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Vacant and broke

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The Denali Princess where they won’t even bother to put out the chairs this year/Princess Lodges photos

Before a microscopic coronavirus that has come to be called COVID-19 shifted the entire world order, Alaska’s remote and little peopled Denali Borough had a pretty good thing going.

 

Now it’s in the deep do-do even though the pandemic virus responsible for terrifying the planet has yet to touch this far corner of the world

The borough’s problem is that the silver-haired flood of tourists that has for many summers past descended on a short and narrow band of development on the eastern edge of Denali National Park and Preserve isn’t coming.

Those tourists were to the Denali Borough what the black gold of North Slope oil long was to the state of Alaska. Bed taxes from the hotels mainly in that strand of development known as “Glitter Gulch” covered the cost of government in the borough.

Not this year.

“The revenue loss for the 2020 season will be split across two fiscal years, breaking on June 30,” Borough mayor Clay Walker messaged this week. “We anticipate a revenue loss of $3.4 million directly tied to COVID-19 and the associated (social distancing) mandates.”

Approximately 80 percent of the cruise ship sailings expected to bring almost a million passengers to the state this summer have been canceled. Most of those cruise operations circle their passengers through the iconic Denali park before sending them south again.

Both Princess Cruises and Holland America Line own big hotels in Glitter Gulch.

“Princess Cruises, the leading cruise line in Alaska, realized early that while guests loved the experience of cruising the area, they also wanted to touch and feel the place,” Cruise Passenger magazine noted in a story last year. “Their answer to that was to start its own lodges. Denali Princess Wilderness Lodge, a beautiful timber hotel about a mile from the park’s main entrance was the first.”

The company now owns a total of four major lodges in the state and runs a variety of land tours that complement its boat tours. All of those operations are shut down for the season.

No alternatives

The loss of a few million dollars might not seem like much in a nation now spending trillions of dollars to try to minimize the fallout from the disease spawned by the SARS-CoV-2 virus, but $3.4 million is about 75 percent of the Denali borough’s budget.

“Annual general fund expenses are around $4.5 million,” Walker said, “which includes a $2.7 million contribution to the school district. So the impacts to the Denali Borough are acute.”

The borough – home to only about 2,100 people, would be a small town anywhere else in the country. And it isn’t the only area in Alaska being hard hit by human lockdowns designed to minimize the passage of SARS-CoV-2 from one person to another and thus spread the number of infections overs months instead of concentrating them into weeks and overloading the health care system.

This is what has been called “flattening the curve” of the bell-shaped progression of a major infectious disease. Flattening the curve is intended to save lives by ensuring the best medical care remains available to anyone who comes down with COVID-19.

But the efforts to flatten the curve have killed the tourism season for Denali – both the park and the borough – and with the death of tourism goes most of the borough’s budget. The only other industry in the borough is the Usibelli Coal Mine, the state’s only coal mine.

It employs about 115 people. By way of comparison, Peabody Energy’s North Antelope Rochelle Mine in Wyoming employed more than 10 times as many, but just laid off 170 with the global economy imploding and the demand for energy falling.

The Gillette (Wyo.) News Record reported a total of 300 miners were laid off across that state’s Powder Basin. The mines employ 4,834, more than twice the population of the entire Denali borough.

Denali jobs are expected to take a far bigger hit than those in the Wyoming coal mining industry. With the major hotels closing for the summer, bars, restaurants, raft and aerial sightseeing tours, sled-dog tours and more are expected to also close for the summer or shrink their operations back to almost nothing.

Walker is hoping the borough gets help from the federal government in the form of funding from the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law by President Donald Trump on March 27, but it remains unclear as to exactly how much of state and local government shortfalls the act will cover.

“We have communicated (our) situation to our Congressional delegation and are thankful that they are working to provide flexibility in the use of CARES Act,” Clay said, but the situation remains tenuous.

Aside from tourism, the borough has no real revenue streams.  The U.S. Census Bureau reports only 639 households in the borough. To cover the revenue shortfall, each would need to pony up more than $5,300 at a time when most people in the borough are expected to be out of work.

Other small population centers in Alaska are also being hit hard by COVID-19 related economic chaos, but those with commercial fish processing plants are trying to forge ahead with business as usual. Alaska Gov. Mike Dunleavy declared commercial fishing an “essential industry” which freed it from some COVID-19 restrictions.

No such assistance was offered the tourism industry, but it is not clear that it would have mattered with cruise lines shutting down for the summer and the airlines cutting flights by 40 to 70 percent.

The Transportation Safety Administration (TSA) is reporting the number of air travelers nationwide down by more than 2 million per day or about 14 million per week. Through the first week of May, the agency reported, about 1.1 million passengers passed through American airports on their way to flights.

That weekly traffic is less than half the number that traveled on May 7, 2019, and less than 7 percent of the traffic for the first week of May 2019.

Nearly all Alaska tourists arrive in the state by airplane or boat. Canada-Alaska border crossing reports indicate only about 70,000 people per year enter the 49th state via the Alaska Highway. It’s a long drive from the Lower 48 states to the 49th one.

There would appear to be no cavalry coming to save the state’s tourism industry from an economic massacre.

 

 

 

 

 

12 replies »

  1. Since Denali Park won’t be needing any of those buses on the Park Road why not open the road to Alaskans and their private vehicles? That would bring a little money to the Denali Borough businesses and give those Denali Park employees something to do since they are getting paid during the shutdown anyway. It works fine in the Fall when they allow a very few private vehicles to enter the Park, if they should be lucky enough to draw a permit. Without all those tourists a vehicle permit system wouldn’t even be needed.

  2. Does anyone think the Fedrales can bail out the entire state of Alaska? When will the money from heaven stop? It is still not too late for Dunleavy to lift the quarantine and get some tourist dollars captured. With the active case number microscopic in number, the restrictions must be lifted for these businesses. How long can a restaurant last at 25%? Not a quicker way to go broke in that business.
    Businesses need to re tool off the cruise ship model. It is dead and buried- never coming back. Who would get on one after this(although the ships were full 10 years after the Legionaries Disease outbreak 10 years ago)? How do you fill the beds and buses at Denali? How do the SE businesses ever come back?
    Executive summary- Clear and creative thinking needed now. The Fed money stream will dry up. Soon.There are just too many states wanting a big fat piece of that pie.

  3. My name is Steve O’Bryanstine. I am both a parasite and a parrot. I have neither a life nor a platform of my own, so here I am day after day. after day after day. Aren’t you glad to see me again? I know I’m always glad to see myself in the Medred comments. Makes me pretty famous, don’t you think?

  4. I’d like to think this whole covid pandemic is a really good learning experience for everyone in the entire world…I doubt many will really learn anything from it but some might. In this instance, regarding the article above, I would like to think that our elected representatives have learned that being financially responsible is why they were elected. Our various layers of government should have reserves set aside for times like these, sadly most do not…just like most Americans. If we can’t get through a few lean weeks how are we going to get through a few lean months, or years? Fiscal responsibility has all but disappeared from our elected officials, from our local governments all the way to the Federal level.

  5. Curious though, what is to say the Chinese next Spring do not release another “accidental” virus? This time a tad more deadlier. One that doesn’t just target the old and vulnerable. What then? They know the media would run cover if a Dem wins and they know if Trump wins the Dems will blame him. What then? They know and see Democrats hungry for more control and power. Communist brethren in arms if you will. China can destroy the free world without firing a shot and reap the benefits of it. I think Dems would be cool with that. Scary times ahead. The Chinese have seen our “hand”.

    • Bryan,
      Yes, this virus very well may have come from the Wuhan Lab…but why was Fauci funding that lab to work on the “gain of function” trait for Coronavirus?
      $3.7 million to the Chinese to develop a form of Coronavirus that can infect humans?
      I am afraid we are pretty far down this One World Economy and our politicans are nothing more than “paper boys” for the Empire.
      $13,000 bonus to the hospital if they diagnose a patient with Covid…
      $39,000 bonus to the hospital if the patient is placed on a ventilator?
      Now we know why NYC was crying for more and more ventilators $$$.
      How about the hundreds of millions that went to contractors under “no bid” contracts for building the temporary hospital facilities that were never used?
      Time to shell out more IMF funds to dismantle the mess created?
      The Rockefellers, Rothschilds and Melons are laughing all the way to the bank!
      Bezos has made billions why we all were told to stay in our homes and make masks out of old T-shirts?
      What a mess!

    • Bryan,
      It was an obvious next step for the Chinese owned meat producers to prioritize exports to their own country.
      What was Congress thinking to allow critical food production in the U.S. to be bought up by CCP Oligarchs?

      “Founded in Smithfield, Virginia in 1936, Smithfield Foods boasts more than 40,000 U.S. employees with nearly 50 facilities across the country.
      In 2013, WH Group (formerly known as Shuanghui International Holdings) purchased Smithfield for $4.7 billion; including debt, the deal valued the firm at $7.1 billion, then the largest acquisition of a U.S. company by a Chinese business…

      Less well known: its Chinese billionaire owner Wan Long…”

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