In the late summer of 2019, a large number of business owners from Skagway formed a group to represent the interests of the business community. As witnessed by Skagway’s huge outmigration during COVID, without cruise ships, Skagway cannot survive as a year-round community. The existence and success of Skagway is necessarily related to, and dependent upon, commerce.
Existing service businesses, tour businesses, retail businesses and local full time residents should have a unified, communicative and vested interest in working together to make Skagway a great destination. We need to provide a preferred port of call that entices cruise ships and visitors to insist on Skagway as a destination. It is for this reason that we have put together the following response to the sales tax increase:
We as a business group are against any sales tax increase, especially at the present time. We are already facing record inflation in virtually every area of consumption. We are still reeling from two straight years of severely reduced or zero income, and a 2022 year of compromised income (due to the landslide on Railroad Dock). Now, we are facing a 2023 season that looks to be compromised again by having no real solution for the dock disaster. The city’s response to this is: “Raise the sales tax.” It couldn’t happen at a worse time. Buildings are vacant; businesses are closing, leaving town or playing musical chairs; properties are devalued; and interest rates, gas and freight prices are skyrocketing again. Juneau will get the lion’s share of traffic in 2023, and likely in 2024.
If we are to provide a more positive visitor experience, our hook should be a remaining 5% tax that can be used as a sales point, encouraging bigger and better sales. Ketchikan may have a higher tax rate, but it is still capped at $2,000 sales. Oftentimes, a customer will try to negotiate with the salesperson to pay the sales tax. Just to make the sale, this is sometimes done. Adding the credit card fee to this expense erodes our margins and provides a discouraging picture to lenders who require annual reporting.
Skagway will take over its waterfront in March. Didn’t the Alaska Bond Bank presentation identify that we will receive $13 M in revenue for the Broadway Dock, Ore Dock and upland leases? The projected costs of the bond, operations, reserves and debt services still should leave us a very hefty bit of change. Where is that money going to go? A complete financial projection needs to be done so that voters can see exactly what’s going on with the projected new revenues before any increases are voted on.
Raising sales tax before we are re-established as a “must see port” adds additional burden onto Skagway’s business and property owners. Increasing taxes because “the other towns are doing it” (and then figuring out how the funds will be spent) is simply not prudent or responsible at this time. We ask that the community consider leaving sales tax at 5% and focus on bringing full-scale tourism back to Skagway.
Skagway Business Association
P.O. Box 708
Skagway, AK 99840