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The latest news of cruise line cutbacks in Alaska may create ripple effects in city finances.

City Manager Rod Swope and Finance Director Craig Duncan gave a presentation last week to the Assembly's Finance Committee on major expenditure and revenue updates to the 2010 budget. The upcoming fiscal year, which begins July 1, is the second in the Assembly's two-year budget cycle.

Duncan's numbers show city finances on sound footing through June 30, 2010, but the city faces a $5.3 million deficit in 2011 and similar multimillion dollar deficits going forward.

Shortly after the presentation, news broke of more cruise lines taking ships out of the Alaska rotation, translating into tens of thousands fewer tourists in Juneau and less sales tax revenue to feed city operations and projects.

Assemblyman Bob Doll reacted Monday to news of Princess Cruises taking one of its ships out of the Alaska market.

"We think we have a stable budget for 2010, and the out-years are in doubt," Doll said. "This just reinforces that doubt. We know we're going to have 48,000 less passengers. The dollar implications of this remain to be determined."

Duncan has said his projections are based on trends; they don't reflect a systematic assimilation of specific pieces of data. City offices were closed in observance of Seward's Day on Monday and Duncan could not be reached for comment on whether the latest cruise news is consistent with his projections or if it would prompt more revisions.

In recent years, sales taxes have generated about a quarter of the city's $96 million core budget, which excludes operations such as Bartlett Regional Hospital and Juneau International Airport, which the city owns but operates indirectly. Including those operations, sales taxes have made up about 15 percent of the city's overall $290 million budget.

Cruise ship passengers who stop in town generate a significant portion of that revenue. According to a 2005 traveler survey by the McDowell Group, each cruise ship passenger spent an average of $186 in the local economy.

City and industry officials have speculated that even if the number of bookings stay up - about 1 million people came to Juneau on cruise ships last year - they might not spend money in town as liberally as they have in the past.

On Wednesday, the Assembly's Finance Committee plans to discuss changes in property assessments, budget changes from the city manager, the city's general operating budget and long-term planning. The committee will meet every Wednesday through at least May 13 to discuss various elements of the budget. The full Assembly must adopt it by June 15.

At last week's meeting, the Assembly also received physical copies of the two-volume, 297-page budget document.

Assemblyman Jonathan Anderson said he's satisfied with a budget that holds the line, and is wary of making significant cuts because of the city government's role as an economic driver.

"I don't want us to be doing drastic program cutting," he said. "We know that to the extent we cut, we hurt the Juneau economy as well."

Assemblyman Randy Wanamaker said he'd like to further vet city spending to ensure taxpayers' money is paying for only the most essential services in preparation for the coming deficit years.

"The sooner we start planning for those, the easier it will be, (though) it's not going to be easy in either circumstance," he said. "This is the beginning of the spring season. Spring is the season of hope. Let's hope things turn out better than we thought."

• Contact reporter Jeremy Hsieh at 523-2258 or e-mail jeremy.hsieh@juneauempire.com.