August 28, 2009 • Vol. XXXII, No. 15

Chilkoot Chatter

Chilkoot Trail Ranger Jeremy Prater talks to two hikers from Northwest Territories about the next stretch of the trail above Sheep Camp. Read more about a ranger’s summer on the trail on page 7 of our printe edition. MD

Second quarter revenues fall only slightly

Borough, businesses, waiting for third quarter to assess the season


The borough’s numbers are down this summer, but only slightly. Taxable revenue for tour operators, restaurants and gift shops increased. The decrease came from fuel wholesalers and retailers.
According to an August 11 memo from borough treasurer Cindy O’Daniel, the borough had collected $2,270,609 in sales tax revenue at that time. That number was just $86,264 less than the amount collected in the second quarter of 2008: $2,356,873.
In an August 3 memo, O’Daniel noted that the price of fuel has dropped since 2008. The amount of taxable revenue in the fuel sector in 2009 was about $800,000 less than in 2008. The amount dropped from $2,006,362 to $1,176,727.
At the assembly’s August 20 meeting, Assemblyman Dave Hunz suggested changing the tax so that it is per gallon, rather than a percentage of the total sale. Finance Committee Chairman Dan Henry said they would discuss that idea at the next finance meeting.
Taxable revenue increased in three sectors – tours, gift stores, and restaurants.
Tour operators had the greatest increase, with $18,593,427 in taxable revenue for the second quarter this year, compared to $18,139,735 for the second quarter of 2008. The number of tour operators decreased from 43 to 38, but O’Daniel said that number includes each individual pedi-cab as an individual tour operator. Three fewer businesses could just be the result of three fewer pedi-cabs, she explained.
During a July discussion onboard the Celebrity Millenium, Temsco manager Dave Herbig said the weather this summer had helped the helicopter operator’s performance.
Gift stores (including jewelry stores) had an increase in taxable revenue of about $250,000. That could be from an increase in the sheer number of stores. O’Daniel said the number increased from 70 in 2008 to 80 in 2009. The sector had $15,331,029 in taxable revenue in the second quarter, compared to $15,074,016 in 2008.
While some retailers said they had held steady or increased this summer, the borough’s numbers don’t reflect everyone’s success – others reported drops of up to 20 percent.
Restaurants had an increase of about $200,000 from 2008 to 2009. The number of restaurants dropped slightly from 28 in 2008 to 25 in 2009.
Hotels are not subject to Skagway’s sales tax, so the numbers aren’t available for that category, but at the annual Chamber of Commerce lunch, Buckwheat Donahue said most hotels were having a good summer.
“Most hoteliers are actually fairing fairly well,” he said, adding that the Chilkoot Trail Outpost in Dyea has had a tough summer as well as the bed and breakfasts in town. But the real test is in the third quarter’s numbers – and next summer.
If the third quarter mimics the second, O’Daniel said the budget would probably work out. The budget for fiscal year 2010 begins with the third quarter.
Cruise West reported sunny numbers for July. Spokeswoman Jerrol Golden said this season was “much better than we anticipated, and that’s awesome.” The company had fewer stops in Skagway this July than last, but the ships that traveled up the Lynn Canal carried more passengers.
Golden said via email that the company’s sales increased 35 percent compared to last July, and they had 50 percent more passengers. She did not respond to a request for the specific number of passengers.
This year’s budget is also dependent on the first-half of next summer.
The number of visitors is supposed to decrease next summer, Donahue said.
Cruise West is just one cruise company pulling a ship from Alaska next summer. The company pulled one ship from Alaska, and changed the itineraries of the four still traveling to the state. This year, their ships made 47 voyages to Skagway. Next year, they will visit only 34 times.
Independent tourists have been decreasing by two or three percent every year for the last couple of years, and the number of cruise ships sailing to Skagway is set to decrease again next year.
The ferry numbers were also down this year, but just slightly. An email from Skagway’s Convention and Visitors Bureau said that vehicles arriving in Skagway on the ferry are down about 2.5 percent compared to last year (from January through July), and vehicles leaving Skagway via ferry are down about five percent for the same time period.
Donahue said the minimum impact from those decreases would put Skagway at visitor numbers similar to what they were in 2002. “To go back to 2002 levels is not an encouraging thing,” he said.
The economy was also a rough one for the local Chamber of Commerce. The borough provided funding at the chamber’s request after the local business organization had a deficit in its 2008 budget of about $17,000, said new president Michelle Gihl.

Port differentiations
PCC decides not to submit amended proposal to finish grant application; Port Committee will seek help from SDC, others to wrap it up, ‘make it real’


The Skagway Borough Assembly on Tuesday evening was expecting a new proposal from Pacific Contract Co. to complete the second half of the federal grant application for the Gateway Project, however a letter from PCC president Paul Taylor that day simply stated that no proposal would be submitted.
The application will still move forward with a combined effort of the Skagway Port Steering Committee, Skagway Development Corp. and other engineering firms already at work on different aspects of the document, which is due Sept. 15.
The Aug. 25 special meeting had been called specifically to vote on a new proposal from PCC, because the application’s focus needed to change after a recent decision by the Alaska Industrial Development and Export Authority to co-sponsor the application. The AIDEA board voted to assist the borough after meetings with a delegation from Skagway Aug. 12-13 that included Mayor Tom Cochran, Borough Manager Tom Smith, lobbyist John Walsh, and Taylor.
Taylor had completed the first half of the application for $24,000 based on a June 15 agreement, and had submitted a proposal for the second half prior to the meetings with AIDEA. He then revoked the proposal before the regular assembly meeting on Aug. 20 and said he would be submitting a new one.
The borough held an open house about port planning before the Aug. 20 meeting, and Taylor was also present at the Chamber of Commerce annual meeting the next day, as Cochran and Smith explained the TIGER grant’s new focus. He said they summed it up pretty well and there was no indication he would be stepping away from the process.
One big change was in the amount being requested from the federal government through its Transportation Investment Generating Economic Recovery (TIGER) program. It had increased from $77 million to $89 million, with the $12 million additional funds going toward a new ship loader at the ore terminal, which is owned by AIDEA.
Cochran said the new ship loader would be the top priority under the revised proposal, which would accept incremental funding if all of the $89 million was not available. The two remaining major increments are an intermodal dock at the ore dock that would allow ore ships and cruise ships to be docked at the same time, and a new floating roll-on, roll-off barge ramp that could be modified for rail use in the future if there is enough tonnage from Yukon mines. It also would accommodate a pipe haul if the proposed natural gas pipeline gets built down the Alaska Highway.
An initial draft of the grant application prepared by Taylor had included suggested amounts or blank spaces from various entities, including the borough ($7 million), the Yukon Government ($9 million), AIDEA, and White Pass, to reach the original $77 million required for the Yukon Gateway Project for the Port of Skagway. That approach was going to be scrapped in favor of full funding from the federal government, and possible matches from entities later on if the grant funding comes up short.

The west side of the Skagway harbor will see major work if the federal TIGER grant is approved. JB

At Tuesday’s special assembly meeting, Cochran said he was disappointed that PCC had not submitted a new proposal. There was an additional $24,000 budgeted to complete the work.
“In the past two years, PCC has been the primary mover behind this,” Cochran said. “At this point if anyone can claim ownership to the concept, it was PCC.”
Taylor had been involved in helping the borough’s Port Steering Committee work with engineering firm CH2M Hill to develop the Skagway Port Development Plan last year. One of the recommendations of that plan was to pursue funding for the Gateway Project. Taylor had been appointed to the committee, but his company, which has been under contract for various borough projects from the seawalk to the new clinic, also was hired in June to develop the TIGER grant application. This apparent conflict led to his resignation from the committee last month, but he said he would continue to assist the committee.
Taylor was not at either meeting this week, nor did he return phone calls or email requests by Wednesday’s deadline for comment on his recent decision.
Cochran said he was confident the port committee and the borough’s other engineering firms, working with the Skagway Development Corporation, could complete the grant application by the Sept. 15 deadline. He added that the lead-zinc contamination problem in the ore terminal basin would have to be addressed, but remained the responsibility of White Pass, which operated the facility in the 1970s.
At the meeting, former mayor Tim Bourcy, who at one time chaired the Port Steering Committee, said there needed to be more public involvement in the process.
“TIGER is a big picture item that requires a lot of consideration,” he said. “It should be in a manner that is appropriate at the port committee level.”
At Wednesday’s meeting of the port steering committee, it was decided to have Trish Sims of the SDC go over proposed changes to the document and have them ready for a work session this Friday night at 7 p.m. Engineering firm PN&D will be asked to revise a dock drawing showing a new ship loader and base, and another engineering firm, KPMG, will be asked to finish up a National Environmental Policy Act application that needs to be submitted before the TIGER grant application will even be considered. It will address the contamination issues.
Committee member Steve Hites said the grant application needs to be pulled back from its focus on the potential for big mine tonnages and standard gauge rail to “near term traffic” that can be handled by trucks and narrow gauge rail.
“It has to be real and exactly what we want,” he said, adding that the ultimate goal is for the Skagway port to be able to compete with Stewart, BC for Yukon freight.
Smith said that based on his notes from earlier meetings with the federal Department of Transportation in Washington, DC this summer, there needs to be more in the grant application’s narrative about jobs.
Members also discussed adding needed dock improvements to the application to go with the first priority of replacing the ship loader. These and other application details will be hashed out at Friday night’s meeting, which begins at 7 p.m. at City Hall.
In the meantime, the assembly took the first step in setting up a permanent port governance structure. First reading of a Skagway Port Commission ordinance passed on Aug. 20. The ordinance sets up a commission with five members of the community and two non-voting liaisons, a borough assembly member and a representative of the Yukon Government. Second reading and public hearing will be Sept. 3.
Cochran also asked the assembly to consider joining the Pacific Northwest Economic Region, an economic development group. Smith said he supported the mayor’s idea, and assembly members had no objection.

Three candidates interested in one-year assembly seat; Write-in challenges for three-year seat


The October 6 municipal ballot has nine candidates running for the six seats that are up for election.
Current Mayor Tom Cochran is running unopposed to continue serving as Skagway’s mayor. Cochran said one of the main reasons he was running was that the borough has a number of projects it’s working on, and he wanted to see them through. Of those projects, he said the Gateway Project would be one priority, but he also wanted to work on the fire department reorganization, getting the new clinic going, and carefully budgeting for the rest of the economic downturn.
The Borough Assembly has two three-year seats open and three people interested in filling them. Incumbent Dave Hunz and newcomer Tim Cochran each filed to run for office. After filing for the one-year seat, Alison Holtkamp decided to switch and is running a write-in campaign for the full-term instead. Mike Korsmo decided not to seek re-election and is focusing on his new duties as chair of the state’s Marine Transportation Advisory Board (see p. 5).
Hunz said he enjoyed the work and knowing what is happening in Skagway. “It’s been interesting, and I can keep track of what’s going on in the city,” he said.
His top two priorities are port development and diversifying Skagway’s economy.
Tim Cochran, the mayor’s older brother, said he wanted to see Skagway balance tourism and industry on the waterfront.
“I think we can do it in a responsible, environmentally-friendly, way,” he said.
Right now, he said, Skagway has “all our eggs in one basket.” Extending the railroad back to Whitehorse might be one way to change that, he said.
Enhancing Skagway’s non-tourism jobs would also increase the year-round jobs, which he said he wanted to see happen. “I’d like to see my son be able to come back here, after college say, and raise a family,” he said.
Holtkamp has worked here for six summers, but has just decided to spend her first winter here. “I love Skagway, and I miss it so much when I’m not here, so I decided I may as well stay,” she said.
Her focus is on small business and the environment. “I love Skagway and I’m excited to bring a fresh perspective,” she said.
The table at City Hall also has a one-year opening, which L.C. Cassidy vacated earlier this summer. The mayor appointed Dennis Corrington to fill her seat until the October election. Now, Ed Fairbanks, Luke Rauscher and Paul Reichert are all running for the seat.
Fairbanks said he was a fiscal conservative and felt that the current government was on somewhat of an unsustainable spending spree. Developing Skagway’s economy so that it was less “boom and bust” was one of his goals, he said.
“I believe the city should explore some means to improve the economy,” he said.
Reichert agreed that economic development, mostly port development, was an important issue in Skagway. He said he also wanted to maintain the cruise industry’s presence. Like others interested in the position, he said he was excited for the opportunity to serve Skagway.
Rauscher was one of few assembly candidates who didn’t mention tourists or the port. He said he wanted to help make the assembly more efficient, and see changes made to the municipality’s code.
Fairbanks also said he’d like to see the government be more business-friendly.
The School Board seats are also uncontested. Incumbent Chris Ellis filed to run again, and newcomer Stuart Brown is running for the other open seat, which was held by Robert Murphy who decided not to run (see page 4).
Both candidates said enrollment was a priority.
“Enrollment, enrollment, enrollment,” said Ellis. “Always enrollment.”
Ellis said she is running “to continue my time on the board and to keep helping the school and students as much as I can.”
Brown said he has worked in Skagway for 13 seasons, and wanted to give back to the community. Maintaining and expanding Skagway School’s curriculum was also important to him, but mostly, he said, it was about helping the school help kids.
“I’m all about the kids,” Brown said.

Electric bills increase next month


Electricity bills in Skagway will increase starting in September.
Alaska Power and Telephone Manager Stan Selmer said the increase would be about $6 for a typical Skagway residence using 500 kilowatt hours of power.
The Alaska Regulatory Commission approved the interim increase on August 20.
Officially, the increase is nine percent. Without Power Cost Equalization factored in, it works out to about five percent, Selmer said. With PCE factored in, it’s closer to 15 percent. But no matter which percent you go with, the cost is the same. “In terms of dollars and cents, that’s going to be approximately $6.65,” Selmer said.
The increase will show up on the electric rate part of AP&T’s bills. That charge is for the infrastructure that supports electricity – like power poles and transformers – and the maintenance and labor to keep them going, Selmer said. A decrease in the energy charge (the cost of the power) will help offset the increase and keep it in the six-dollar range.
The increase is a temporary one, meant to tide AP&T over while the commission reviews their application for a 13 percent increase. A decision on that might take until the middle of 2010, Selmer said. If the commission denies the request, Selmer said AP&T will have to refund the extra charge.
Selmer said the increase was the first the company had requested since 2004. Their 2004 request was granted, and went into affect in June 2005. The primary reason is for changes in the costs of maintaining facilities and in the company’s investment in overhead lines.
The increase in property taxes for the Municipality of Skagway is also part of the rate increase, Selmer said. Taxes on the company’s Goat Lake and Dewey Lakes properties increased significantly this year. The Goat Lake property value doubled, and Dewey Lakes quadrupled, he said.
Selmer said that some customers had questioned whether electricity should be getting more expensive when all businesses are having trouble. But Selmer noted that because of state regulations, AP&T isn’t run like many other businesses. The commission requires the company to make enough of a profit to stay in business, Selmer said.
“A utility is tasked with providing reliable energy to the customers,” Selmer said. “We have to serve everybody, and [the commission] requires us to make enough money to stay in business.”

More info needed before assembly discusses regional power intertie

 After tabling discussion of a possible regional intertie connecting Skagway, Haines and the Yukon to provide a hydroelectric hook-up for cruise ships, Skagway’s Assembly decided not to immediately schedule a meeting with Alaska Power and Telephone regarding the possibility.
AP&T proposed the idea in a letter to the assembly and asked for a meeting between the company, Skagway and Haines. After hearing the assembly members and citizens at its August 25 special meeting, Mayor Tom Cochran suggested that they send a letter telling AP&T they needed someone to speak to the assembly and provide more details before the assembly would move forward on the idea.
During public comment, both Tim Bourcy and John Harris said they supported hydroelectric projects, but weren’t sure if all the details (such as AP&T’s potential request for head tax funding) were appropriate for the borough to support. Assembly members, including Colette Hisman, were concerned about the head tax money as well.
Bourcy also mentioned that any plan to add hydroelectric projects such as the suggested 25 MW project for West Creek, needed to be vetted by the public first.
Member Dennis Corrington agreed.
“It needs to go through a highly visible process,” he said. In addition to wanting public process, the assembly had other concerns.
Mike Korsmo said that SE Conference was working on getting power to rural villages, which the white paper didn’t recognize.
“I have a lot of issues with this white paper,” he said.
Dave Hunz said that while allowing ships to plug-in might stop them from burning diesel in port, Skagway might wind up burning more diesel in the winter. –MD

Skagway assemblyman elected chair of ferry advisory board


Mike Korsmo of Skagway was recently elected chairman of the state’s Marine Transportation Advisory Board.
Kosmo, who runs the big tug in Skagway, will serve a one-year term as the board’s chair. He was appointed to the board by former Governor Sarah Palin and has been a member for three years.
The board focuses mainly on the Alaska Marine Highway, which Korsmo said he enjoyed working on.
“I love the marine transportation stuff,” he said.
This year the board is advocating for a few different aspects of the ferry system, Korsmo said.
The board’s first priority is to fund the M/V Kennicott to operate full time in the summer, Korsmo said. That would mean it would cross the gulf twice a month, freeing up the M/V Tustumena to sail the Aleutian chain twice a month. Currently, it just goes once a month. The board also requested that the cost of operating the M/V Fairweather full-time this spring be added to the budget.
Another board request was for $60 million for the Alaska Marine Highway’s vessel replacement fund, Korsmo said. Two years ago, $60 million was put in that fund, but last year, nothing was allocated to it. If the money is added, it would eventually go towards purchasing the first Alaska Class Ferry.
The Department of Transportation put $120 million into State Transportation Improvement Program for the Alaska Class ferry project. Korsmo said that doesn’t mean the money will necessarily make it into the budget, but the STIP is used to guide the budget process and outline the state’s priorities, so it is a first step.
The board doesn’t just work on the ferry system’s budget. Korsmo said they were also working towards developing a long-term schedule. Right now, AMHS is operating on a three-year cycle.

SCHOOL REPORT (complete report in print edition)

Report card distributed
 The Skagway School District Report Card to the Public for the 2008-2009 school year was unveiled at the Aug. 18 board meeting and is being mailed to parents.
The report card includes test scores from grades 3-10 in reading, writing and math, and in grades 4, 8 and 10 for science. The scores showed a slight drop in somes grades of the percentage of students scoring proficient or advanced, however those combined totals were still 80 percent or higher in all but a couple instances. The scores remained some of the highest in the state, according to the report, and the district met its Annual Yearly Progress mandate.
The scores are broken down in the report, except for grades with fewer than five students. Overall, Skagway scored the following percentages:
• Reading: 58.3 percent advanced, 31.3 percent proficient, 10.4 percent below, 0 percent far below.
• Writing: 37.5 percent advanced, 52.1 percent proficient, 10.4 percent below, 0 percent far below.
• Mathematics: 54.2 percent advanced, 35.4 percent proficient, 6.3 percent below, 4.2 percent far below.
• Science: 41.7 percent advanced, 37.5 percent proficient, 16.7 percent below, 4.2 percent far below.
The school had a 90.30 percent attendance rate, and a 83.33 percent graduation rate last year.

Superintendent’s wife hired
At its Aug. 18 meeting, the Skagway School Board voted 4-1 to accept the special education hiring committee’s recommendation to hire Laura McCormick as a full-time aide. She is the wife of new Supertintendent Les McCormick.
Mr. McCormick said it had been worked out so he would have no direct supervisory authority over his wife. He said she was the most qualified of the three applicants, including two who had worked in the district. She was recommended by a three-member teacher committee headed up by special ed. teacher Mary Jo Pike, but the superintendent said he was also present.
Board member Joanne Korsmo, who voted against the hiring motion, said she was not comfortable hiring the superintendent’s wife, especially since he was in the room with the committee. “It’s awkward to say anything against a new boss,” she said, adding later that her main problem was the fact there was no board member in the room.
But other board members said they trusted the members of the hiring committee, which also included teachers Jo Trozzo and Vivian Meyer, to make the best choice.
“They are three strong-willed teachers looking after the interests of the students,” said Board President Darren Belisle.
“They will not let anyone sway their opinions,” added Chris Maggio.
Members Chris Ellis and Robert Murphy said they were cautious about the hiring but would go along with it. “It’s unusual but not illegal,” Ellis said.
McCormick said the two other finalists would have opportunities to substitute and be hired if part-time positions become available. The full-time aide position is fully funded under a federal program, he said.
The board also hired two sets of co-coaches: Duppy Ticaro and Jerod Henley for wrestling, and Rick Ackerman and Michelle Carlson for junior high basketball. Chris Wassman was rehired as the high school boys basketball coach. Still to hire are the girls basketball and DDF coaches for the coming year.

McCormick explores funding options for ‘migrant students’
In his first superintendent’s report, McCormick said he was looking into a federal program that may provide Skagway money for “migrant students” which make up 27 percent of the student body at this time of year.
Children who come to Skagway with their parents who work in the tourism industry may qualify under the “migrant education” program, he said, adding that Ketchikan was one district that had applied for the money and received it. McCormick said he should have an answer some time this week.
He added that a new bill being introduced in the Legislature would mandate two count periods in the fall and spring. By averaging the two, it would help Skagway.
Typically, Skagway loses several of these “migrant” students before the usual October count period, and then gets them back in the spring. They receive the same services as year-round students but are never counted under the formula for state education money.
McCormick said the school house was open and teachers were going through boxes “like it was Christmas.” He said the only change in the academic program would be a college credit English course instead of an Advanced Placement course.

West Creek Bridge in Place

The new West Creek bridge was installed by Hamilton Construction earlier this month. The old ferry terminal ramp was moved to the site about two miles up the three mile road. It accesses the other side of the creek, where a Cat track leads into the woods, opening up a new recreation area for Skagway. The Parks and Recreation Committee is holding a meeting tonight, Aug. 28 at 5:30 p.m. at City Hall to begin work on a plan for the area. JB

BOROUGH DIGEST (complete digest in print edition)

Cruise initiative review requested
At its Aug. 20 meeting, the assembly members present (Dennis Corrington, Dan Henry, Dave Hunz and Mark Schaefer) unanimously passed a resolution asking the state to create a panel to evaluate the 2006 head tax initiative. That resolution noted the drop in visitors to Skagway as well as Skagway’s receipt and use of head tax funds for a number of projects.
Colette Hisman and Mike Korsmo were absent, but supported the resolution when the assembly revised it at an August 18 work session.
Hunz said the legislation had a lot of things in it and it was important to look and see what could be done to help the cruise industry continue business in Alaska. “Somebody’s gotta look at it and decide,” he said.
Corrington described the discharge regulations enacted in the 2006 initiative as the “most onerous” part of the package.
The resolution also garnered public input from both sides of the issue. Kathy Hosford said she wanted to see the municipality respect the people of Alaska, who voted for the initiative “overwhelmingly.”
After Hosford spoke, Buckwheat Donahue stated the margin of the state’s vote: 52 to 48.
Tim Bourcy, who spoke earlier in the meeting about Skagway’s need for a clear vision for the future, said he supported the version that passed. “I do support the substitute,” he said. “I do not support the original.”
Bourcy was referring to the resolution originally presented to the assembly August 6, which was tabled and revised before being brought up on August 20. The revised version asked the state to evaluate the head tax and provided details on the initiative and the industry’s impact in Skagway. The original was much shorter and asked the state to “review, eliminate or lower” the tax.

State to regulate misleading signs
An ordinance that would forward some sign issues to the state attorney general’s office passed first reading with a yes-vote from all four assembly members present.
The signs in question are those that violate state laws about misleading signs, said Permitting Official Emily Rauscher. Currently, the police department notifies businesses about their non-compliance, and then fines them $500 per day until the sign is removed or changed. Borough staff and the police department are responsible for notification and enforcement, and Rauscher said that city hall doesn’t have the resources or knowledge to sit down and look at a business’ books to make a decision on their sales.
The ordinance would put decision-making and enforcement in the state’s hands.
Planning and Zoning approved sending the resolution to the assembly at their August 13 meeting, although members of the commission stated their hesitations about the law being enforced.
The assembly also had concerns about the ordinance, but voted unanimously to pass it.
Assemblyman Dave Hunz said he liked that this passed it on to the state rather than spending Skagway’s resources.
Rauscher said misleading signs include those that advertise an end-of-season sale before the end of the season, advertise a store-wide sale when only a few items are on sale, or advertise sale prices on certain items, but offer those sale prices continually.






Two boys check out the new kiosk that AP&T recently put up at the fork in the Lower Dewey Lakes Trail. It explains the history of Skagway’s first hydro system, dating back to 1898.

Photo by Jeff Brady