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PUBLISHED: 5:32 PM on Wednesday, April 16, 2008
Southeast cities consider economic adaptation
Next Port Alaska?: Cruisenomics
Editor's note: This is the second and final segment of a series looking at the Passenger Vessel Services Act and the impact it could have on Southeast Alaska.

KETCHIKAN

Ketchikan's economy once flourished through lumber mills, which were the city's single largest employer. But when federal legislature closed the mills in 1997 many were left jobless and moved away. To restore the population and local economy, Ketchikan chose tourism as its new bread and butter.


For the past decade, Ketchikan's economy has molded itself to the influx of tourists arriving by cruise ships, and is one of the three major port stops for large vessels, said Blain Ashcraft, executive director of the Ketchikan Chamber of Commerce.

But now the city again finds itself in turbulent waters as officials with Customs and Border Protection discuss a 122-year-old maritime law that could dramatically harm the Alaska cruise industry.

Amendments to the Passenger Vessel Services Act (PVSA), created in 1886, would require foreign-flag vessels originating from Seattle and California to spend more than 50 percent of cruise time in foreign waters and to make foreign port calls for no less than 48-hours. The result would be supplanting an Alaska port call with one in Canada, and either Ketchikan, Juneau or Skagway would lose out.

Ketchikan and Skagway are looking at the worst-case scenario and considering how they can diversify their economies if the cruise and tourism industry changes.

"It could end up putting some places out of business," Ashcraft said. "Ketchikan has become reliant on tourism since the pulp mill closed. The economy needs to think of being more diverse, but it's hard when some of these business have spent seven or eight years in the tourism industry."

SKAGWAY

Skagway also fears a worst-case scenario. About 80 percent of its businesses are tourism dependent, said Marla Beisle, Skagway Chamber of Commerce's office manager.

Skagway's population nearly triples in the summer months from 700 to nearly 2,000 people when residents return to open shop in early May when the first batch of tourists arrive. Skagway averages about one million tourists each year, and about 40 percent of that total could be impacted by the PVSA.

"We prefer not to be so reliant on tourism, but you have to live with what you've got," said Skagway Chamber President Debbie Ackerman.


Lee Leschper photo
  Charter buses drop off cruise ship passengers in downtown Juneau during peak tourism season. But possible changes to an old maritime law could cut down on tourists in Southeast Alaska, which has some cities rethinking their economy as related to the cruise and tourism industry.
Ackerman said a loss in sales taxes means more strain for the municipal government and schools. Plus, she said, residents would have to dig deeper in their pockets to pay property taxes - if they decide to stay in Skagway.

"(Tourism) helps keep our property taxes low. Without that a lot of people couldn't afford property taxes," she said. "The school is asking for a $2.2 million budget and it has to come from somewhere."

Like Ashcraft, Ackerman also is looking for ways to sustain a year-round economy. But both are continuing the fight to keep tourism regulations unchanged by writing to Alaska's politicians and even sending letters to Washington D.C.

Plans to revisit the PVSA first arose when foreign-flag Hawaiian cruise ships allegedly circumvented the PVSA by making one-hour port calls in Ensenada, Mexico. The result was American cruise lines losing customers and going out of business, according to the Maritime Administration, which then asked Customs and Border Protection to tighten the reigns on the PVSA (also known as the Jones Act).

"For me, it's frustration with Washington D.C. and the inability to look at one specific are and instead they want to blanket everybody," Ackerman said. "It's mind-boggling ... they would assume everyone has the same problem."

JUNEAU

Juneau also is a major port call for Alaskan cruises with more than one million passengers and 500 port calls annually. That also means it has a lot to lose.

According to the Juneau Tourism and Visitors Bureau, tighter PVSA restrictions could impact nearly 375,000 passengers resulting in the loss of nearly $70 million to the economy. The city would lose more than $3 million in sales tax revenue, according to city data.

Cathie Roemmich, CEO of the Juneau Chamber of Commerce, is optimistic it won't come to that.

"(The PVSA) could pose a huge threat, but I feel confident Sen. Ted Stevens ... will nip it in the bud.

Stevens, vice chairman for the Committee on Commerce, Science and Transportation, has been vocal about his opposition to the current proposals to the act. Stevens also serves on the Committee of Appropriations and the Homeland Security subcommittee - the parent agency that will ultimately decide on how to amend the PVSA. Stevens could not be reached for comment.

PETERSBURG & SITKA

Petersburg and Sitka officials say changes to the PVSA would have less impact to their communities, which are not dependent on seasonal tourism alone.

"We tend to be a year-round destination," said Sandy Lorrigan, director of the Sitka Convention and Visitors Bureau. "Sitka has diversified its economy."

That's not to say an impact wouldn't be felt, she said, because the city's general fund would have less money coming in and her marketing budget, which relies on appropriations from the bed tax, would suffer.

"When you don't have those dollars from sales tax it would affect other areas where that money goes," she said.

Sitka receives about 200,000 tourists each year.

Dave Berg, owner of Viking travel in Petersburg and landing coordinator for cruise ships, expects tourism to increase this year and said that many of the ships he sees are smaller vessels, which wouldn't be affected by changes to the PVSA. He said Petersburg had 150 port calls in 2007.

But Berg said Petersburg would is starting to receive larger vessels and local tourism businesses would lose out if the PVSA is amended.

"It would impact financials from dock facilities to other infrastructures such as tour buses and small tourism operations," he said. "A longer stay in a foreign port means cruise ships wouldn't be able to stay as long in Alaska and would have to drop a port or two."

Charles Westmoreland is managing editor of The Capital City Weekly and can be reached at charles.westmoreland@capweek.com.


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