Skagway’s economy depends on cruise tourism. With little money coming in, the city is paying millions of dollars to residents

Aerial photo of Skagway (Photo by S. Millard/National Park Service)

Alaskans began receiving Permanent Fund Dividends this week. The payments, just shy of $1,000, were distributed months early an effort to help offset the economic impacts of the COVID-19 pandemic.

The small Alaska town of Skagway is going a step further, distributing a large portion of its federal CARES Act funding directly to residents. A million dollars went in the mail last week and that’s just the first round.

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KHNS reporter Claire Stremple says city officials hope this unique action will keep residents in Skagway.


COLLINS: Claire, can you set the scene for us. In a normal non-pandemic year, what is Skagway like in the summertime?

STREMPLE: Skagway is usually thronging with tourists, often over 10,000 people a day, just packing the streets of this tiny tourist town. And they usually are spending a lot of money.

COLLINS: How important are those huge numbers of tourists for Skagway’s workforce and its economy?

STREMPLE: It is Skagway’s economy. The town’s largest employer is its tourist rail line. Most businesses are really only open in the summer months. They work just the equivalent of a year’s worth of work, seven days a week long long hours and then close up for wintertime. The tourists really drive the economy and most businesses, though they serve the year round population, are really geared towards that huge influx of tourists that comes in every summer off of cruise ships.

COLLINS: This summer is obviously wildly different. How has that played out in a town like Skagway that is so reliant on tourism, and cruise ship tourism in particular?

STREMPLE: COVID-19 restrictions mean that no cruise ships have come to the town yet this year. It’s looking unlikely that they will. And all road traffic, all motor tourists pass through the Yukon, they pass through Canada, and that border is now closed to recreation. So it’s essentially cut off the influx of tourists that makes the town run, that is kind of economic motor for the town.

COLLINS: So now the city is taking a pretty unique step and distributing relief money to residents in need. Can you tell us about that? How is that working? Who is eligible? Where is that money coming from?

STREMPLE: All Alaska boroughs got federal CARES Act dollars to distribute as they see fit. In Skagway, they’re giving most of that money back to people in the form of direct aid. They’re getting checks. And anyone who demonstrates a need, anyone who demonstrates economic or financial loss due to COVID-19 qualifies for $1,000 check every month until December. And not only that, but say they’re married and have two kids, they would get an additional thousand dollars for any dependents. So if I’m a family of four, for example, I could be getting a $4,000 check every month from the municipal government. And the first round of checks went out on Friday. So we haven’t quite seen how it’s working yet, because it just started. But there was a huge huge huge response to the program. Almost 900 people applied for the money and the municipality mailed out about a million dollars in checks on Friday.

COLLINS: How did the city’s leadership determined that this was the best way to use this money?

STREMPLE: Well, yeah, before anyone gets too jealous of these checks this is a Hail Mary pass on the part of the municipality. Lack of tourist dollars is an existential threat to Skagway. There’s really not a lot of money coming in. The town was anticipating $160 million in tourist money this 2020 season and it’s not going to materialize. This money is an effort to keep the year round population of Skagway in Skagway. The fear on the part of the municipality is that year round residents will leave and there won’t be a town anymore. So it’s really serious. This money isn’t frivolous money, this money is really hoping to just get people through winter. Let them put food on the table, help them pay their heating bills, maybe offset a mortgage. Because people’s bills are still coming even though tourist dollars aren’t.

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