TOPPING OFF

Shae Hanson pours water over the top of one of the daisies that kids from Little Dippers Day Care planted at Pullen Park recently. Flowers were planted to help beautify the Taiya Inlet Watershed Council's project to protect the creek and improve salmon habitat.

Photo by Molly Dischner

First numbers are in

New split sales tax scheme off to a strong start despite shaky economy

By MOLLY DISCHNER
The transition to Skagway’s new sales tax rates has been a smooth one.
Most businesses made the switch from the first quarter’s three percent sales tax to the second quarter’s five, said Kathy Moody, Skagway’s tax clerk, in an e-mail. A few businesses reported three or four percent, but overall the majority of the businesses reported correctly, she said.
The new tax rates took effect in 2008 after the community voted to change them in last October’s muncipal election.
Cori Giacomazzi, owner of Wandering Wardrobe, said she had to reprogram her till more often to keep up with the shifting tax rates, but otherwise it wasn’t a big deal.
The higher tax made things a little more expensive, but that didn’t stop people from eating, said Duppy Ticarro from the Skagway Brewing Co.
Ticarro said that if it had been any higher, businesses would probably be feeling more of an impact.
The new tax rates were keeping the borough from feeling the effects of the economy as a whole this summer.
Overall sales went up in the first quarter, but tax revenue decreased because of the lower rate and increased exemptions, said Finance Chair Dan Henry. In the second quarter, overall revenue decreased.
“Total sales dollars for the community are about six percent off,” Henry said.
That decrease didn’t hurt the borough at all. The higher tax rate absorbed both the decreased sales and the new exemption on food sales. The borough’s 2008 tax revenue for the first two quarters increased by more than $300,000 compared to 2007, he said.
“I’m going to be very anxious to see what the third quarter numbers translate to, but that certainly bodes well for us,” he said.
For local businesses, the new tax rate was less of a concern than the lower revenues. Most whom the News contacted agreed that the drop for their businesses were somewhere in the neighborhood of six percent, but few would say what the decrease was (and many hadn’t looked at the exact numbers).
Ticarro said the Brew C.o didn’t have a solid comparison, because this is its first full season being open. The owners will have to look at the numbers at the end of the season, but so far things were going well – well enough that the Brew Co. may stay open for the fall, he said.
Glacial Smoothies and Espresso will definitely be open, and the Black Bean will definitely close, but Ticarro said they planned to wait and see how the Brew Co. does. Right now, the plan is to stay open until sometime in October, and then see if they have enough local support to continue.
Rosemary Libert, from Lynch and Kennedy, said 2007 was an anomaly – and had more passengers than 2008 – so 2006 was a better marker of how this season is going. Compared to those numbers, things are OK, she said.

Visitor Carolina Guerro shops for souvenirs at Dedman's. MD

The borough’s numbers are quite a bit closer to 2006 as well.
Overall, Skagway’s sales revenue was about $52,502,862 for the first two quarters of 2006, and $50,849,143 for the first two quarters of 2007. That’s only a three percent difference.
Henry thought a strong September, which he had heard predicted by various groups in Skagway, might shoot this summer up and bring the gap between this year and last to about three percent. That would also bring 2008 even closer to 2006.
But whether the difference is three percent or six, people said they are feeling it.
“People are not spending like they normally do,” said Giacomazzi. She wasn’t sure if the weather was hurting or helping, but said the U.S. economy definitely is not helping.
Ticarro said there is definitely less traffic in and out of Skagway – by car and on cruise ships – but the economy has hurt the hospitality industry less than others.
“In hospitality, we’re lucky,” he said. “We really depend on people being hungry and thirsty, and they are.”
Libert had her own theory about the falling dollar.
European tourists haven’t negated Americans’ closed wallets as much as business owners would like, she said. They are less inclined to pay for souvenirs, and more willing to pay for experiences. But the falling dollar is also giving Canadians, Australians, and New Zealanders – whose spending habits are closer to Americans – more buying power, so the two groups kind of balanced out, she said.
Overall, ups and downs are just business as usual, Libert said.
“It’s not a stellar year, but for me it’s not a drastic year,” she said.

Skagway rental market changing

The business slow-down is affecting property-owners too.
Local businessman Dennis Corrington said heís seen a number of firsts this season – all indicative of a recession trickling up from the continental U.S.
One of the most shocking was the number of empty shops on Broadway at the start of the season, he said.
“This is the first time in 35 years I’ve ever seen the season start with three or four locations dark – that’s very critical, too, because you only have 150 days to make it for the year,” he said.
Those weren’t Corrington’s properties, he said. But he’s also had firsts of his own.
One tenant paid a deposit and didn’t show up to open a store. Another abandoned their space mid-season. And others have been chronically late on their payments.
“All of these are just an indication of the recession that’s lapping on the shores of Lynn Canal by way of the lower 48,” he said.
But Corrington was hopeful about next season. Seven jewelry stores alone have contacted him for space – some new stores moving up from Ketchikan. Heís also had current tenants ask for better spaces, or expand into bigger areas.
“We’re very close to filled up for next year,” he said.
He also thought the clinic project and increased traffic from Yukon mines would help Skagway grow and diversify.
“If the port is open and expanding, there will be more facilities to support that in restaurants and over-night housing,” he said.
Corrington mentioned one business looking at staying open with the increased winter traffic. The Skagway Brewing Co. will fill the gap left by Moeís closure last fall, and also offer food, he said.
That’s good news for more than just a hungry community or folks looking for jobs: property owners will gain year-round tenants, too. The Brew Co. is inside one of Corrington’s buildings. – MD

Proposed cruise port time rule finally nixed

Stevens takes Skagway en route to primary win

By MOLLY DISCHNER
Sen. Ted Stevens’ opposition to a proposed rule that would have required foreign-flagged ships to spend more time in foreign ports helped stop the White House from accepting the rule.
On a campaign stop in July, Stevens said he had pretty much stopped the rule from becoming law, but his staff was unsure of when it would be officially rejected. That happened Aug. 15.
It was a relief for many Skagway businesses.
“We don’t have to worry for 2009 about vessels cutting their port time,” said local tour operator Steve Hites. “It’s a good thing for Skagway.”
The proposed Customs and Border Protection rule would have required foreign-flagged ships starting and ending their voyages in American ports to spend one day in foreign ports for every two days in American ports.
“That would have destroyed industry as we have built it here,” Hites said.
All large ships traveling to Alaska are foreign-flagged, said a statement from the senator’s office. There aren’t any convenient foreign ports for cruises that begin in Juneau or Anchorage, and a trip from San Francisco or Seattle to Southeast Alaska would spend less time in local ports if it had to spend more time in a Canadian port on the way.
While in town last month, Stevens said the rule was designed for Hawaii, and he had the support of its senators in stopping the rule from hurting Alaska’s tourism industry.
Stevens could not be reached for comment by press time.
Stevens beat several Republican challengers in Tuesday’s primary despite being under indictment for alleged reporting violations over the cost of improvements to his Girdwood home. His trial is next month.
Skagway was solidly behind Stevens. See how Skagway voted on page. 9.

PRIMARY ELECTION RESULTS

Haines requests back-taxes from Temsco Helicopters, brings flawed tax codes to light

Haines and Skagway codes out-of-sync on taxing tours

By KELLY ROBERTS
An old point of contention between Skagway and Haines rose to the surface recently when interim Haines Borough Manager Bob Ward and Haines Mayor Fred Shields requested two years’ restitution in back-taxes from Skagway’s Temsco Helicopters, Inc. for tours operated within Haines Borough.
The request came as a surprise. Ward and Shields met with Skagway Mayor Tom Cochran and Temsco’s Skagway Base Manager Dave Herbig on the afternoon of August 12, just after the ground-breaking ceremony for Skagway’s new Rasmuson Community Health Center.
The meeting was “not supposed to have anything to do with taxes,” said Skagway Borough Manager Alan Sorum in a phone interview, who said he thought the meeting was meant to determine if Temsco needed a permit from Haines.
Temsco Helicopters has been operating glacier tours in the Haines Borough for the past 15 years, and currently lands on two glaciers within the Haines Borough boundary: the Meade and the Ferebee.

(Note the print version of this story said three glaciers, but the helicopter landing area on the Chilkat glacier is within the Skagway Borough. The News regrets the error)

Temsco has paid user fees for over 12 years to the US Forest Service for operations within the Tongass National Forest (Meade is in the Tongass), and also paid fees to the Bureau of Land Management for landings on glaciers in their jurisdiction. Additionally, Temsco has paid taxes to Skagway — where the tours are based, take off from, and return to – since 1985.
“Right now, it has been handed over to our attorneys,” said Herbig.
Herbig said Temsco was not notified two years ago that it needed a Haines permit, but that Haines chose to go back two years for tax collection because that is as far back as they can legally request.
On a larger scale, the Temsco debate is serving as a catalyst for Skagway and Haines to reconcile their tax codes, which currently do not match. Skagway’s tax code levies a tax on tours that start and end in Skagway, while Haines taxes those tours that take place in Haines.
In the late 1980s, when only a small number of tours operated in both Skagway and Haines, the two then-city managers met and consented to a “gentlemen’s agreement” that taxes would be paid to the city or borough where the majority of the tour took place, thereby not double-taxing tour companies. Today the issue affects a much broader scope of tours, and the definition of where the tour takes place is murky at best.
The issue was brought before Skagway’s assembly on August 21. Mayor Cochran suggested the two assemblies meet to rectify the tax codes once the tour season has come to a close, likely starting initial discussion in October.
“(We) would like to work with Haines Borough for an arrangement that we can all agree upon,” said Cochran in a phone interview, adding “our main goal is for assemblies to work together…(arguing) is not in the best interest for either community.”
Yet Assembly member Mike Korsmo pointed out that if Haines is getting aggressive in its pursuit of tax dollars, Skagway may need to entertain talks sooner than the end of the season.
As of now, there is no set date for the two assemblies to meet.
Ward, a former Skagway City Manager (who helped to create the “gentlemen’s agreement”) and current interim manager for Haines, has offered to facilitate future meetings between the two governments, once Haines hires a permanent borough manager to replace him.
“I don’t think this issue is beyond resolution among reasonable minds,” said Ward.

Post office staff shortage limits service
With two employees out of the building this week, the Skagway Post Office has been unable to provide their usual range of services.
The post office planned to operate on a reduced schedule until Aug. 30, although Anchorage-based consumer affairs manager Dawn Peppinger said Aug. 26 that a seasoned postmaster should be flying in from Wrangell the same day to fill in for Skagway postmaster Elaine Brummett, who is on leave. The substitute postmaster was expected to clear up any backlog of mail by Aug. 27, and continue to help staff the office until Brummett returned.
Peppinger said the post office tried to plan for the shortage and had three employees working while the others were gone, but the United States Postal Service’s Anchorage office had still received a few calls from concerned Skagwegians. Those calls prompted the postal service to send help in the form of the fill-in postmaster, she said.
Just one of those three remaining employees could provide retail services and work at the front counter, so the post office has been closing each day for a lunch break from 11:30 a.m. to noon, and there is no Saturday window service. Pick-up times for general delivery mail were also reduced.
Extra employees hired for the summer “peak” season are not trained for retail services, so they’re only able to work in the back, said Peppinger. She added that the postal service views training them as retail associates as too expensive and time-consuming for temporary employees.
Peppinger suggested the Skagwegians take advantage of the USPS online services while the Skagway Post Office was understaffed. – MD

All races in municipal election uncontested

There are four seats up for election on Skagway’s Oct. 7 ballot, and just one candidate has filed for each.
For Skagway Borough Assembly, current assembly members Dan Henry and Colette Hisman are running for re-election.
For Skagway School Board, current board members Joanne Korsmo and Chris Maggio are also running again.
Henry and Hisman both said they wanted to see the projects the borough is working on get finished.
“There’s a lot of projects, and I want to make sure that I stay involved and they’re being completed,” Hisman said.
The list compiled by Borough Manager Alan Sorum includes about 26 different projects in various stages of completion.
Barring a declared write-in candidate, the two don’t need much of a campaign to be re-elected.
Henry said he was glad he didn’t have an opponent because running the Skagway Fish Co. and hosting a few fundraisers there would take him right up to election day before he finishes his season.
Maggio said the position was a way for him to give back to the community. Having run a year ago, he didnít want to put together a huge campaign either.
Henry, Hisman, and Maggio all filed to run by the Aug. 18 deadline. Korsmo did not, and instead declared as a write-in candidate on Aug. 20. Anyone else interested in filing as a write-in candidate must do so by 5 p.m., Oct. 3.
All positions are for three-year terms. – MD

BOROUGH: Projects funded, vendors selected

At its Aug. 21 meeting, the Skagway Borough Assembly passed second reading of the budget amendment that re-allocates money from the wave barrier project to other projects. Assembly member Dave Hunz was absent, but everyone else voted in favor of the amendment. The assembly also altered the ordinance to reduce the wave barrier funding by an additional $20,000 and move it to the Upper Dewey Lake trail restoration project.
Assembly member Mike Kormso asked the assembly for the amendment after bids came in higher than expected.
The assembly voted to award the project to low-bidder Packer Expeditions of Skagway for $49,411.81. Both bids were higher than expected, but Korsmo said it was due to increased fuel costs. Trail Mix of Juneau submitted a bid for more than $56,000.
A local firm also was low bidder for the new water booster station. Hamilton Construction’s bid of $781,500 was about $200,000 below those of Admiralty Construction and Dawson Construction, whose bids came in right around $1.1 million – the amount the assembly was expecting.
Assembly members expressed concern that low bidders do not always work out, but Borough Manager Alan Sorum said he had contacted Hamilton, and they were standing by the bid despite the price difference.
The assembly also amended the engineering contract with PND Engineers, Inc. for the wave barrier project. The new version alters the scope of the project to reflect what the state asked the borough to focus on at a recent meeting, but does not change the cost, said Sorum. - MD

BOROUGH: MOA with White cancelled

The assembly agreed to dissolve the Memorandum of Agreement with Skagway Sculpture Garden’s Bob White to co-develop Veteran’s Park.
The 2003 MOA had created a partnership between the two parties to develop and maintain the land between the museum and White’s property at 8th and Spring. Mayor Tom Cochran said neither party followed through.
“I don’t think one party is more guilty than the other, it’s just how it panned out,” he said.
At an earlier meeting, Cochran said that White had been upset that the borough left a pile of gravel opposite the entrance to the sculpture garden. White was not present at either meeting and later did not wish to comment about the issue.
Assembly member Colette Hisman noted that while both parties were at fault, the city built a boardwalk in an alley for White.
“I know that there was no meeting of the minds, and that both parties dropped the ball, but there normally wouldn’t be a boardwalk in an alley.”
The borough also decided to let White off the hook for his portion of the work that was completed. That amounted to about $8,000, according to an e-mail that retired city employee Lizzie Carlson sent to accounts receivable clerk Emily Wescott.
Cochran also told the assembly the borough is ready to move forward on purchasing the Garden City RV Park property. The assembly will meet as the committee of the whole Sept. 12 to discuss the possible purchase from the Catholic Archdiocese. - MD

PHOTO OF THE WEEK

The Cranbrook girls' bugle band performs at Centennial Park Aug. 18 before climbing on a WP&YR train. The girls from British Columbia played valveless bugles and drew a crowd of locals and tourists to their performance, which included familiar tunes such as "Hokey Pokey" and "When the Saints go Marching In". Photo by Molly Dischner

• SPORTS & REC: Skagway runners get set for Klondike Road Relay; X-C preview; Fishing update.

• AUGUST OBITUARIES: Art Nelson

HEARD ON THE WIND: Caribou and moose are the ticket... (August 29, 2008)

FISH THIS!: One hour on the lake... (Aug. 29, 2008)

To read all the stories in the News, including complete borough and school digests, letters and commentary, police and court reports, and view our many advertisers for Skagway products and services, you must subscribe to the real thing. Out of town subscriptions cost $35 per year for second class mail, $45 for first class mail. Send a check to Skagway News, Box 498, Skagway, AK 99840 or call us at 907-983-2354 with a credit card number.