Consultants tell Skagway finance committee cruise passengers cost municipality about $13 million in 2024

Heather Hoagland, vice president of McKinley Research Group, told the Skagway Municipality Finance Committee on Nov. 19 that the firm estimated cruise passengers cost the municipality about $13,000,000 in calendar year 2024 — roughly $10.20 per passenger. The firm presented a department-level breakdown and said the estimate separates marginal (seasonal) from overhead (year‑round) costs.

Why it matters: the report is intended to inform how the borough allocates Cruise Passenger Fees (CPV) and vessel-impact revenue. Borough Treasurer Heather Rodig told the committee that if the assembly approves the McKinley report, the administration would use it as the basis for CPV allocations, making the consultants’ methodology consequential for near-term budget choices.

McKinley said its work combined municipal financial records for 2024 with 20 interviews of municipal staff to allocate time and expenses to cruise-related activity. Hoagland summarized the headline figures: operating and overhead costs of about $7.7 million, marginal operating costs of about $2.2 million, overhead capital about $1.8 million, and marginal capital about $1.2 million. The consultants also reported municipal cruise-related revenues of about $23 million for 2024, which they clarified breaks down to roughly $6 million in CPV revenues and $14 million in vessel impact fees.

Committee members asked for specifics and comparisons. Chair Deb noted the local clinic experienced about a 200% increase in emergent calls over the prior year and asked how the study accounted for that rise; McKinley said the study used 2024 call and visit data and applied user‑fee offsets where appropriate. Rania Bakker, the study economist, said the team apportioned costs by examining monthly budget lines, salaries, seasonal staffing and capital items and by applying a share of cruise‑related work to each category. “We did 20 interviews of municipal employees to determine just how much of their time could be allocated to the cruise industry,” Bakker said.

Finance member Gary Burnham said the appendix percentages surprised him and questioned comparability with the earlier report, noting his expectation that police and fire costs would show higher cruise association. “It just kinda surprised me on things like how much I would think that things had gone down at, like, public works, the police department,” Burnham said, asking whether the new study and the older report could be compared directly. The consultants replied that the two reports use different methodologies and cautioned against direct apples‑to‑apples comparisons.

On departmental allocations, McKinley explained examples: seasonal employees were treated as fully marginal when their positions exist only during the cruise season, while year‑round positions were allocated by share of cruise‑related work; clinic calculation also netted an estimated $132,000 in user‑fee revenue that reduced net clinic costs. For dispatch, the consultants said they estimated about a 25% year‑round cruise‑related share based on interviews and time allocations.

Next steps: the presentation closed with the consultants offering to follow up by email on detailed spreadsheet items. The committee discussed a resolution (25‑26) to accept the report; Treasurer Heather Rodig said that if the assembly approves the McKinley report, administration would use it rather than simultaneously using both the new and the old reports. The committee did not take a final vote on the resolution during this meeting; the budget ordinance (25‑13) was scheduled for a second reading the following day.