An Already Exhausted Bar Harbor Town Budget Could Be About to Take a Huge Hit
BAR HARBOR––In a town, like Bar Harbor, with limited revenue streams, cruise ship revenue is amongst the largest contributors. In fact, Bar Harbor has only four revenue line items that have earned, or are projected to earn, as of August 21, 2023, close to or above $1 million a year post COVID-19. Those line items are listed below.
· Tax Revenues – 1090 Tax revenues (property taxes)
· Tax Revenues – 1092 Intergovernmental (governmental reimbursements)
In comparison, the revenue from short-term rental permits is projected to only be in the $200,000 range. Ambulance fees is projected to be close to $550,000 and revenue sharing is only projected to be between $450,000 to $475,000.
Depending upon the decision of District Judge Lance Walker in the APPLL v. Town of Bar Harbor litigation, which is expected soon, the town may lose 60-90% of its cruise ship revenue based on recent and current schedules.
In July, the three-day trial in federal court in Bangor saw testimony from both town staff and officials as well as citizens’ initiative lead petitioner Charles Sidman, as well as from local business owners who said that the daily limit of 1,000 disembarkations is a violation of the U.S. Constitution’s Supremacy Clause, Commerce Clause or Due Process Clause, which are central to the case's legal question.
Those limits were voted in during the November 2022 election. The limits are placed within the town’s land use ordinance and were created by a citizen’s petition. The Town Council also had a newly revised plan involving memorandums of agreements with cruise lines that would reduce the number of cruise ships visiting. Those agreements were based on cruise ships’ lower berth capacity and monthly caps rather than daily disembarkation rates.
All of this comes as the town begins its budget process for FY2025, which begins in July. The final town budget is approved by voters at the Bar Harbor Town Meeting in June. Already, the Jesup Memorial Library has asked for an increase of $100,000 to $383,000 and The Quietside Journal reported this weekend that Bar Harbor’s contribution to the Hancock County budget is likely to be “a 15 percent increase next year to $1,089,918.” The town still has a high bond rating and this past June voters approved a multi-million-dollar bond for a new school.
THE TOWN’S CURRENT STANCE ON CRUISE SHIPS
On December 20, the Bar Harbor Town Council issued a statement that the MOA Working Group failed “to renegotiate the MOAs beyond December 2023.” On December 22, the town manager’s office issued a second statement “in response to some inquiries about the status of the Memorandums of Agreement between the cruise lines visiting Bar Harbor and the Town.”
Town Manager James Smith replied to an email from the Bar Harbor Story seeking greater detail, “With regard to the below question(s), the Town has already addressed these specific questions (see below link) and we will have no further public comment until we have a decision from the court on this matter.”
The referenced link is here and the statements are below.
That statement says that Bar Harbor will abide by the MOAs for the 2024 cruise ship season but that the MOAs are not applicable to the 2025 season until an agreement is reached, if one is, to extend the MOAs.
The statement also says, “The Council's position is that it will abide by the terms of the Memorandum of Agreement between the cruise lines visiting in Bar Harbor and the Town ("MOA") for booking cruise ships for the 2023 and 2024 seasons until it promulgates rules to implement and enforce the cruise ship ordinance and a decision from the U.S. District Court of Maine on the APPLL litigation is issued.”
Norwegian Cruise Lines replied to an email from the Bar Harbor Story asking how the new ordinance, if enacted, may affect their ship’s visitation to Bar Harbor with, “Thank you for reaching out. Kindly note, we do not comment on ongoing litigations.”
Bar Harbor Police Captain and Harbormaster Chris Wharff has accepted all reservations for the 2024 and 2025 cruise ship seasons that were made prior to the passing of the new citizen’s petition-based ordinance in November 2022.
The 2024 season has 102 confirmed reservations with the first one scheduled to arrive on May 2 and the last scheduled to arrive on October 28. The 2025 season has 18 confirmed reservations currently starting on August 27 and ending on October 28.
In a January 6, 2023, article, the Bar Harbor Story wrote that then Town Manager Kevin Sutherland, while addressing the now defunct Cruise Ship Committee, said that all the cruise ships that had booked prior to March 17, 2022, are grandfathered in despite the petition’s passage.
An email to Smith and Town Council Chair Val Peacock seeking verification that all of the currently confirmed cruise reservations for 2024 with lower berth capacities greater then 1,000 would be able to disembark as many people as they wish without penalty under the potential new ordinance, went unanswered as of press time.
THE REVENUE AND POTENTIAL LOSS
Bar Harbor charges the cruise lines two separate fees when they come to town. There is a port development fee (PDF) and a passenger service fee (PSF). The fees are based on the lower berth capacity of each ship and when a ship comes to port it pays for the entire lower berth capacity, not any portion thereof based upon how many people they think may disembark.
Both of these fees are subject to the Tonnage Clause of the United States Constitution, and as the cruise ship reserve fund section of the town’s budget says, “these fees can be used only for facilities and services directly benefitting cruise ship passengers, although the general public may also derive some benefit from them.”
There are many projects and services, past, present, and future that have been completed (or could be completed) that benefit residents and non-cruise ship visitors as well.
The cruise ship revenue pays or helps to pay many town expenditures. This link will take you to account 65 of the town’s budget, which is the cruise ship reserve budget, to see how the money is allocated.
The current fees are $2.53 per berth for the PDF and $2.84 per berth for the PSF for a total of $5.37. The PSF fees raise annually by the cost-of-living increase, which is set at 3.2% for 2024 (FY25 for the Town). Based on these numbers, $5.46 per berth will be the amount used for all monetary figures below.
The confirmed ships, the number of times they are scheduled to visit Bar Harbor in 2024, their lower berth capacities, the revenue amount that they would generate currently per visit, and the revenue amount that they would generate per visit under the new land use ordinance (if enacted and if the ships continue to visit but only disembark 1,000) are listed below.
The numbers under the “Revenue Under New Ordinance Per Visit” column assume that passengers or cruise lines do not want to pay an extra $100 per person to disembark and that ships over 1,000 lower berth capacity are only charged PDF and PSF for the 1,000 disembarkation cap.
TOTALS
For revenue, the assumption stated in the paragraph above applies. It is also assumed that no ships will cancel due to weather or vessel issues. In addition, since the town has stated that it will make no further comments until a decision is made in the litigation, the second revenue line makes a huge jump in that ships over 1,000 lower berth capacity are only charged PDF and PSF for the 1,000-disembarkation cap.
For disembarkations, these totals make the assumption that all guests will disembark and does not count crew. They also assume that no ships will cancel due to weather or vessel issues.
All of these assumptions may or may not be realistic, but to not enact them for both categories presents too many variables to list.
POTENTIAL REVENUE TOTALS
If the town loses the lawsuit or cannot enact the ordinance prior to the end of the season and all ships show up (or the town wins the lawsuit, enacts the ordinance, all ships show up and those over 1,000 lower berth capacity pay for the full lower berth capacity) – $1,001,400.
If the town wins the lawsuit, it can enact the ordinance prior to the start of the season, all ships show up, and the PDF and PSF are only charged for 1,000 passengers rather than the full lower berth capacity – $400,021.
If the town wins the lawsuit and can enact the ordinance prior to the start of the season and all ships over 1,000 lower berth capacity cancel - $28,741.
DISEMBARKATIONS TOTALS
If the town loses the lawsuit or cannot enact the ordinance prior to the end of the season and all ships show up – 183,408 disembarkations.
If the town wins the lawsuit and can enact the ordinance prior to the start of the season and all ships show up – 73,264 disembarkations.
If the town wins the lawsuit and can enact the ordinance prior to the start of the season and all ships over 1,000 lower berth capacity cancel – 5,264 disembarkations.
Please forgive all of the assumptions and variables enacted in the presentation of these figures, but in an effort to show the extremes and something resembling a middle ground with all of these unknowns, it was necessary.
Democracy is not all about money, the majority of citizens who voted to cap the massive polluting ships know that the town and a few businesses would lose money. Beating a dead horse here won't change anyone's mind.
Sorry, but there are too many factual mistakes in this article.
The town voted on facts. 58% to 42%. Most businesses and citizens found the cruise industry to be an undue burden on our health and welfare.