Just as most Juneau folks worry about "Capitol Creep", (that is not a person, it's the gradual moving of state government offices to Anchorage), I worry about the gradual progression of international jewelry stores on South Franklin Street edging their way into our core downtown and snuffing it out.
Mark Stopha's My Turn on September 20th about the upcoming CBJ election and Proposition 1 had a sentence that caught my eye. He wrote, "Not only is Juneau's sales tax regressive, it taxes the poor for virtually all of their purchases, including necessities like food, yet exempts the value over $7,500 for big ticket items, and exempts tourism services purchased on the ship." This includes shore excursions that have expanded tremendously over the last several years from bus trips to the glacier to kayaking, white water rafting, and other adventures.
Did you know that? I didn't. The same section 69.05.040(21) exempting single sale items that exceed $7,500 includes, “(b) A single delivery of fuel oil in excess of 50,000 gallons delivered by marine transportation to a single customer." These exemptions were made "to promote purchasing from local businesses”, and to “provide sales tax relief when purchasing a single high ticket item” rather than exempt all items that may be purchased in a single sale on a single invoice. For example, we bought a car in Juneau this year and benefited from the “tax relief” of this policy.
Mark’s column got me to thinking about how little I know about the way our local government interacts with the cruise ship companies and the jewelry stores that appear to be part of a package deal.
Earlier this summer, I sat next to a person I will call Diamond (D) on a flight from Seattle. After an hour or so, we struck up a conversation. D works at one of the jewelry stores on South Franklin in the summer and for the same company in St. Thomas during the winter. I have always been curious about the whole jewelry store dynamic and asked D if the cruise ships own the jewelry stores. No, they don't, D said, but they have an arrangement that if a passenger buys a diamond ring because of a flyer or referral from their cruise ship, the ship gets 20% of the sale. I realize this is just one conversation from one person who works in the international jewelry store business, but I have no reason to think she would be anything less than truthful.
I asked D why on earth people on a cruise to Alaska (or anywhere) would want to focus so much of their attention and money on jewelry. D said there are a lot of announcements to the passengers about "showing your lady how much you love her" and the not-so-subliminal message that nothing says love like a diamond. They also hand out “20% off” flyers with specific recommendations for jewelry stores at ports of call.
Feeling a little like Columbo, my next question was, “Where do the jewelry store workers come from?” Like D, many are from the Caribbean area. They work in Caribbean ports during the winter and in Alaska during the summer. D's voice took on an edge, and said, "Many of the workers are undocumented workers. I have my papers, but they don't and nobody checks them." Then D added, "Those guys live above the stores during the season."
Diamond said that several cruise ship port towns have an agreement with the jewelry stores that at least one local person must be hired for the season. D asked me why Juneau doesn't do that. I mumbled something about having a low unemployment rate, but I honestly didn’t know the answer to that.
So, between Mark Stopha's issue about the city’s tax exemption for items over $7,500, but not for food, and remembering Diamond's description of the tie-in between the ships and the shops, I began to wonder about the ethics around our tax structure. Is it just smart governance to provide such a generous tax incentive when a big part of our economy is tourism? Did the industry representatives suggest this, or was it our Assembly's idea?
We have friends who work in the cruise ship industry, and there are many Juneau stores that benefit greatly from tourism. Every summer, while passengers are shopping downtown, crew members are in Costco, Fred Meyer, and Walmart buying things and paying the sales tax. (I'm assuming they pay the sales tax.)
In preparation for this blog, I asked a friend in Ketchikan to tell me if her town’s downtown area is still intact. The answer, sadly, is there has been a complete takeover by international jewelry stores in Ketchikan’s downtown. Those stores go dark when the season ends. Just about all that is open year-round downtown is a consignment shop called Silly Munchkins, and another store called Simply Bella. Two local women started these businesses.
As my friend said, "When the jewelry stores are done, downtown Ketchikan is a ghost town. It's just so sad that our little town doesn't benefit at all with these stores coming in, taking the earnings, and leaving." My friend doesn't know how much tax money comes in, or what benefit to the citizens of Ketchikan offsets the almost 100% hollowing out of their downtown.
Juneau has a kind of diagonal bright line at the Red Dog Saloon on one side of South Franklin Street and the Fil-Am Hall on the other. With a few notable exceptions, like Trove, Invisible World, and Taku Smokeries Fishery, that line is where most of the local businesses end and the Outside businesses begin.
What happens if a jewelry store corporate representative offers the owners of the Senate Building an enormous amount of money to sell or lease? Or what if the corner where Hearthside Books is gets leased to Tanzanite International for a handsome sum? Paradise Café is closing. What if that little island across from Marine Park becomes another Diamonds International store? Or, imagine the Viking Bar becoming a branch of Tanzanite International, complete with darkened windows from September to May?
Up the water from us is Skagway, another cruise ship port with a year-round population just over 900 people. (Juneau has about 33,000.) Years ago, I had a conversation on the ferry with Buckwheat Donohue, the tourism director for Skagway, and I believe he said that two jewelry companies flew in and offered $1 million for a store lot there. (Note: I'm double-checking this with Buckwheat, and will correct it he tells me I have it wrong.) There is an online travel site called eportviews.com and the writer described his experience in Skagway this way: "I am not sure how it happened, but Skagway is full of jewelry stores selling everything imaginable. There is even a Diamonds International and Tanzanite International. One would think you were in St. Thomas." Or Juneau. Or Ketchikan.
In Mark’s My Turn, he asks why the City exempts the tax value of items above $7,500, but our food is taxed. I have more questions: When did we, the people of Juneau, make a decision to tax food, but provide tax breaks to two industries (jewelry and cruise ships) that are joined at the hip in ports all over the world. Did we know this would create seasonal Dead Zones where the lights are out eight months of the year?
This could be the start of a serious conversation about connecting the dollar signs between the cruise ship industry, the jewelry industry, the City & Borough of Juneau policies, and the immigration authorities. Are we at peace with seasonal workers living in attics? Do we care if these workers are legally in this country? Is this a kind of Faustian bargain that goes with living in a tourist town? Does this tax set-up reflect our values as a community? Can we welcome the tourism industry, but hold back on the tax breaks for certain businesses and use that money to ease the burden on our neighbors who struggle to make ends meet? Food for thought.