Parnell proposes cruise head tax rollback

Proposal also seeks to reimburse industry for Juneau, Ketchikan fees

Posted: Friday, March 26, 2010

Gov. Sean Parnell Thursday provided more details on his plan to reduce cruise ship head taxes, and said he would soon introduce legislation that could end up returning most or all of the $46 per passenger "head tax" to the industry.

Parnell's bill not only proposed cutting the tax 25 percent by eliminating the $11.50 portion that goes to the Regional Cruise Ship Impact Fund, it also seeks to reimburse the industry for municipal head taxes paid in Juneau and Ketchikan.

Juneau's $8 fee and Ketchikan's $7 fee can add $15 to the tax cut, though not every cruise ship stops in each port.

Further, Parnell said he'd propose in the same bill to offer a tax credit to the industry for money the Alaska Tourism Industry Association spends marketing Alaska. That amount could reach a maximum of $20 million.

Rep. Beth Kerttula, D-Juneau, expressed doubts about the bill after learning the details Thursday evening, but Rep. Cathy Muñoz, R-Juneau, said that it could be modified to be good for Juneau.

"I like tourism, but it takes a toll on our communities and there are costs that we have to deal with," Kerttula said, supporting the head tax.

"I support the governor's proposal to reduce the $50 fee," Muñoz, said, noting that it actually cost the cruise ships $64 per passenger when the municipal fees in Juneau and Ketchikan are added in.

"There's a great cost to come to Alaska," she said.

"Juneau in particular is a very expensive port, I think we're second in the international market," she said.

Parnell's proposal also includes tax credits for tourism marketing funding that the Legislature has failed to act on in a separate bill this year.

Muñoz and Kerttula agreed that was unlikely to pass because the Legislature does not want to give away its ability to appropriate money with an automatic tax credit provision.

"I don't think there is support to maintain the tax credit portion of the bill at this point," Muñoz said.

Kerttula agreed, and said that it might be important for the state to do tourism marketing, and if so, it should budget and pay for it.

Parnell, meeting with reporters prior to his bill being made public, said a proposal that reduced the money the Legislature has available to spend would be difficult to pass.

"Lawmakers don't like to give up revenue streams because their power is in the power to appropriate, and I get that, but our state has billions of dollars in savings," he said.

Parnell referred to his bill costing $11 million, but did not provide cost estimates later that he said would be completed Thursday. The Empire's calculations of the cost of the bill were closer to the $46 million the head tax collected last year.

Parnell said spending that much money should not be a problem for the state.

"I think given the state's financial condition, given my desire to grow the economy, this makes sense," Parnell said.

Parnell said his bill would resolve the industry's lawsuit against the state, and "bring jobs and business back to our Alaska small businesses."

He said the industry has offered to drop the lawsuit, but said he told the industry it would have to persuade the Legislature it was willing to increase business in the state.

"I made a very pointed case they would need to demonstrate that in the public process this would bring back ships and bring back Alaska jobs," he said.

Kerttula said the industry may be gearing up now to make its case.

"They've got quite a few lobbyists in the hallways in the last couple of days," she said.

• Contact reporter Pat Forgey at 586-4816 or patrick.forgey@juneauempire.com.



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