Questions shroud fate of Alaska cruise tax bill

Posted: Sunday, April 18, 2010

JUNEAU - Disagreement over the divvying-up of cruise ship passenger taxes threatened to torpedo a bill aimed at bringing more ships back to Alaska and settling a federal lawsuit over the state head tax.

The bill, passed out of House Finance about 1:30 a.m. Saturday and a key issue in leadership meetings later in the day, would still lower the tax from $46 a person to $34.50, and allow for deeper offsets for ships stopping in at least one of two ports - Juneau and Ketchikan. Those levels are what Gov. Sean Parnell has proposed and what's included in a settlement agreement signed by Attorney General Dan Sullivan and Alaska Cruise Association President John Binkley.

But the measure drastically alters from the version passed by the Senate this week who gets what share of the tax from the state. That could pose problems for the bill's passage, as the Legislature nears its scheduled adjournment today.

The settlement agreement hinges upon lawmakers passing and the governor signing the tax cut this year.

"We can probably find a solution, but the clock is ticking and it's getting late," House Majority Leader Kyle Johansen, a Republican from Ketchikan, said Saturday afternoon.

It was one of several big, outstanding issues that legislative leaders were trying to resolve in the session's last hours.

At issue: fairness.

Juneau and Ketchikan have their own head taxes, $8 and $7, respectively; other communities get a share of the tax from the state. The Senate bill gave both Juneau and Ketchikan, popular stops for ships, a cut from the state, along with their local fees, for receiving cruise ship passengers.

The measure passed out of House Finance would do away with that and instead bring up to seven ports of call to that $8 reimbursement level. Juneau wouldn't get any more than its local fee back, Ketchikan would get $1, plus its local tax, and there'd be none of the so-called "double dip" that critics, like Rep. Bill Thomas, considered unfair to communities that also benefit from the industry and likewise feel the sting when tourism falls.

Chip Thoma, with Responsible Cruising in Alaska, called the House measure "masterful," saying that, at the very least, it keeps Juneau at the status quo and would provide parity for ports. He believes an amendment by Rep. Alan Austerman, R-Kodiak, which would place proceeds from gambling operations aboard ships into a special cruise ship account, would help blunt the effects of the tax cut and that those proceeds collected could go toward improving infrastructure.

But it made for a lot of unhappy lawmakers and lobbyists who learned more details of the plan Saturday. Sen. Bert Stedman, whose finance committee crafted the Senate version, was not pleased, his chief of staff said.

And Johansen said the House bill penalizes communities like his, which were "aggressive" in enacting a tax to help fund and improve their own infrastructure for large ship traffic.

"I can't go back to Ketchikan with that proposal on the table," said Johansen, who favors language included in the Senate plan.

What was supposed to be a 15-minute committee break around 11 p.m. Friday to prepare for the bill extended into early Saturday morning. Lobbyists paced nervously in the halls of the Capitol as language and options were being drafted and bandied around.

The bill could stir considerable debate on the House floor if it gets there. Many lawmakers are from communities that rely heavily on the tourist trade; Minority Leader Beth Kerttula is from Juneau. Not everyone is convinced the rollback - and a settling of the suit - will actually bring back any more ships.

Binkley has blamed Alaska's regulatory climate and tax costs for the expected loss of ships accounting for about 142,000 passengers this season. Others doubt the tax would keep passengers from taking a cruise and have suggested the recession, travel trends or other factors as playing a role.

There's a stipulation in the agreement calling for member cruise lines to work with the state toward making Alaska "a more attractive destination" and increasing ship traffic, "subject to economic conditions and each member line's overall market strategy." Sen. Bill Wielechowski, speaking on the floor earlier this week, said he didn't think that was a solid-enough assurance.

But Binkley told the House Finance Committee that the proposed tax reduction and settlement "really is about getting the ships back."

Thomas, R-Haines, said that if the cruise industry doesn't come back, "then I think we've been misled."

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