ferry service schedule. She also works with state Department of Transportation officials to ensure river access for fishermen and others is preserved in the Haines Highway construction project and meets regularly with harbor and parks officials.

Without the 1 percent tax, funding for tourism and economic development would come from other borough revenues. “It’s not like tourism would just go away,” she said. “It would affect the whole borough budget.”

Ross said she is willing to consider other options to advertise Haines, such as chamber of commerce and Visitor Center collaborations and a member-supported convention and visitor’s bureau, a model that only supports paying merchants.

“But any model I’ve looked at includes contributions from local government. I don’t think the town is big enough for a membership-based CVB. Right now, we promote all of Haines’ businesses in an unbiased way.”

While cutbacks in local tourism spending remain in question, state budget cuts are a reality.

“Right now, we’re in an unprecedented place,” said Susan Bell, a former Haines tourism director who now works for the McDowell Group, a state research and consulting firm. “I don’t think the effect will be immediate. People might not yet be making the decision to be coming to Alaska next year. But the effects of the dramatic drop in state funding will be seen over the next few years.”

Bell added: “It will be difficult for Haines to make waves in the marketplace. It will be more important for the town to take part in things like the Southeastern Alaska Tourism Council.”

The regional council is considering ways the industry can fund its own marketing, including the creation of a Tourism Improvement District in which tourism-related businesses would pay a fee toward statewide marketing efforts.

Under the plan, businesses would use a formula to assess what portion of their revenue comes from tourism. Businesses would be identified by their IRS tax codes and the fees would be used to develop statewide marketing efforts.

That worries some Haines residents.

“What degree will Haines be represented on equal footing as Juneau or Ketchikan?” asked Diana Lapham, a former assembly liaison to the borough’s Tourism Advisory Board. “In Haines, we just don’t have the power the larger communities have.”

The state marketing cutbacks make the Haines tourism tax even more important, many say.

But Churchill, who has fished here since the 1970s, said things have changed since the tax was introduced 30 years ago. “Back then, we had a young, budding tourism industry in Southeast Alaska. We were all behind standing up this effort. But after 30 years, if you’re not standing up on your own, that’s just throwing good money after bad,” he said.

“I’m tired of funding tourism. It’s not my industry and I don’t see any benefit from it. Tourism needs to stop digging in our pockets.”

Dan Egolf, owner of Alaska Nature Tours and Alaska Backcountry Outfitters, said such arguments aren’t good for the community.

“Whenever we face budget cuts, we have one industry trying to point the finger at another industry. Factions arise,” he said.

Egolf added. “It’s not about ‘we’ or ‘they.’ In small communities like Haines, we have to help one another out. That’s the only saving grace we have.”

Bell suggested that Haines residents review whether the borough has the right allocation for tourism and other industries and ask the question: “Where are the opportunities to work together?”

She added that Haines is unique in directing its sales tax not only for tourism, but also for economic development. In the 2017 fiscal year, $71,500 was tagged for such spending.

“The town has the money to be able to measure its performance, and keep track of how many inquiries at the visitor’s center and how many pieces of mail they’ve sent out.”

If the borough loses that funding, Bell said, “it’s hard to speculate on the impact.”

Lapham said the tax money spent on economic development is often misunderstood. “It goes for so many things we don’t have to pay for out of the general fund,” she said. “It’s in the budget, but how many people read our budget?

Ross says her department has built momentum with its cruise ship initiative to attract more tourists. “If people vote against a tax that supports something that actually works, like bringing economic development to town, that would be a bummer.”

 
 

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