Former Sen. Elton Engstrom opposed most of the proposed funding of the private AJ and Franklin Docks with money from Marine Passenger Fees, and gave support to the fees themselves when he addressed the City and Borough of Juneau Assembly Monday night.
Engstrom spoke about the annual appropriation of Marine Passenger Fee collections, which are based upon the number of cruise ship passengers estimated to be in Juneau. Marine Passenger Fees themselves have been the subject of legal scrutiny by the industry and the issue of spending public dollars on private docks is being contested by some members of the public and Responsible Cruising in Alaska.
Engstrom is a practicing lawyer who was not paid for his presentation. He raised two points: whether the private docks had legal standing to question the head tax, and whether the city and borough is required to act.
Engstrom said that a common false-statement is that Marine Passenger Fees are remitted to the docks. The fees are actually collected and paid to the city by the cruise ships.
“In regard to the legality of the head tax, this is totally a federal issue,” he said. “It is doubtful they will give any standing to someone unless they pay the head tax, which the private docks do not do.”
As to the issue of spending city-collected funds on private docks, Engstrom said in some cases that would be OK.
“The most important question is whether the Assembly may grant tax revenues to a private entity for work already encompassed under contractual obligations,” Engstrom said. “In other words, private docks have contracts with cruise lines that pay for profit, upkeep and depreciation which a share of the head tax would only duplicate.”
Examples of those expenses include dock resurfacing, corrosion control, rebuild the retaining wall, replace canvas stop, pave the parking area, restroom cleaning supplies and others.
“Those are the expenses that you’ll be paying, very much in duplicate in what they would expect under a contract,” Engstrom said. “Not suggesting you forgo paying some dock expenses.”
He said the study for determining hazards to the private docks created by the new cruise shop docks and security training would be more applicable, since those aren’t likely to be in the contract of a private dock.
Engstrom said Alaska’s Constitution in Article 9, Section 6 says no appropriation of public funds may be made unless for a public purpose. He said that if the city went forward with giving these funds to private docks, it would have to make considerable investments in the future.
Engstrom said it is up to the city to decide how to develop the Port of Juneau and that it would be “plainly wrong” to give private docks a contribution for those docks to decide how those funds are used.
“I suspect if you feel there is some kind of pressure for some kind of suit or influence in a brief filed by Seattle attorney,” he said. “You have received legislative authority by a vote of the people. You must act with high responsibility to retain that trust.”
Assemblyman Jonathan Anderson said he’s studied the issues around this at length, and asked Engstrom if he believes it would be acceptable to use those funds on city cruise ship docks.
Engstrom said they would be able to do that, but again pointed out that it is the cruise ships, not the docks that collect the Marine Passenger Fees and it is up to the Assembly to determine what is the most appropriate way to develop the port.
“You could put money into the private dock but it should not be a duplicate to what the contract already provides,” Engstrom said. “That’s against the law agreement. I don’t think the Supreme Court has heard such a case as that. They’ve heard where a municipality granted aid to private companies, but not in a situation where this is a duplicate payment.”
Assemblyman Bob Doll said the Assembly is searching for the best “yardstick” to measure and evaluate where those funds should be spent. He asked Engstrom for comments on the view of what best suits the passenger, not to whom funds are distributed.
Doll said he could imagine a passenger standing under an awning and benefiting from that, but couldn’t imagine doing the same for protection of the dock itself.
Engstrom said it certainly is a system that should be looked into.
Assemblywoman Ruth Danner asked if Engstrom if the Assembly would they create an additional problem if it passed this year’s proposed list as-is, then changed how the funds are allocated next year.
Danner would like to see the city weigh each proposed project on how much it benefits marine passengers.
Engstrom said if the Assembly set the precedent of giving funds to private docks this year, it will be significantly harder to break that cycle next year.
“You have the power to do it,” he said. “The example will be there to kind of bludgeon.”
Engstrom had submitted a four-page letter to the city Finance Committee, which is composed entirely of Assembly members, last week and was asked by Botelho to speak to the issue to the Assembly.
The Finance Committee last week unanimously moved the proposed list forward to the Assembly. The item was not on Monday’s agenda and Engstrom spoke during the public comment time, so no action was taken.
• Contact reporter Sarah Day at 523-2279 or at sarah.day@juneauempire.com.
Comments (22)
Add commentSubsidize private industry
It is the theme of the 21st century across America. But any attempts to tax said industry is completely unreasonable.
Editor!
WTH does this mean "Ruth Danner asked if Engstrom if the Assembly would they create an additional problem if it passed this year’s proposed list as-is"?
"if Engstrom/if the Assembly/would they" HUH????!
Editor! - JNUKara
That's hilarious JNUKara! I was thinking the same thing. I wonder if the wording/verbiage is the same in the printed Empire? I see a lot of errors, comparable to the entry you cited, in the online Empire.
Why is it unreasonable to tax the industry?
They cruise our ports, their passengers take advantage of the infrastructure that makes their visits amenable (I honestly believe that all improvements made to downtown Juneau are done primarily in the interests of the tourists, a.k.a. cruise ship passengers). It would be unthinkable to continue as the city had previously done in the past, letting the ships and passengers pass-through without any fee or tax. They use Juneau's resources and the city should be compensated for it.
In regard to funding private docks, Engstrom makes an excellent point: if they operate under contract, and that contract requires the city to pay for various expenditures, such as resurfacing, corrosion prevention, etc., there's no sense in duplicating those payments.
Where exactly is this line item?
I looked up the city budget a week or two ago, and could not squirrel out where these payments actually were. Does anyone know? I'm going to write to the Assembly today.
I don't think the city should be giving money to private docks, any more than they should be giving money to any privately owned tourist shop downtown for new flooring or awnings.
JnuKara - yeah, confusing article, but Mr. Engstrom is confusing too - I've always had a hard time following him.
If I'm not mistaken....
The article says that the ships at the private docks DO NOT pay the head tax? Is that right?
Subsidy to Private Business
Nice story and thoughtful points made by our former State House Senator. There are legal ways to spend public revenue on private entities, including the private docks that are at issue here. But a bunch of the proposed spending measures have very little or no benefit to the general public or even to cruise passengers. Mr. Engstrom is right to point out the many problems associated with a bunch of these spending proposals. A number of these spending proposals to the private dock owners will simply subsidize maintenance of private property without any demonstrable benefit to the general public or the cruise passengers.
Really, what we have here is a use of public funds to pump up the economic margins of private businesses. The process where the list of private projects to be competed with public funds was opaque. There is no accountability on how the funds will really be spent. Who knows whether the costs for completing the projects on these private docks is even realistic? If the projects cost less to complete, will the public get a refund?
Essentially this is a situation where two special interests that actively fought against implementation of the passenger ship fees have decided to hog up on the funding for their own benefit. There are certainly projects that could be proposed where public funding could be allocated to these private docks if the passengers and public benefit but too many of the projects on the current list submitted to the CBJ Assembly are simply routine maintenance of private property or improvements to private property that only benefit the owners of the private property and not the public.
A better way of allocating public funding in this situation is to set aside a pot of public funds, establish criteria on how the funds must be spent (including to benefit the cruise passengers and public), and let anyone submit a proposal on how they intend to spend the public funds according to the criteria set out in a Request for Proposals. Following a procedure like this insures accountability and gives everyone a chance to submit a proposal based on known metrics.
The current proposals to spend public funds on two private docks has all the hallmarks of a deal and a deal done poorly at that. Juneau can do better for the local public and the cruise passengers. The best thing to do here is put a halt to this appropriation charade for one year, devise an open and fair process, follow the open proposal process through and then have the CBJ Assembly allocate funds in a thoughtful and transparent manner.
And, the private docks have been charging more
Based on the other story in today's paper.
Swim's Question
The private docks DO NOT pay or collect the passenger fee levied by the CBJ. This canard has become part of local folklore because CBJ Assembly member Anderson continues to repeat this statement.
The cruise lines that call on Juneau collect the fee from their passengers and remit to the CBJ. This is kind of like how a grocery store collects sales tax from their customer and then pays the CBJ.
The private docks have been happy to let this falsehood circulate. The erroneous concept that the docks somehow collect the passenger fee gives political justification to the notion that somehow the docks should be cut in on the financial action.
There are ways in which the CBJ can (and I would even say should) provide public funding to private entities, including the two docks discussed in the article above but only if the public and cruise passengers obviously benefit.
The CBJ has undertaken a large number of projects and conducts many activities with the cruise passenger funds that benefit the passengers and our community. In regard to these expenditures, the two private docks have significantly benefited from public funding. For example, reconstruction of sidewalks and the roads leading to the private docks has obviously benefited the private docks. But now the private docks want to go further and get direct subsidies for their maintenance and operational needs.
Look, there are ways that public funds can legitimately be used on the private docks. If the private docks are giving an easement for a seawalk that the passengers and public can use then using public money for a private dock might make sense. But that is not the case here and too many of these spending proposals are just subsidies cooked up in a back room with no public involvement. Now that the proposals are out in the open and the public can see them, tell your representatives to can the concept for a year and go back to the drawing board and this time do the initial allocation out in the open where everyone can have a say in how to allocate public funds.
good points.
good points.
The private docks do collect
The private docks do collect the local passenger fee that is paid to CBJ. Once again Responsible Cruising is not being responsible with the facts. Secondly this is horrible journalism by the Juneau Empire, no balance at all. Sarah, did you let Joe and Chip interview and write your story and you just put your name on it. To correct Joe's false hood, the cruisers coming in on ships docking at the private facility are being taxed the same local head tax that cruisers are being taxed on ships docking at the city docks. I challenge the Empire to pick up the phone and do their homework, instead of swallowing Joe's and Chip's garbage whole.
Juneau Kid's Got It Wrong
Kid: You can say the Private Dock's collect the passenger fee all you want and as long as you desire but that doesn't make it true. Call the Port Director or the Finance Director for the CBJ. The CBJ collects from the passengers via the cruise lines. The docks do not collect the fees. Call the private dock owners and ask them if they collect the passenger fee. They do not. What the private dock owners want is a cut of the fees paid by the passengers,collected by cruise lines and then deposited into the treasury of the CBJ.
In the modern world, you can have any opinion you wish but confusing facts with opinion goes beyond what most folks consider normal behavior. Stop making up material and presenting it as a matter of fact. Even a guy like Glen Beck was held accountable in the end for making stuff up and ignoring facts, reason and logic. Really, there is nothing wrong with sticking to the facts and using logic and reason. It's actually kind of a good habit to get into, if you follow my drift.
And what's with the horrible journalism routine? The author reports on what a former elected official presented. How, exactly, is that horrible? Is it horrible because the story didn't report an alternative viewpoint that you would like everyone to adopt? And the little ad hominem attack on Thoma and myself in the context of a story where neither of us is quoted or mentioned is silly. One could even say your rant is "kid" stuff, but I guess your user name pretty much tells us that already.
king of spin
So in other words, the passengers who dock at the private docks are still paying the fee to the city through the cruise lines. You, Joe, make it sound like those passengers coming in at the private docks do not pay the fee. So, yes, anyone on a cruise ship to Juneau no matter what dock they come in on pay the fee to the city in the end.
You, Joe are still the king of spin!
Sorry, Joe....
I may have muddied the waters a bit.
So, as I understand it, the passenger fee/head tax is the same for all passengers, regardless of where their ship docks. It is collected directly from the ships by the city and intended for benefits to passengers and the community as affected by passengers.
Ships also pay a docking fee of some sort, based on weight and length of the vessel itself, which according to the other city assembly story in today's paper, the private docks charge MORE than the city does.
Right?
Seems to me private docks are already collecting higher fees, which they should use to maintain their own docks. Again, why would we pay for private dock maintenance out of head tax fees - any more than we would pay for Foodland to put in new freezers and flooring from city sales tax revenue? Seems like the same thing to me.
From the other story:
"Stone said no, because ships are charged based on length and weight.
Assembly members were concerned the city was charging too little on their docks based upon complaints from private docks. Stone and Docks and Harbors Finance Committee Chairman Eric Kueffner said the city charges for maintenance and operation. It has no debt service now, which private docks may have. The rates are comparable to other publicly-owned docks in Southeast."
cj north -
no he doesn't, I understood perfectly that all passengers pay the fee. Frankly, I don't see what difference it makes who collects the fee and forwards it to the city, but clearly the cruise line has the database and records (and collects the fees for the trip in the first place) to manage this more easily.
Joe, great job at the spin, I
Joe, great job at the spin, I applaud that you are using your law degree to pollute & muddy the discussion. At the end of the port call all passengers regardless of where they dock are being charged a tax to come to Juneau & AK. Thus all facilities regardless of public or private should be entitled to the pot of money if they are all providing the service. It's not American to collect fees on four docks and only allow two docks to benefit.
Taxes and Fees
Whenever a Alaska cruise ticket is purchased, taxes, fees and gratuities are also added to the ticket as new catagories. Taxes and fees total $80-120 per passenger, depending on the trip length and number of ports they visit. $40 of actual 'taxes' go to Alaska, Juneau & Ketchikan as head taxes. These are paid to the CBJ and the port of Juneau, not to "the docks." Ships can choose to anchor out in Juneau and still pay the exact same rate. These 'head taxes' were charged long before the Juneau arrival, as part of the ticket price. There is no collection of real 'taxes' by docks - just tax payments to CBJ.
However, the other $40-80 charged by cruise lines as "fees" are indeed collected by each private dock, such as those located in Skagway, Hoonah, Whittier, Seward, Juneau and Ketchikan. There is a constant battle by the cruise lines to reduce both taxes and fees, and what we see in Juneau today is now being played out state-wide. The squeeze is on the private docks to reduce their 'fees' and then grab as much 'tax' as they can. The only winners are the cruise lines if that grab is successful - as the paying passenger is oblivious.
It all makes sense if you
It all makes sense if you just don't think about it.
It is time to eliminate the
It is time to eliminate the cruise ship head tax! Alaska's state and municipal leaders have shown it can't legally spend the amount of tax dollars that it collects now. Elected leaders should be jumping at the chance to spend it on these private facilities so that they can show a justification for continuing the need for this ridiculous tax. Alaska can't tax our way to a better business climate.
"It is time to eliminate the..."
Sure, let's eliminate the head tax of cruise ships. Let's eliminate all taxes and fees...for everything. No more tax for groceries, no more taxes on your income, no more property tax, etc. Doesn't that feel better? Much better, except now we have many needs, but no resources; roads get battered, but there's no revenue to repair them, schools are dilapidated, sorry - no funding to fix them, you say your house was robbed ? That's too bad, too bad there's no money to afford public protection.
There's always a purpose for taxes and fees, and in this instance it's for the benefit of a community that welcome's the tour ship industry with open arms, a community that bends over backwards to accommodate tourists; and not the least of which, a community that builds and buffs their downtown district to appeal to and comfort the tour(ais).
Some kids never learn and some kids, so it seems, can't even read. To say, eliminate the tax, is like saying, I'm taking my ball and going home. "...Jump at the chance to spend it on private docks..."? I'm dumbfounded.
Kid's Rant
Now, now TBrakes. You have to accept comments like Kid's in the modern world. Everyone is allowed to put their two cents in regardless of whether or not it makes any sense at all. We are adrift in a world of opinion detached from fact or common sense anymore. Guys like Kid are allowed to make stuff up as they drift along and whenever they are confronted with facts or reality that doesn't square with their view of the world, they are allowed to say that the other viewpoint is "spin" and then dismiss facts with impunity. This wonderful world we live in is why it is becoming increasingly difficult to get anything done. We listen to everyone with equal ear and assume that all points of views are equally valid, even the kid voices. We certainly deserve what we get in these circumstances.
Juneaukid....
Private docks are recieving funds - they charge docking fees to cruise ships (higher fees than city owned docks). As they are private businesses, they should collect enough fees to operate their business.
Unless I'm mistaken, the head tax is kind of like city taxes. It's collected for general public infrastructure and purposes, which in this case would presumably also benefit cruise travel passengers (better bus turnarounds on public property in front of the cruise docks, visitor's center, walking tour signs, etc.)
What other private business do you know of that gets city taxes for their own infrastructure? Again - The taxes I pay for my groceries should go for paving and lighting the street in front of Foodland or Annie Kaills, but they shouldn't go for replacing the flooring or carpet INSIDE those businesses. All are used by tourists, but they are private businesses, and responsible for their own maintenance.
Joe and Chip are right
I was a travel agent for 17 years and booked many cruises. The cruise lines collect the head tax, not the docks. It's not a "docking fee", it's a head tax. The docks themselves are not necessarily entitled to it, as it's to improve "infrastructure", which can mean far more than just docks.