Senate mulls head tax change

Posted: Tuesday, March 04, 2008

Alaska senators are considering a bill that would alter a cruise ship head tax citizens approved in 2006.

Brian Wallace / Juneau Empire
Brian Wallace / Juneau Empire

Critics complain the tax is being changed even before the first revenue from it has been distributed.

"They're trying to roll back the initiative," said Juneau attorney Joe Geldhof, who was one of its sponsors. "It's at least premature."

On the Senate floor Monday, legislators amended the bill so it would be effective in 2009 instead of being retroactive and returned it to the Rules Committee.

As a result of the cruise ship ballot initiative, the state collects $50 per passenger from cruise ships that visit Alaska. Of that revenue, $4 pays for an Ocean Rangers environmental monitoring program. Another $5 per passenger goes directly to each of the first five ports visited. The rest goes into the general fund and is intended for cruise-ship-related infrastructure improvements. Juneau and Ketchikan opted out of receiving those state funds, and instead levy their own head taxes on top of the $50 state tax. They charge $8 and $7 per passenger, respectively.

Last year about 1 million cruise ship passengers stopped at Alaska ports, so the state collected $50 million.

Senate Bill 168 effectively caps the total passenger tax at $50, and cities such as Juneau and Ketchikan would be paid out of that money for the passenger taxes they levied themselves. The bill sets the maximum rebate to cities at $10 a passenger.

The bill is sponsored by the Senate Finance Committee, which is chaired by Sen. Bert Stedman, R-Sitka.

Other supporters of the bill include the mayors of Juneau and Ketchikan, the cruise ship industry and Alaska cities such as Seward, which hopes to levy its own head tax in the future.

Supporters say it's too difficult for cities to obtain funds from the state revenue pool created by the tax, partly because federal legislation limits how cruise ship taxes can be spent. Communities that don't get cruise ship visits yet and want to build infrastructure to invite them might not be eligible for the money.

Ketchikan Mayor Bob Weinstein told the Senate last year the cruise ship money was idling in the general fund as a result.

The problem is hypothetical so far. Since last year was the first in which the money was collected, none has been appropriated yet for projects.

Of last year's pot, $744,000 has been distributed directly to ports, according to Jerry Burnett, director of administrative services for the Department of Revenue.

The Department of Revenue opposes the bill because it would reduce the total amount of tax money the state has to spend, Burnett said.

Sen. Hollis French, D-Anchorage, agreed that the general fund money should be easier to access. But he said this bill was the wrong solution to that problem because of its other consequences.

His worry is that cities that get cruise ships now would impose head taxes or raise the ones they have, and the money would be taken out of the state fund until there was little or nothing left for other cities.

"Communities that don't get direct visits will quite likely not get any direct impact aid," he said.

Opponents of the bill say it would ultimately cause infighting among cities, which might try make sure they attract cruise ships with the lowest taxes. Creating a state revenue pool allows cities to create a unified front against the cruise lines that might threaten to leave a town if passenger taxes are raised, according to critics.

"That's one of the reasons we wrote the initiative, to avoid the competition between ports," Geldhof said.

He cited the example of Whittier, which repealed a $1 head tax in April 2003, after Princess Cruise Lines told the city it would stop visiting if it had to pay the tax.

• Contact reporter Kate Golden at 523-2276 or kate.golden@juneauempire.com.



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