A recent column by Gary Droubay in the Juneau Empire took issue with various aspects of the cruise ship initiative enacted in 2006. As a primary author of the initiative - which is now state law - I believe it is appropriate to respond. Mr. Droubay claims the state initiative has reduced revenue to the City and Borough of Juneau, has caused cruise lines to re-deploy cruise vessels to other ports of call and generally wrecked economic havoc on the industry.
Mr. Droubay suggests that, "Alaskans had an equitable partnership with the cruise lines," prior to enactment of the initiative law changes in 2006. He concludes that repeal of the initiative substance is justified in order to preserve cruise tourism in Alaska.
Alaska is a wonderful destination and has long welcomed tourists, including those who travel to Alaska aboard cruise vessels. But, Alaska has never had a "partnership" with cruise lines. Alaska is a world-class destination and the role of our state government is to make sure that we protect the resources of our state and properly promote sustainable tourism.
The initiative was approved by a significant majority of Alaskans in 2006 because it addressed fundamental problems associated with large-scale cruise tourism. Alaskans were tired of repeated pollution problems associated with large cruise vessels and voted for stringent standards and enforcement measures to protect Alaska's marine waters. To their great credit, many of the cruise lines have worked hard to meet the new discharge standards for ammonia and heavy, suspended metals like copper and zinc; proof that the new laws are working as intended.
Most of the taxes contained in the initiative are collected from passengers. These funds are required by federal and state law to be spent on infrastructure to make Alaska ports safe and accommodating destinations for the cruise passengers. For the most part, the state of Alaska and local governments that receive these passenger funds have spent the passenger "head taxes" on worthy projects that benefit both tourists and locals. In fact, a number of Goldbelt shareholders (the corporation Mr. Droubay is a part of), are employed to assist cruise passengers, using "head tax" revenue.
In addition to the tax levy on passengers, the new cruise ship laws require cruise corporations to pay apportioned income tax on their Alaska operations, just like other corporations doing business in Alaska. The initiative also taxes the casino gambling aboard the ships while in Alaskan waters. Corporate and gambling taxes yield roughly $20 million annually to the state's General Fund, a sum unlikely to drive away a multi-billion dollar business from our shores.
Cruise lines doing business in Alaska redeploy vessels based on many, varied considerations. The overwhelming evidence shows that the current global recession and slowdown in consumer spending is decreasing discretionary travel in 2009. The economy, not Alaska "head taxes," is the reason for diminished cruise traffic and redeployments.
Alaskans are not gullible. They were not duped by the false claims and erroneous information spread by the cruise lines during the political campaign of 2006. In 2009, Alaskans won't accept the novel theory that state taxes are destroying the cruise industry. For the two years following initiative passage in 2006, cruise visits to Alaska increased; proof that new Alaska taxes did not have a negative impact on cruise passenger numbers.
In time, the cruise industry and other enterprises will emerge from the financial difficulties that are global in nature. Until then, we should continue to collect fair cruise taxes and spend the revenues wisely. Working with industry and local communities, Alaska can build wharfs, sidewalks, marine parks and other infrastructure that make our cruise ports safe, efficient and desirable destinations for many decades to come.
Joe Geldhof is an attorney living in Juneau.
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