Sitka’s economy is down, but it’s not as bad as some places.

That was the general sense of things at an economic summit held by the Sitka Chamber of Commerce this week (Wed 4-11-12).

Representatives from eleven industry sectors gave short presentations during the summit. Although some reported steep declines in business, several described areas of growth.
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The hardest-hit sector by far is cruise-ship tourism, and related cruise passenger spending. Cruise visits to Sitka peaked in 2007 at 290,000. This year, visits are expected to reach a post-recession low of 108,000.

Eugene Solovyov, owner of the Sitka Rose Gallery, told the large audience that he had scaled down his operation from three employees to just one – himself. Since no dramatic turnaround is forecast for the Sitka’s cruise market, he thought it might be time to revisit the idea of a downtown cruise dock that could accommodate two ships.

To him, the status quo creates undesirable alternatives.

“We can keep trying to raise taxes on ourselves at a time when local citizens are least able to pay them, or we can do something more creative and intelligent using different strategies, bringing more tourists into town to pay taxes on various purchases and tours which will then go into the city coffers.”

Solovyov thought there might be a happy medium between 2007’s peak traffic and this year’s low that would ensure that Sitka would not be overrun by tourists like a Juneau, Ketchikan, or Skagway.

Dirk White spoke on behalf Sitka’s retailers who are not directly involved in the summer cruise market. White, who co-owns Harry Race Pharmacy, said his overall revenues were up “not by big fat arrows, but skinny ones.” White’s main store is downtown. He felt that large cruise passenger volumes could actually depress sales.

“Big ship days the store is packed, bulging at the seams. As I told Vern (Vern Culp, owner of the Fisherman’s Eye Gallery) there in the back a long time ago, there’s the butt-rub effect. We use that term a lot in our business. When the numbers started to slowly decline, we saw our ability to help people and a larger ring.”

White said customers purchased more when the store was less crowded.

Tonia Rioux, the director of the Sitka Convention and Visitor’s Bureau reported that cruise visitors may not necessarily be Sitka’s most valuable guests. Rioux said that – based on pre-recession data from 2005 and 2006 – independent travelers were a surprisingly large market.

“Daily spending – back then – from independent visitors would have been around $133,000 per day. The economic impact from cruise ships – large ships (again from Cruise Line Agencies of Alaska) – per day local spending per ship was around $133,000. So, very comparable between the two, and to me it just highlighted the importance of both sectors of our visitors.”

Rioux attributed a large portion of independent spending to the charter industry, which, like cruise visits, has seen a steep decline. Teresa Weiser, owner of the Wild Strawberry Lodge, said the number of registered charter boats in Sitka had dropped from a high of 199 in 2007, to 145 in 2011, due mostly to the implementation of limited entry permits. The one-halibut per day limit in Southeast Alaska also had a depressing effect on sales. Weiser also felt Sitka’s unique fish box tax sent the wrong message to potential charter clients.

“Our industry can’t market Sitka if Sitka discourages visitors with special taxes and anti-tourism sentiment. So we need to take a real close look at that.”

Surprisingly, being receptive to out-of-town visitors was also a part of the message from Sitka’s commercial fishing sector.

Longliner Dan Falvey urged the audience to look out the window at the large fleet of out-of-town herring seiners. He said transient fishermen contributed 30-50 percent of the landed value of seafood in Sitka, but very little else was known about their economic impact.

“It is a visitor industry, and as such there’s a potential for growth here, if we have the correct infrastructure and services to attract them. And you can see there has been a slight upward trend. So this is one area I would star.”

Overall, Falvey presented data showing that commercial fishing remains Sitka’s economic star for the moment, with robust prices, markets, and employment. He said over 1,000 Sitkans worked 600 vessels home-ported in the community, with most of those boats engaged in the longlining or salmon fisheries – both worth millions in new money into the local economy. But, Falvey said, there were always new challenges – such as the rebounding farmed-salmon industry in Chile – and nothing in fishing should be taken for granted.

Other bright spots for Sitka included Tribal government, with roughly a $9-million budget, and several large construction projects on the horizon; the construction industry, which has seen an increase in sales due to the airport expansion project, though a reduction in employment; health care, with SEARHC’s budget increasing from $32-million in 1994 to $93-million in 2010; and local cruise tourism. Allen Marine’s foray into cruising is expanding this year, with two ships on full-time routes this summer.

Perhaps the most startling news of the summit came from Sitka Historical Society director Bob Medinger, representing non-profits. He reported that Sitka’s non-profits had revenues of nearly $29-million last year. And while there are too many non-profits (92 registered in Sitka), and some non-profits were trending down – especially those with ties to the cruise industry like the Friends of Sheldon Jackson Museum gift shop and the New Archangel Dancers – the sector was strong, and even optimistic.

Medinger read a statement from Roger Schmidt, the director of the Sitka Fine Arts Camp, that stressed the importance of looking forward.

“Sitka’s self-image is at a crossroads. If we see ourselves as a shrinking economy, we will begin to shrink. The challenge is to see opportunities and move forward in the face of economic recession. We have a tremendous opportunity as a community if we realize, embrace, and turn toward economic solutions based on the unique qualities our communities has. There is a natural hunger for places and experiences that have a feeling of authenticity. People are seeking places and work where they can find themselves contributing at a community level and making a difference.”

The chamber’s economic forum was intended to lay the groundwork for a community discussion and action-plan modeled on the Sitka Health Summit. SEDA (the Sitka Economic Development Association) will host that event next Tuesday, April 17th, beginning at 1:30 PM in Harrigan Centennial Hall.