How cruise ship revenue is allocated  

BAR HARBOR — For the fiscal year of 2023, revenue from cruise ships anchoring in Bar Harbor is expected to be almost a million dollars. Without this revenue stream, the town would have to raise an additional $485,000 or look to cut costs from municipal services.  

The town collects revenue from cruise lines through two separate fees. For every passenger on board, all ships are required to pay a service fee of $2.68 per person and a port development fee of $2.53 per person.  

Lower berth capacity for all ships scheduled to cruise into Frenchman Bay is projected to total 191,791 passengers for the 2023 season. This number represents the maximum number of passengers ships can carry, not necessarily how many they will have on board when it’s time to set sail. But regardless of official disembarkation numbers, every line still has to pay based on its lower berth capacity.  

That means passenger service fees will pull in $514,000 and port development fees will capture $485,000 for the next year.  

Town Manager Kevin Sutherland explained revenue from cruise ships is kept in a separate enterprise fund to raise money for and pay for all their own services. 

Of that million-dollar sum, the town has only budgeted $665,000 for cruise related expenditures and set the rest aside in a surplus fund. 

Expenditures fall into one of three categories: direct expenses deposited back into maintenance to keep the industry afloat; allocated expenses for operating needs that pay portions of salaries for personnel like public safety officers; and capital expenses invested into larger projects to benefit town property that passengers also utilize. 

By law, these expenditures can only be used for facilities and services directly benefiting cruise ship passengers. However, this definition may be applied more liberally as the general public may also benefit from the use of these programs as well. 

“Some of that money is then sent over to the general fund to cover capital improvement, or some of the operations of the town,” Sutherland said.  

For example, $246,294 of the port development fees are transferred to the Capital Improvement Program Fund, which pays for infrastructure upgrades and/or debt service projects that add to the overall value of town property. Streetscapes, building renovations, and emergency vehicle replacements are a few of the projects itemized on the CIP Fund list from cruise ship revenue.  

Roughly half of passenger service fees – approximately $238,656 – is allocated to the general fund to pay a portion of public officials’ salaries dedicated to cruise ship operations.  These management expenses include compensating port security, public works, harbormaster and administrative services. 

Town Council member Jill Goldthwait said cruise ship reduction plans to cap disembarkation numbers doesn’t lessen the workload for public safety personnel. Whether there are 2,000 passengers or 200 coming off the boat, the same amount of services are needed. 

These two expenses – capital and operating – represent the $485,000 the town would have to absorb or if they could not pull from cruise ship revenue. 

“For example, we put $10,000 towards police cruiser replacement. If that money wasn’t there through this particular avenue, we’d have to ask the taxpayers in the general fund to cover the cost of that,” Sutherland said. “Or we’d have to not replace our cars as frequently as we do.” 

Town Council Chair Valerie Peacock said if there were no ships, taxpayers wouldn’t necessarily have to foot the additional bill; other means of fundraising like raising parking fees could offset the loss of revenue.  

In the case the taxpayers ended up covering the costs, at the beginning of January, the $485,000 was estimated to be $.25 on the mil rate. For the median home valued at $400K, it would add $100 to that tax bill.  

The other $180,000 of the $665,000 cruise-related expenditures would be essentially eliminated since those direct expenses like environmental monitoring and cruise Maine dues would no longer be needed without ships coming to town.  

Victoria DeCoster

Victoria DeCoster

Victoria DeCoster covers the Bar Harbor area including town boards and committees. She recently moved to the island after graduating from Syracuse University last year. Contact Victoria with tips and story ideas at [email protected].