Governor doesn't support head tax repeal

Parnell says industry needs stable environment, not tax structure changes

Posted: Thursday, July 30, 2009

Gov. Sean Parnell would be reluctant to support a repeal or reduction of the state's $50 head tax on cruise passengers, he told reporters at a Wednesday meeting in Juneau.

Michael Penn / Juneau Empire File
Michael Penn / Juneau Empire File

Parnell's statement follows a tourism summit held in Juneau on Friday, at which attendees called for the head tax's reduction or repeal. Many in the industry blame it for driving cruise business away.

"The $50 head tax is a major issue, along with everything in it," said Rick Erickson, operations manager for Ketchikan-based Cruise Line Agencies of Alaska, which provides shoreline support for cruises. "The bottom line is we've priced ourselves out of the market."

The head tax, approved in a 2006 ballot initiative, pays for infrastructure projects that support cruise operations.

Erickson said environmental regulations imposed on cruise lines through another initiative added to the costs that are driving business out of the state.

Parnell framed his position Wednesday around the need for a stable investment environment.

"That means typically no change to the tax structure, that's the guiding principle that I have and short of a sea change in terms of reasoning, that's where I'd stay," Parnell said.

He noted the head tax was implemented by citizen initiative.

"If the Legislature wants to take that up and debate it, I'll certainly participate in that policy discussion," he said.

There doesn't appear to be support in the Legislature for a repeal of the tax, according to Rep. Bert Stedman, a Sitka Republican.

Juneau Mayor Bruce Botelho called a repeal of the tax "highly unlikely," but said modifications might be achievable. Cruise lines might be more accepting of the tax if they had more say in which projects it paid for, he said.

Industry leaders are expected to hold a similar summit in Anchorage next month. It's a rally to prevent the state from losing its share of the cruise market in the bad economy, they said.

The pain will likely be worse next year because four cruise lines announced cuts in ship visits to Alaska, amounting to about 150,000 fewer tourists.

In Juneau, that would mean $208,000 less in spending every day during the height of the season, according to the Juneau Convention and Visitors Bureau.

"The thought of losing $200,000 a day is very alarming," President Lorene Palmer said. "When you look at it as a community, that's a pretty significant amount of revenue to lose."

While Alaska faces a 14 percent decline in cruise visits next season, cruising around the world is doing fine, according to a report released Wednesday by Cruise Lines International Association.

Despite uncertain economic times, the industry grew by 6 percent in 2008 and contributed $1.24 billion to Alaska's economy, the report said. Alaska visits accounted for 70 percent of all visits to U.S. ports.

CLIA is an industry organization that represents 24 North American cruise lines.

"In Alaska ... cruising remains one of the most attractive alternatives for Americans demanding affordable prices and diverse options in their vacation," President and CEO Terry Dale said.

Yet the cruise industry is going global, increasing its presence in Europe by 60 percent since 2005. It is doing more business in the Caribbean as well, CLIA Executive Vice President Bob Sharak said.

Royal Caribbean Cruise Lines announced in January that the 2,100-passenger Serenade of the Seas would be redeployed from Alaska in 2010. It is scheduled to be in the Caribbean.

• Contact reporter Kim Marquis at 523-2279 or by e-mail at kim.marquis@juneauempire.com.



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