Juneau merchants await first cruise ships of season

Posted: Sunday, May 06, 2007

Today when the first cruise ship is sighted in Gastineau Channel, the merchants of South Franklin Street expect to be ready. They are excited for the first wave of an expected million passengers arrive in the state this season.

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"We're excited for the money to start coming in," said merchant and tour operator Carol Pits. "They're our bread and butter."

Pits, a year-round Juneau resident, owns a company tied into nearly every aspect of the local tourist industry. Prior to today's passenger arrivals she had a hectic week at Orca Enterprises stocking retail shelves, painting, installing new signs, arranging permits for tour buses and whale-watching boats, and training drivers and college students for the busy months ahead.

"Last year we were installing a new display case as the first ship hit the channel," Pits said.

Alaska draws about 8 percent of the cruise market worldwide. Their presence is an economic boon to the state, with shore-side spending estimated at about $650 million.

The busy season at the famous Red Dog Saloon starts the moment the first ship arrives and ends after the last one has gone, said Heidi Halvorson, a server in the saloon.

"We're the first thing they see," she said.

Ship to saloon commerce is so great that the Red Dog sets their summer hours to match the last ship's departure each day.

But many residents also consider them a bane as disembarking hordes test the patience and infrastructure of small port communities.

Pits said 80 percent of her business comes from the cruise industry, but as an Alaskan she knows the strain on the local infrastructure added by tourist population. "Those who use it should pay for it."

Last August, Alaskans' ambivalence toward the ships came to a head as voters snubbed the industry's expensive ad campaign and narrowly approved an initiative to impose new taxes and environmental controls on cruise ships.

Pits said the new tax adding $50 to each person's ticket should have little effect on business in Juneau, though some people might resent the tax.

"People who want to come will pay the tax, and most will not know they've paid it," she said.

According to Pits, the local tourist industry is already heavily taxed. In one example, Orca Enterprises will pay tax three times for each and every tourist they move from a cruise ship to their whale-watching fleet operating out of Auke Bay.

The new law takes a share of the ships' gambling proceeds, levies a state income tax on the cruise lines and a head tax on passengers, requires disclosure of on-board commissions - or deals struck with local companies to offer services to the passengers - and funds a program to put state environmental officers on board the ships to monitor their pollution controls while in Alaska waters.

"Clearly it was a wake-up call to the people who run the industry that we need to have better community relations," said John Shively, vice president of government and community relations for Holland America Line, Inc.

Some question the cruise lines' sincerity, however, as lawmakers are now mulling over industry-backed bills to water down several initiative provisions.

While lawmakers cannot repeal a citizens' initiative for two years, they can amend it as long as they remain true to the voters' intent.

The changes would correct flaws in the new law, proponents argued. Others said they would gut it instead. "I definitely think there has been a full court press (against the initiative)," said one of three authors of the initiative, Gershon Cohen of Haines.

The most high profile measure would change the new environmental monitoring program.

The initiative placed a $50 head tax on each cruise ship passenger of which $4 was earmarked to raise about $4 million a year to have marine engineers called ocean rangers ride the ships to make sure their pollution controls are working properly.

But state Rep. Kyle Johansen, R-Ketchikan, proposed a change that would have rangers come on board only when the ships are in port, at a cost of $800,000 a year.

Cruise ship companies - which pour thousands of dollars into local legislative campaigns - said the ocean ranger program is unnecessary.

The state meanwhile is moving forward with developing regulations to implement the tax provisions of the initiative.

The Associated Press contributed to this report

• Greg Skinner can be reached at greg.skinner@juneauempire.com

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