FIFTH OPENING – The Sitka seine boats Hukilau and Rose Lee pump herring aboard this afternoon at the end of Deep Inlet during the fifth opening in the Sitka Sound sac roe herring fishery. The opening was being held in two locations beginning at 11 a.m. (Sentinel Photo by James Poulson) 

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Daily Sitka Sentinel

‘No Sail’ Ripples Through Sitka Economy

By GARLAND KENNEDY
Sentinel Staff Writer

With a “No Sail” order for cruise ships extended through mid-July, Sitka businesses and city officials are looking for solutions and calculating projected losses.

The original No Sail order from the Centers for Disease Control and Prevention went into effect March 14. The new order, published Thursday, extends the No Sail time line until July 16. These orders came on top of the previously announced decision by the Canadian government to close its ports to cruise ships. Under American law, an intermediate stop in a foreign port is required of foreign-flagged vessels traveling between U.S. ports.

On March 17, the CDC recommended that “all travelers defer cruise ship travel worldwide based on the widespread ongoing transmission of COVID-19,” while issuing the order that removed that option for anyone planning to leave from or travel to an American port.

The No Sail order has no impact on cargo vessels. The full text of the order can be viewed at cdc.gov.

Thursday’s order states: “The Director of the CDC finds that cruise ship travel exacerbates the global spread of COVID-19 and that the scope of this pandemic is inherently and necessarily a problem that is international and interstate in nature, and has not been controlled sufficiently by the cruise ship industry or individual State or local health authorities.”

The Holland America Line cruise ship Oosterdam is pictured at the Old Sitka Dock September 26, 2019. It was the last ship of the season. (Sentinel Photo by James Poulson)

The CDC concluded that because of the stated health risks “cruise ship operators shall not be allowed to disembark passengers or crew members (American) at ports or stations, except as directed by the USCG (Coast Guard)... shall not embark any new passengers or crew… (and) shall not commence or continue operations.”

The order will end when one of three conditions is met, the CDC said. First, the order ends if COVID-19 is no longer a declared public health emergency. Second, the order ends if the CDC decides to rescind it. And third, the order can end 100 days after publication. As the order went into effect April 9, the 100-day mark will be July 16.

While so far no confirmed cases of COVID-19 have been reported in Sitka, the economic impacts are already being felt on Baranof Island.

Melissa Haley, controller in the city finance department, said the expected decline in tourist spending this summer will cause an estimated $2 million drop in sales tax.

“If we’re talking a $2 million reduction (in city sales tax), assuming that happens during the six percent tax rate, that would be a reduction in the economy in taxable spending of $33 million,” Haley said. There’s another factor reducing sales tax revenue, she noted: “One thing that’s important to think about is during the summer we have a lot of activity happening above our sales tax cap.”

This calculation does not include lost revenues in the 2020 fiscal year, which ends June 30, she noted.

Haley cited activities such as charter fishing as an example of economic activity with single transaction revenue that are above the taxable limit of $12,000. 

“We’ve got both the economic impact of the loss of tourism, but also the impact to what locals are spending,” Haley said.

She said the city expects to see the first revenue shortfalls in its budgeted income by the end of July.

She added that this early in the process it’s not possible to determine the possible impacts of federal relief programs, such as the $2.2 trillion CARES Act, which is designed to offer financial help to local governments, small businesses and individuals.

“In our FY21 budget we did not assume any stimulus funding,” she said.

Haley said the city is tightening its fiscal belt, adding, “we’ve never been in this situation before.”

Haley noted that the city has about $2 million in its emergency reserve fund, and another $6 million in its liquidity reserve, both of which can be spent if needed.

“The bottom line is we have a cushion, it’s not huge, it’s not unending, but we have a cushion,” she concluded.

Sitka’s Allen Marine companies, whose summertime boat cruises through Southeast waters are popular attractions for cruise passengers, is directly affected by the No Sail order.

Company spokesman Zak Kirkpatrick said,  “the whole region continues to experience an unfathomable blow in the face of the pandemic.”

When the impact became clear last month, Allen Marine furloughed 130 of its 170 full-time employees.

“It was the most painful decision the company has had to make,” Kirkpatrick said.

With the No Sail order extended into July, Kirkpatrick said “it’s hard for us to even plan for the season… We don’t have all the answers at this juncture either.”

“Our number one concern is health and safety – for our communities, employees, and guests,” he said. “Our greatest hope is that the pandemic can be controlled so citizens and caregivers are protected, the economy strengthened, and life normalized.”

He expressed confidence that the cruise industry will bounce back.

With the federal paycheck protection program in its first operational weeks, Kirkpatrick said his company is looking into options for relief to those in his company who have taken hits to their regular income.

He took note also of the economic ripple effects on the economy of Sitka and Alaska.

“Our tourism and hospitality companies are severely impacted by this and so are many others – tour operators, restaurants, local retailers, and more,” he said.

 

 

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20 YEARS AGO

March 2004

Matthew C. Hunter of Sitka recently returned from Cuba as part of a St. Olaf College International and Off-Campus Studies program. Hunter, a junior physics major at St. Olaf College, is the son of Robert and Kim Hunter of Sitka.


50 YEARS AGO

March 1974

Eighth graders have returned from a visit to Juneau to see the Legislature. They had worked for it since Christmas vacation ... Clarice Johnson’s idea of a “White Elephant” sales was chosen as the best money-maker; Joe Roth won the political cartoon assignment; highest government test scorers were Ken Armstrong, Joanna Hearn, Linda Montgomery, Lisa Henry, Calvin Taylor and David Licari .....

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