Ketchikan’s borough offices are located in the White Cliff building. (Maria Dudzak/KRBD)

Faced with the prospect of another canceled cruise season, Ketchikan’s borough is projecting a multimillion-dollar deficit. But despite the estimated $3.4 million shortfall, officials say the borough won’t burn through all of its savings.

 

Ketchikan’s borough finance director, Cynna Gubatayao, told the Borough Assembly last month that she was expecting a vastly reduced cruise season to weigh on sales tax revenues. Those are the biggest source of the borough’s general revenue — property taxes go towards funding the school district.

Now, after Canada announced it would keep its ports closed until next year, Gubatayao is revising those projections further. But she told KRBD Friday that the borough still has money in the bank.

“So the borough is fortunate in that we do have strong reserves, and even having to revise our revenue figures downward for the loss of the cruise ship season this year, or potential loss, we still have enough reserves that we do not have to take immediate drastic action,” Gubatayao said.

Gutbatayao says that doesn’t mean they’re going ahead as if it’s a normal year — she’s recommending that the borough not start any new capital projects, not hire its seasonal workforce and continue a freeze on almost all travel. But she and borough manager Ruben Duran say services shouldn’t be cut and nobody should lose their jobs.

“At some point, if the cruise industry, and if the economic decline here goes too deep, I would expect that we would have a much more severe hiring freeze, and I don’t at this point — the manager and I are not recommending making any kind of fee increases or adding any new fees or taxes,” she said.

Part of the reason for that is that the deficit for fiscal year 2021 — which runs from last July through the end of this June — wasn’t nearly as big as local officials initially thought it would be: a projected $3.2 million deficit was revised down to roughly $1 million. Gubatayao says federal pandmeic relief filled some of the gap.

She said those transportation grants were separate from the roughly $10 million in CARES Act funds local officials spent on relief programs in 2020.

The smaller-than-expected deficit is projected to leave the borough with an estimated $11.6 million in the bank at the beginning of July. That’s more than three times the borough’s projected deficit for this coming year.

And more help could be on the way — the finance director says a Biden administration package now pending in Congress could provide as much as $2.7 million in federal relief for Ketchikan’s borough.

Gubatayao is scheduled to take questions about the impact of a canceled 2021 season on the budget at the Borough Assembly’s meeting on Tuesday.

In other business, the assembly is set to consider a joint resolution with the cities of Ketchikan and Saxman urging the state’s congressional delegation to waive federal laws that require foreign-flagged cruise ships to stop in Canada. The delegation issued a statement earlier this month saying they were “exploring all potential avenues, including changing existing laws, to ensure the cruise industry in Alaska resumes operations as soon as it is safe.”

The document also asks the federal Centers for Disease Control to issue guidance that would allow cruise lines to start sailing again.

And finally, the assembly is set to consider coming to the defense of the Trump administration’s decision to roll back the federal Roadless Rule for the Tongass National Forest.

A coalition of conservation groups and tribes — including the local Organized Village of Saxman — is suing the federal government to reinstate the rule.

The assembly briefly considered spending $5,000 to intervene in the suit at its last meeting but postponed action. Ketchikan’s City Council voted to defend the rollback last month.

The Ketchikan Gateway Borough Assembly is scheduled to meet at 5:30 p.m. Tuesday via videoconference. The full agenda is available online. The meeting is broadcast on local cable channels and live-streamed at the borough’s website. Members of the public will have an opportunity to address the assembly at the beginning of the meeting, but they must register by 3 p.m. Tuesday by calling the borough clerk at 228-6605.