Tax Division collects $26.6 million from cruise fees

Posted: Friday, September 21, 2007

SKAGWAY - The state Tax Division has collected $26.6 million this year from a new $46 per cruise-ship passenger fee that Alaska voters approved last fall, the division's director announced during an update to the Southeast Conference on Wednesday.

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More revenue is coming from this tourist season, as August and September fees have not yet been collected.

Many questions remain about the revenue, such as when and how it will be distributed to communities that are affected by the cruise ship industry.

Those questions will have to wait for answers from the Alaska Legislature because it appropriates the money, said Johanna Bales, deputy director of the Tax Division of the Department of Revenue.

The discussion came up during a session at the annual meeting of the Southeast Conference, which includes business and government leaders working to promote development in the region.

Bill Thomas, R-Haines, said he was hoping to be able to use the money to provide better sidewalks and bathroom facilities near cruise docks, but he's not sure that's going to be a legal use of the passenger fee revenue and doesn't want his community subject to a lawsuit.

"That's where it starts to get a little grayer," Binkley said, adding that federal law says the money has to be used on something related to the vessel as well as the passenger, such as a dock. Binkley said there are many more questions for the state and communities to overcome when it comes to implementing the law.

"The biggest takeaway that I had (from the presentation) really was the challenges that the Department of Revenue faces and the difficulty that they are having in trying to take the voter initiative and really practically apply the law that's been created," Binkley said.

The ballot initiative requires a $46 fee per passenger that disembarks from a cruise ship. Of that, $5 will go to each of the first five ports of call, unless that community already has such a charge, such as Juneau and Ketchikan. The rest of the fee will be used for state projects.

The department will distribute the money as directed by the Legislature, but the department cannot oversee whether communities use the money in a legal way, she said.

"We don't have that expertise," she told a gathering of Southeast Conference delegates. "We are accountants. We account for the money. We know where it is. ... But oversight needs to be provided by a different agency. ... It's pretty convoluted right now," Bales said.

The legal use of the money is governed by the commerce clause of the U.S. Constitution, said John Binkley, president of the Alaska Cruise Association.

Some of the challenges to the Division of Tax come from interpreting the intent of the law. Because the law was passed through an initiative, the intent is not as clear as when the Legislature passes a law, Bales said.

"Without the public hearing process, we have nothing that gives us insight to the intent of this initiative," she said.

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