Legislators endorse cruise tax settlement

Some hope to avoid court battle with industry

Posted: Tuesday, March 23, 2010

There's been little courtroom action as part of the cruise ship industry's legal challenge to Alaska's cruse passenger "head tax," but the lawsuit has got the attention of legislative leaders and Gov. Sean Parnell.

House Speaker Mike Chenault, R-Nikiski, said it might be in the state's best interest to agree to lower the industry's taxes rather than risk going to trial.

"Would you rather settle and have a piece of what you started out with, or would you rather go to court and spend millions of dollars and then lose a case," he asked Monday.

"I don't know how good a case they really have," he said of the cruise industry.

Gov. Sean Parnell announced Friday in Anchorage that he was going to propose a cut of more than 25 percent to the state's $46 head tax. An additional $4 per passenger fee that pays for environmental monitoring is not part of the discussion.

Parnell recently returned from a cruise industry trade show in Miami, where he discussed the tax with industry members. His support for a tax reduction would be tied to a commitment to send more vessels to Alaska and dismissal of the legal challenge, he said.

Legislators were troubled by the threat of legal action as well.

Parnell's top legal officer, Attorney General Dan Sullivan, has promised to aggressively defend the state, and the law adopted by voters in 2006.

Chenault said he's discussed the lawsuit with Parnell, and ways to solve the problem and move the state forward.

House Rules Committee Chair Nancy Dahlstrom, R-Anchorage, said a negotiated settlement like the one proposed by Parnell was "probably in everybody's best interest."

She said the cruise industry didn't want to be involved in a lawsuit either.

"We heard members of the cruise ship industry say they didn't really want to have a lawsuit and they would be willing to drop their lawsuit if we come to some understanding," Dahlstrom said.

Juneau's Joe Geldhof, with Responsible Cruising for Alaska, which sponsored the initiative the voters adopted, said the state's case was strong.

The lawsuit, filed by the Alaska Cruise Association, a trade group representing the state's major tour operators, was filed in September.

There have been no legal filings since November, and the state's Department of Law has yet to make a substantive response.

Department of Law spokesman Bill McAllister said the department doesn't comment on ongoing cases.

"We typically speak through our court filings," he said.

One concern of legislators may be cost. The department has requested in its supplemental budget $353,700 to conduct an economic study to determine whether the cruise ship taxes are roughly commensurate with what it costs the state.

"Anytime there's a lawsuit filed, there should be a concern," Chenault said.

Rep. Bob Lynn, a Republican from Anchorage and chairman of the State Affairs Committee, said he'd be open to seeing what could be done to end the lawsuit.

"Are we open to discussion? Am I open to discussion? Yes, I am," he said.

• Contact reporter Pat Forgey at 5586-4816 or patrick.forgey@juneauempire.com.

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