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Assembly hears former senator's views on uses of Marine Passenger Fees

Posted: April 13, 2011 - 9:13pm

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.

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