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Parnell backs income tax credits for cruise industry

Critics say state needs marketing boost, but credit not the way to go

Posted: Wednesday, October 07, 2009

The tourism industry got a boost Tuesday after Gov. Sean Parnell announced his support of creating corporate income tax credits for cruise lines that contribute to the Alaska Travel Industry Association's marketing campaign.

Some critics say the marketing boost is needed but that redirecting taxes to the ATIA isn't the right way to do it. Parnell, who made the announcement at the association's annual convention in Fairbanks, likened it to medicine for an ailing industry.

"This will be a good shot in the arm toward a well-funded tourism marketing budget - a step in the right direction to put Alaska's tourism industry and the state's economy back on the path to recovery and on the road to a healthy future," Parnell said in a press release.

Parnell didn't directly identify the two bills introduced in the Legislature last spring that aim to establish those tax credits, though Parnell spokeswoman Sharon Leighow said their review prompted the governor's speech.

Under those bills, cruise lines that contribute to the marketing campaign would receive tax credits against their contributions. The bills will be considered by state lawmakers in the upcoming session.

The governor also alluded to proponents' argument for parity with other states' marketing spending.

"Our travel industry faces serious challenges," Parnell said in the press release. "To lure visitors to Alaska, we have to be able to compete through top-notch marketing of Alaska's wonders. The tax credit can provide a consistent source of dollars to pay for that marketing. The association has an annual budget of $11.7 million made up of $9 million from the state's car rental tax plus a 30 percent match the association generates from its members and marketing. That $11.7 million figure is a fraction of other states' marketing budgets, ATIA president and chief operating officer Ron Peck said.

Joe Geldhof, a lawyer for industry watchdog group Responsible Cruising in Alaska, acknowledged the need for more marketing dollars, but said the proposed tax credits are a flawed means of delivering them.

"I understand the governor's desire to market Alaska. It's my belief that a tax credit is - particularly one that's open ended - is not the best way to go," Geldhof said. "What we should do is appropriate funds for a genuine marketing campaign. In fact, increase the funds for marketing as long as it's done in an open and transparent way, as long as it doesn't go to a single entity. ... It would be far superior to have an open competition with clear goals and a transparent procurement process subject to renewal annually."

Neither bill names the ATIA as the recipient of the marketing money, though it has handled tourism marketing on the state's behalf for years through a contract.

Chip Thoma, also of Responsible Cruising in Alaska, had a similar take. He added that the association's lobbying efforts should preclude the association from receiving the tax credits, or that the tax credits should preclude the association from lobbying, citing tourism industry stances against sport fishing limits, tough pollution controls and taxes.

"The very same taxes they want to get tax credits for," Thoma said.

Geldhof and Thoma were authors of the 2006 ballot initiative that led to the $50 head tax on cruise ship passengers, now the subject of a pending lawsuit by the Alaska Cruise Association, a group made up of the state's major tour companies. It filed suit against the state last month in federal district court, questioning the head tax's constitutionality.

Peck said the governor's support was great news and that his association would continue to cooperate with government reporting requirements and overseers concerning its marketing efforts.

Peck said the association's lobbying efforts and marketing mission are separate, as are the associated dollars.

"Money from the state of Alaska is not mixed with lobbying efforts," Peck said.

If the funding boost comes through, "You'll see us increase our public relations, our television campaign, continue to improve our Web site, direct mail ... and we'll probably expand some of our international marketing."

• Contact Jeremy Hsieh at jeremy.hsieh@juneauempire.com.



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