Skagway’s fiscal year 2017 budget appears to be in the clear with the reinstatement of the Commercial Passenger Vessel excise tax in the state’s budget.
Language for the CPV funds was removed by the Senate and maintained by the House prior to their special session. The legislature entered it fourth special session on May 23 and reinstated the funds last week. The budget is awaiting Governor Bill Walker’s signature for final approval.
Representative Sam Kito III said while the funds have been reinstated, both he and Walker are concerned for the future of Alaska.
“Unless we work on a fiscal plan, we are going to have to take out of our savings,” Kito said.
In a press conference, Walker said the state cannot continue with business as usual.
Last year the legislature reached into savings and pulled out about $4 billion, he said, and this year they did the same, pulling more than $3 billion.
If the state goes through another year with such financial problems, Walker said the permanent fund dividend will be in jeopardy, individual taxes will be higher and real estate values will drop.
“The economic uncertainty will continue as long as we choose not to fix this problem,” he said.
During the third reading and public hearing of Skagway’s FY17 budget on June 2, borough assembly members addressed the return of the CPV funds and how the municipality can prepare for such fiscal doubt.
Assemblyman Steve Burnham Jr. suggested the budget be given a fourth reading, so as to adequately consider what the lack of CPV funds would mean.
“There are a lot of basic services that are funded with CPV, and were that to be gone, we would need to accommodate somehow,” he said. “Either you cut back the services or find a way to pay for them at the same subsidized level.”
CPV funds currently subsidize services like water, sewer and garbage costs, and are also used to improve port infrastructure. The state collects $34.50 for every person that visits on a cruise ship. That sum is split among the top seven ports. Skagway receives $5 per head, equal to almost $4 million per year.
In an interview, Skagway Borough Manager Scott Hahn said the municipality lucked out with the reinstatement of CPV funds, and so the budget will stay the same. But even so, the budget is tight.
“People get confused because we have a lot of reserves,” Hahn said. “But there are still a lot of difficulties in the budget for making it a sensible financial plan for the city.”
The municipality has a laundry list of capital projects, including the public safety facility and a potential senior center and rec center expansion. Were Skagway to lose the tax dollars, the list might look a lot different.
While CPV funds are required to be spent on infrastructure impacted by the cruise ship industry, Hahn said it could be pulled from Skagway and put to use somewhere else.
For now, it appears that Skagway and its six sister ports will continue receiving its CPV dollars from the state. But what the financial situation looks like past FY17 is uncertain.
“Even if the governor signs this budget, there is no telling what is going to happen next year,” Burnham said. “The sooner this conversation occurs, and we find a solution on how we’re going to move forward, the better.”