Sonneman suggests raising cruise-ship tax

Lawyer says city could boost head tax and cap number of passengers

Posted: Thursday, October 16, 2003

City leaders are divided over whether to raise the cruise ship passenger tax after a local lawyer presented his own analysis at Monday night's Assembly meeting. The tax issue comes at a time when advocates are scrambling to have a statewide passenger tax initiative on the 2004 ballot.

Joe Sonneman told Assembly members that altering the head tax structure could regulate the cruise ship passenger market in Juneau. Sonneman showed how he believed the city could benefit overall by raising the head tax on passengers.

Currently the city charges $5 per passenger for an estimated 700,000 passengers a year. That amounts to $3.5 million annually.

Sonneman showed that the city could collect $7 per passenger, cap the number of passengers at 500,000, and still collect the same $3.5 million. If passengers were not deterred by the higher tax, then the city would simply collect more revenue to offset the impact of the tourism industry on the city, he said.

The only ways the city could lose, Sonneman said, were if tourists felt the price was too high and stopped traveling, or if the city lowered the head tax and got an influx of tourists.

But generally Sonneman is willing to bank that passengers will not be deterred by the increase because they already have paid a much higher sum to take a vacation, he said.

"Are we trying to increase passengers or increase CBJ revenue?" Sonneman asked. "What is the right number of passengers Juneau can handle?"

Assembly members Jim Powell, Stan Ridgeway and Randy Wanamaker said in interviews they would consider increasing the head tax. Jeannie Johnson, Merrill Sanford and Ken Koelsch are opposed, they told the Empire.

Powell would prefer a statewide head tax, he said, because it would no longer pit one coastal community against another. The city also will review the head tax as a revenue generator in light of an impending deficit in 2004, he said.

Advocates are scrambling to collect enough signatures needed to put initiatives on the 2004 state ballot including one for a statewide $50-per-passenger tax. They have less than 90 days to collect 23,285 signatures.

Ridgeway said an increase in the city head tax could help offset the cost of having cruise ship passengers in Juneau. That includes city expenses to conduct a study to widen South Franklin Street and handle water from cruise ships, he said.

Tour ships used 96.8 million gallons of water at the city dock in 2002, city Public Works Director Joe Buck said. Princess Cruises used 24.2 million gallons at the privately owned Franklin Dock in 2002.

Ridgeway, who voted against the utility rate increases that passed Monday night, wanted to tap part of the head tax account to absorb the blow to constituents, he said.

Wanamaker said Sonneman's presentation is a "market way" of managing the cruise ship passenger issues in Juneau.

"It's a very creative way of looking at it, he said. "I'm willing to consider anything that is legal and proper."

Johnson and Koelsch said they didn't want to alter the head tax for fear of losing cruise ship business.

They used Whittier as an example of a community that lost cruise ship business with a $1 head tax.

Johnson said she was concerned about the message being sent to the cruise ship industry if the city raises the tax.

A reduction in cruise ship passengers will have an adverse ripple effect on the local economy, Sanford said. More passengers mean an increase in bus drivers, gift shop clerks and other tourism-related jobs. Tourism is the only industry in Juneau that has not declined over the years, he said.

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