Tax time at cruise-ship docks

City prepares for collecting, spending new passenger fee

Posted: Thursday, April 20, 2000

The cruise ships are just around the bend. And waiting for them at the dock is the city's new Marine Passenger Fee ordinance, which spells out the how-to's of taxing and spending about $3 million of the cruise lines' money.

The Juneau Assembly has handed the task of devising a plan for collecting the money to city Docks and Harbors Director Joe Graham. Along with the request went a list of caveats, qualifications and exemptions, so that the chore might seem as complex as the six-month-long ruminations of the city attorney and others on the validity of and prospects for the fee.

The plan is: ``I'll ask 'em for the numbers, and I'll bill 'em,'' Graham said.

But whether the cruise industry will toss that bill -- as it has elsewhere in the country -- is still up in the air.

Industry spokesmen have repeatedly said they are reserving their right to sue the city on the many constitutional grounds spelled out by the city attorney.

For the moment, the industry's focus is on how fee revenues will be spent.

An industry lawsuit will largely depend on whether the assembly follows City Attorney John Corso's advice to keep expenditures ``close to the dock,'' said Jay Hogan, a contractor for the North West CruiseShip Association, a trade group for cruise lines operating in Alaska. Hogan, the budget director for the administrations of Govs. Sheffield and Cowper, has been hired by the cruise group to keep an eye on the assembly -- particularly with regard to what it means to do with the money.

``The ordinance has enough latitude in it that people could still go astray,'' he said. ``Right now, it's still too early to tell.''

Princess Tours spokesman Kirby Day concurred: ``I don't think it's a matter of whether we're going to pay. We want to see how the city will spend the money. That's key.''

The money should be spent -- in terms of functionality -- ``close to the ship,'' Day said this morning. ``If the city follows its attorney's advice, it will be in better shape than if it doesn't.''

Some city staff are already proposing ways to spend the money -- not all of them ``close to the ship,'' in functionality or otherwise.

City Manager Dave Palmer proposed at a recent assembly meeting that a $100,000 aircraft-noise study be paid for by fee revenues.

Parks and Recreation Director Kim Kiefer submitted a wish list of ``possible head tax opportunities'' to the assembly Monday. The proposals number more than a dozen and include paving over the airport dike trail, building more hiking trails, expanding a boat launch parking lot, developing sidewalks in the airport/Nugget Mall area, and construction of an amphitheater.

``Corso's wrong,'' said city union leader and co-author of the fee initiative Greg O'Claray. ``That's not what the initiative said.''

O'Claray said he has been working with an influential assembly member, whom he would not name, on a compromise that ``puts half of fee revenues into the city's general fund (for general use) and dedicates the other half to cruise industry needs,'' though the industry ``hasn't bought into it, yet.''

Assembly member and former state tourism director Tom Garrett opposed the fee initiative and, a month before its passage in October, predicted it would pass, that the cruise lines would sue on constitutional grounds, and that the city ``will never see a penny of it.''

There are, clearly, increased operating costs to the city because of the cruise ship presence, Garrett said Wednesday. ``How we handle our responsibility in spending the money is important.''

There's no shortage of ideas, he said. ``One I thought was great was constructing covered sidewalks.''

The possibility that all the above assessments may become academic was introduced, along with a bill that would impose a statewide cruise ship head tax, by Anchorage Republican Sen. Drue Pearce on Wednesday. The tax's predicted revenues are $30 million, some of which would be shared with coastal communities.

Juneau would get its $5 fee, though from the state rather than from the cruise lines.

``I have nothing but admiration for Sen. Pearce for taking on the industry,'' said Joe Geldhof, an attorney working on the Pearce bill and an author of Juneau's passenger fee initiative.

``I prefer the Pearce alternative,'' he said with obvious relief in his voice. ``Now (state Commissioner of Revenue) Wilson Condon will collect the money and send a check to (City Manager) Dave Palmer.''

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