David Powell is a current Wrangell Assembly member.

City Elections are on October 2^nd. There are two seats open on the Wrangell Borough Assembly. KSTK’s June Leffler spoke with David Powell who is running for re-election.

Mya Delong and Dale Parkinson are also running for an assembly seat.

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Barges carry containers full of product to ship to Southeast towns. (June Leffler/ KSTK)

Lisa Messmer works for a furniture store in the small island town of Wrangell. Earlier this year, she received an email with the heading: freight rate increases.

“When I saw the heading I didn’t read the rest of it because we don’t have a choice here,” Messmer said. “You can’t call them up and say you aren’t going to pay. We’re just stuck, and we pay what they say we pay.”

Wrangell and the rest of Southeast Alaska receive groceries, hardware, appliances, and alcohol by seafaring barges coming from the Seattle. It’s really the only way things get to small island towns.

Freight rates increase all the time. And at small increments, people just suck it up. But small business owners are seeing a steeper hike than anyone expected.

“We know freight is high here, it’s just doing business in Wrangell, Alaska,” said David Powell. He runs the Bay Company. This year, his minimum load freight rate increased 58 percent. For larger loads, it’s three times what it was last year.

He sells boats, motors, buoys, and anything else for the water. He anticipates raising his prices to meet the extra freight costs.

“We’re talking about a boat that would sell for $5700 now would probably sell for $6400 next year.”

A bar owner asked to remain anonymous, fearing his comments could impact his contract with his shipper. His liquor freight increase 58 percent this year, and he had to make a tough decision after seeing that increase.

“Our prices went up the day after I got that invoice,” he said.

There are only two barge companies operating in Southeast: Alaska Marine Lines and Samson Tug and Barge.

Samson’s Vice President Jerry Morgan says the rates have increased to meet their own operating costs. He says when Samson got into the Southeast market five years ago, its competitors were setting low rates for the area.

“I don’t know why the rates were so low, but they were so out of market range it just doesn’t make sense to even provide service to Wrangell at the rates they were offering before,” Morgan says. “The rates in Southeast are pretty low across the board it’s just a difficult market to compete in.”

It’s difficult to peg one number for overall freight increases. Freight rates are based on different weight loads, commodities and ports. Plus, individual businesses have their own contracts with these freight companies, which all look a little different. But companies regularly submit to the federal government their tariffs, which are a baseline of their rates. Here are some of the rate changes for Samson from 2017 to 2018 in Wrangell (at minimum weight loads). Groceries went up 7 percent, building supplies went up 13 percent, liquor went up 80 percent, and mixed freight loads went up 35 percent. Gas went down 8 percent.

Alaska Marine Lines is the bigger barge company in Southeast. An AML representative said its rates are also going up, particularly for smaller loads.

The representative says handling 20 to 30 different orders in a single container requires much more handling than unloading a container for a single customer. And AML has jacked up their rates to reflect that internal cost.

But raising rates on smaller loads, means raising rates on smaller businesses. Those that are already struggling to compete with big box and online retailers. Even though it is a hard decision, there’s no way around it, businesses are going to pass that cost along to their customers.

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The City of Wrangell may look for a private entity to manage or purchase the Wrangell Medical Center. Officials say the municipally-owned hospital faces uncertain finances and a deteriorating building. The top choice is the Southeast Alaska Regional Health Consortium, known as SEARHC, according to city officials.

Building a new hospital on the island could cost $41 million to $50 million. Interest could more than double the cost, according to the BDO Center for Healthcare Innovation and Excellence. The city hired the consulting company to estimate the costs of building a new hospital. Those findings were presented to the Wrangell Borough Assembly and the Wrangell Medical Center Board at a meeting this week. 

The daunting cost prompted Assembly Member David Powell to ask if the city should find a private entity to run and even acquire the hospital.

“We better look at all our bases and possibly look at some kind of partnership if not the complete wash our hands and get out,” Powell said.

Borough Manager Lisa Von Bargen said she and the hospital’s CEO Robert Rang are discussing private options for the hospital. They’re already talking with the Southeast Alaska Regional Health Consortium, known as SEARHC.

SEARHC is a tribal non-profit that provides healthcare services in 20 communities across Southeast Alaska.

This year, SEARHC acquired Alaska Island Community Services. AICS runs a medical clinic and other community services in Wrangell.  Von Bargen said having SEARHC already in the community makes it an obvious choice.

“SEARHC has a presence here in the community already that is significant,” Von Bargen said. “And if another entity were brought to town, that financial impact would potentially be lessened , because SEARHC, like any organization is a business. And they aren’t gong to want to give money to their competitor.”

SEARHC and the Wrangell hospital have a symbiotic relationship right now. The hospital contracts AICS doctors to work in the hospital’s emergency room. And AICS sends the hospital patients for x-rays and other lab work.

SEARHC Chief Operating Officer Dan Neumeister said he wants his organization to step in, if the hospital goes private.

“If we could get some type of perhaps a letter, a non-binding letter of intent, letter of confidentiality, where we could go forward,” Neumeister said. “[We could] work together for maybe the next four to six months and come up with a recommendation together as to how we could really provide a unified health system.”

Neumeister and city staff have already met with an architect to look at design options. He said SEARHC would pay for design plans if the city wants to go forward.

CEO Robert Rang didn’t sugarcoat the hospital’s financial situation. He agreed continued public operation won’t work.

Just two weeks ago, the Borough wrote a 250,000 check to the hospital to meet daily operation costs.

While the city already favors SEARHC, Von Bargen said there would be an independent review to make sure the city is getting a fair deal.

“If we decide we want to go down the road of working with search who happens to be an entity here in the community that has a vested interest in partnering with us, we certainly want to make sure there is a third party review of that with us to make sure we are doing the due diligence we need,” Von Bargen said.

The medical board will meet next week to decide if enlisting private companies is the way to go.

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Wrangell’s Assembly OK’d a contract for unionized municipal workers Tuesday.  (KSTK file photo)

The Wrangell Assembly voted Tuesday to adopt its last contract offer to unionized municipal employees.

That makes a strike more likely. But a labor representative said no decision has been made.

The 24 union members proposed a $2.50 an hour pay increase in their final proposal. They said that balances out higher health insurance costs.

The borough offered 75 cents an hour.

During Tuesday’s meeting, Finance Director Lee Burgess said that still gives the majority of union members a better deal than they have now.

“Fourteen of the 24 represented positions would, over the next three years, receive more in wages as a result of the modifications made, including to the wage table as well as the 75 cents, than the additional costs that they would pay for health insurance premiums,” he said.

The updated wage table drops the six lowest pay levels, while adding three to the high end. Burgess said that will increase pay for four to six employees now and more later.

International Brotherhood of Electrical Workers Shop Steward Mark Armstrong said the employees are disappointed by the Assembly’s vote. But they’ll meet and talk before deciding whether to strike.

He said he sees the Assembly’s vote as another step in the process that he hopes leads to a resolution acceptable to both sides.

During Tuesday’s meeting, Assembly member David Powell said the ball is in the union’s court.

“From what I understand, the city made the last offer and we’re not going to bid against ourselves. So, the way I look at it is, if you’re not going to come back with a counter-offer, it puts us at an impasse as an Assembly. I don’t know where we can go from here other than what we’re doing right now,” he said.

The vote to adopt the municipality’s contract offer was unanimous. Officials have begun hiring fill-in staff in case of a strike. They’ve also listed services that would be reduced to stopped.

Before the vote, union member Andrew Scambler said some of Wrangell’s municipal employees make less money than their counterparts in other communities. And some of those people might leave town.

“Wrangell’s unionized workers contribute to the prosperity of the community. And I hope that you look at us in our prosperity as an asset to be invested in, rather than as a liability,” he said.

Those workers have been without a contract for three years.

In addition to the 24 union members, the borough has about 35 managers and other employees not in a union.

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