With Health Mandate 16, part of Governor Mike Dunleavy's plan to reopen Alaska's economy safely during the COVID-19 pandemic, communities across the state are considering what the near future may look like. Revenues have fallen for the city and businesses have had to get creative to stay open. While there is optimism to be found amongst some business owners, uncertainties loom for the economy in general.
Alan Cummings, of All In Charters and Grand View B&B, said that they are looking at a rough season. He did not have exact numbers, but estimated about 60 to 70 percent of their expected customers this year have cancelled. Some are still holding out for August, however. Cummings said that state guidelines for putting together hazard mitigation plans and getting them approved have been confusing and frustrating, as well. He also mentioned that he's done work in the oil field, but with recent falls in oil prices that industry is not looking optimistic, either. Despite all this, though, Cummings said he believes they will get through this rough season, and the entire country will come together stronger.
"It's going to be difficult, it's going to be a tough year," Cummings said. "But we'll get through it."
Becky Rooney, of Rooney's Roost Bed and Breakfast, said that she has not had very many cancellations so far, but attributes that to a lack of bookings over previous months. Her biggest booking time is in February and March, she said, but it has been a strange year and she has not gotten very many. She has rescheduled three bookings for next summer, she said, but this summer is looking to be fairly quiet. Rooney was optimistic, though, saying she was just going to take it one day at a time, and spend this summer enjoying the local community and worry less about tourists.
"This summer will kind of be about being in Wrangell," she said.
Among some of the guidelines in Mandate 16, restaurants are now allowed to reopen for sit-in dining. However, this is not an option some restaurants in Wrangell are considering right now. Katherine George-Byrd, of Zak's Cafe, said that the mandate only allows restaurants to seat 25 percent of their maximum capacity at a time. In the case of their restaurant, that would only be six people at a time. It is not worth it to reopen for sit-in customers right now, she said. Zak's has not been doing as well as they normally do, she said, but they are doing alright with their current model of to-go only meals.
Josh Young, of J&W's, said that the first few weeks of the pandemic were challenging. He did not want to close, however, as he considers providing good food to the community an important service. He wanted to assure the public that he and his staff were doing everything they could to make sure their ingredients were safe, and that they were doing their part to protect the community. They're continuously sanitizing, he said, and they have been primarily taking orders over the phone. They switched to to-go only orders, Young added. He has checked in on his employees regularly to make sure they are all feeling healthy, as well. All in all, Young said he just wants to know he is doing everything he can to mitigate the risk of the virus spreading to Wrangell.
The restaurant also closed their small dine-in room, and Young said there are no plans to reopen it any time soon. In fact, he is considering making the closure permanent. He is thinking about the feasibility of turning J&W's into a to-go only restaurant moving forward, and possibly adding a drive through, but these plans are not set in stone.
One restaurant that is going back to sit-in dining is the Marine Bar. The bar, which also serves pizza, began letting customers back in this past weekend. Before then they were doing take-out orders, too.
"I just can't wait to get back to normal," said Patty Kautz, of the Marine Bar.
The fishing industry, and other industries tied to it, are also facing some uncertainties. Wrangell's Economic Development Director Rushmore pointed out that Trident Seafoods, one of Wrangell's two seafood processors, was already planning to stay closed this season due to low predictions for fish returns. That loss of workers and purchases will have an impact on the local economy, she said. There are also questions of how strong fish returns will actually be this year, as well as how fishermen intend to stay healthy and resupply themselves with the pandemic going on.
Fisherman Mike Lockabey said that things are not looking good this season, from his perspective. New state mandates have added pages upon pages of guidelines commercial fishermen now have to follow to operate in Alaskan waters, he said, and that prices for various catches are not looking promising. Because of the pandemic, he gave as an example, there is a backlog of crab sitting in freezers waiting to be used, because restaurants and other customers do not have a need to buy them right now. This could have a negative effect on the Southeast Alaskan crab season. On top of that, processors will be incurring extra costs this season, which will bite into the revenues fishermen can expect.
"I'm looking at it being 35 to 50 percent down this year," Lockabey said.
Lockabey also added he was concerned about additional restrictions the city might try to put in place. Up until these most recent mandates, he said, cities could not pass local restrictions that exceeded what the state laid out. Now, however, local communities could be free to do that. He said that he worries the city will try to restrict the fishing industry to the point it is practically shut down, and that it might happen in other fisheries across the state.
Rushmore said that the city is facing several uncertainties economically. The pandemic is going to have an impact on Wrangell's economy, but she said that it is too early to know what that impact is going to be.
"So much depends on the environment we find ourselves in, and which is changing daily," Rushmore wrote in an email to the Sentinel. "There already has been and will be a loss in revenue stream not only to the City, but also to the businesses which then multiplies through the community. From Job loss, loss in individual spending and sales to businesses, loss in sales tax revenue, loss in the revenue to businesses from visitors, loss in the Transient Tax (bed tax) used for visitor marketing – the trickle down effect is enormous."
Borough Manager Lisa Von Bargen went into a little more detail on the revenues the city expects to be impacted. Wrangell sees about $2.8 million in sales taxes annually, she said, and the city could see a 50 percent drop in that area. The city also sees about $60,000 from the transient bed tax. A decrease is likely but Von Bargen said she was not sure how much. The city is also expecting a 50 to 75 percent decrease in CPV funds, normally about $50,000 a year from the tax on cruise ship passengers. Von Bargen also added that city-run facilities like the Nolan Center and the Parks and Rec Department are going to see significant decreases in revenue due to being closed during the pandemic. The Nolan Center usually brings in about $250,000 a year, and parks and rec brings in about $700,000 a year.
"Originally it was reported to Alaska municipalities that funding from the CARES Act would be available for use to replace lost revenue, like sales tax," Von Bargen wrote in an email. "That is not the case. It may not be used for lost revenue replacement. We are waiting for guidance from OMB on what the money can be used for under the heading of COVID-19 response."
Rushmore pointed out that the visitor industry could potentially see some big impacts from COVID-19. Before the pandemic, this year was lining up to be very strong for tourism, both from cruise ships and air travel. She said that several questions remain unanswered, that will determine how major the impacts will be, such as will people feel safe enough to travel, and can travel even resume in June or July? Rushmore added that the convention and visitor bureau was recommending budgeting for a 35 percent drop in transient tax revenue this year.
"I don't know how that will actually come out in the budget as they are still working on that," Rushmore said.
Von Bargen said that she believes Wrangell is faring a bit better than other communities in Southeast Alaska, economically speaking, as Wrangell does not rely on the cruise industry as heavily as others. As the borough is in the middle of its budget season, she added that they are reviewing every position that opens up to decide if it is necessary to fill, and that budget cuts are being made wherever possible.
"We delayed the Borough's budget work sessions because of COVID-19," Von Bargen wrote. "We will begin those meetings with the Assembly soon and priorities will be discussed. However, it is a concerning time for municipalities in Alaska. We are facing significant shortfalls in revenue due to COVID-19. The Governor vetoed school bond debt reimbursement and funding that would have made annual community assistance revenue sharing fully funded. Those are significant hits to our local budget. Additionally, the State is in an unprecedented budget situation with a barrel of oil valued in the negative. This likely means more cuts to come in future years. We will need to be very cautious about spending now and in the near future at least."
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