Muñoz: Head tax reduction likely to pass

Posted: Tuesday, April 13, 2010

Rep. Cathy Muñoz says the governor's head tax reduction bill that stalled in the Legislature will likely be approved now that an agreement has been reached between the state and cruise industry, potentially ending a federal lawsuit.

"I think a bill is going to pass," the Juneau Republican said.

However, her Democratic counterpart, Rep. Beth Kerttula, questioned whether the legislation would solve the problems the region's small businesses are facing.

"I saw the agreement, it doesn't require the industry to bring the vessels back. There is a statement that suggests that they might think about it," she said.

The agreement hinges upon action by the Legislature to implement the tax cuts to the satisfaction of the industry in the remaining six days of the 90-day legislative session.

Kerttula said much of the downturn in travel was due to the economy rather than the head tax, but she did not know how much.

Alaska Cruise Association President John Binkley disputed that, saying declining cruise industry profits elsewhere in the world was due to the economy, but in Alaska it was due to the head tax. The association is made up of Carnival Corp, Royal Caribbean Line and four other cruise companies and their subsidiaries, all of whom are expected to sign the agreement.

Some lawmakers wanted a guarantee from the industry that ships would return if the bill passed, but Muñoz said that wouldn't be practical.

"I think it is hard to enforce that in an agreement," she said.

Gov. Sean Parnell had said earlier that he was expecting the cruise ship companies to make commitments for additional ship deployments to convince the Legislature to adopt the tax reduction.

Appearing before the Legislature though, Binkley only promised the companies would consider new deployments.

Adopting the tax cut will have other benefits besides ending the lawsuit, such as signaling to the industry that Alaska was a good place to do business, Muñoz said.

"Tying the state into a long-term lawsuit with one of its key industries is not really a good idea," she said.

Senate Finance Committee co-chair Bert Stedman, R-Sitka, said the bill to implement the tax reduction was likely to get a rapid hearing now that the agreement has been reached.

"We'll be working hard on it, working through (the bill) trying to move it forward," he said.

The agreement reached Sunday does not include an item that Parnell had previously requested, allowing $20 million in tax credits to the cruise industry for contributions to the Alaska Tourism Industry Association, a group that promotes Alaska travel.

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



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