My turn: Cruise ship head tax won't remedy state's fiscal gap

Posted: Tuesday, May 17, 2005

It has been suggested that a head tax could fund a road to Skagway. A head tax will not pave the way mile by mile to Skagway. A cruise ship passenger head tax will help maintain docks. It will fund port projects, improve facilities and enhance cruise ship terminals.

That's because head taxes, by federal law, can't pay for roads, schools or other state projects. A head tax can only support services used by the person it is collected from. So under federal law, a cruise ship head tax must be used "solely to pay the cost of a service to the vessel."

Cruise ships can, and do, however, contribute significantly to the types of community projects Robert Tonkin desires in his letter to the editor (Empire, April 19). Cruise lines contributed more than $24 million to community and port investments over the past eight years. And they donate another $500,000 annually to Alaska charities and organizations that support education, the arts and the environment.

Alaska, like every state, needs money for its museums, libraries, cultural facilities and transportation (roads and ferries), even those in Skagway. But the cruise visitors, and the cruise industry, are already paying their fair share. In Skagway there are many examples such as our recreation center and our emergency response capabilities.

A proposal to charge cruise ship passengers $50 a person could end up on the 2006 ballot. Before Alaskans vote, they should understand that this head tax money couldn't go to fund state projects like roads and museums. Under federal law, it could only be used for maintaining the facilities that service cruise ships.

We also need to consider how much money the cruise visitors already bring to Alaska. For instance, they make up 6 percent of all out-of-state fishing licenses, generating $618,000 a year for the Department of Fish and Game. They pay sales tax in communities, 4 percent in Skagway. And they pay hotel and motel bed taxes, adding up to $4.5 million a year.

Cruise passengers spend $393 million a year on goods and services in Alaska. They generate $30 million in tax revenue for local governments. And the cruise industry pays $2.1 million for programs that only cost the state $750,000 to run.

A federal law set in 2002 mandates all head taxes collected on cruise ship passengers would go to ports and port facilities. It works like an airline tax. The airline taxes you pay fund runways and airports; the head taxes on cruise ship passengers would pay would go to ports and port facilities.

Industry along with the NorthWest CruiseShip Association has already funded many of the port projects for the past several years and spent over $800,000 on environmental programs within the state. If the cruise line industry is willing to continue supporting efforts to keep our waters clean and help build the needed infrastructure in our ports then we should try to work with them.

Head taxes won't fix our fiscal gap. But tourism will definitely help. It diversifies and strengthens our economy and provides a steady stream of customers for locally owned businesses. So before you vote on a tax, weigh in on the cost to your community. Local governments must have the ability to decide what level of taxation is required for them to adequately provide services for their citizens. The state must figure out how to share with communities its vast wealth of resources to solve its fiscal problem. A state of Alaska head tax on cruise ship passengers will not solve the funding problems many of its local communities are facing.

• Skagway resident Mike Korsmo is a member of the Skagway City Council, Southeast Conference Board of Directors, and the Alaska Municipal League Public Works and Infrastructure Legislative Committee.



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