The City and Borough of Juneau could be nearing the end of a stay of action in its legal battle with the cruise industry, and is financially preparing for negotiations to restart.
The CBJ Assembly approved an ordinance Monday night that appropriates $100,000 to City Attorney Amy Mead for legal expenses. This money comes from the sales tax fund’s balance in the 2017 fiscal year budget. Mead said the money is being put aside mostly if outside counsel is needed in the case, and that the money does not go to her.
“We need to have money to pay attorneys if attorneys need to get involved,” Mead said. “So if we do successfully negotiate a settlement, there will be some settlement documents that need to get drafted.”
In April 2016, Cruise Lines International Association (CLIA) filed a lawsuit against the city asserting that the city misused money from a “head tax,” a tax that gives Juneau $8 for every cruise passenger. Finance Director Bob Bartholomew said that CBJ has already spent $283,000 through the end of February on the lawsuit.
Bartholomew added that it’s difficult to predict how much the city will end up spending on the lawsuit in total, because it could end in any number of ways, from a settlement in the lower courts to the slight possibility of a Supreme Court case.
“We talked about it quite a while ago,” Bartholomew said, “that estimating it was really such a wild guess.”
In March, both sides decided to stay all pretrial deadlines for 30 days, according to court records, so the stay would extend until April 14. Mead said she was set to speak with CLIA attorneys as soon as Tuesday in a discussion about whether to extend the stay or resume negotiations.
The appropriated funds during Monday’s meeting are mostly precautionary, Mead said. The city’s charter prohibits the city from enlisting work from outside attorneys without having money budgeted for that cost, so this appropriation helps the city avoid a charter violation.
The city government’s relationship with the cruise industry is two-sided, as the city greatly benefits from the income generated from the cruise ships — an estimated $20.5 million per year, according to CBJ — but doesn’t want the cruise companies to take advantage of the city.
At a particularly lively Assembly meeting in early March, the Assembly discussed and passed an ordinance exempting sales taxes on cruise ships. Multiple Assembly members, including Mayor Ken Koelsch, asserted that exempting sales taxes on cruise ships while they’re in CBJ waters would further encourage them to visit Juneau. The CBJ estimated that charging sales taxes on cruise ships could raise between $50,000 and $100,000, but the Assembly chose to value the city’s relationship with the cruise industry over the possible sales tax income.
During this Monday’s Assembly meeting, there were no dissenters as it related to the appropriation to the City Attorney, and nobody from the public shared their thoughts. It took just 90 seconds from the introduction of the ordinance to it passing unanimously.
Assembly member Jesse Kiehl, who voted against the sales tax exemption, said Tuesday that this appropriation is a totally separate issue, and that having more money set aside for the lawsuit is a move that those on the Assembly can all agree on.
“I think there’s broad consensus on the Assembly that we’ve used industry money legally,” Kiehl said, “so we’re pretty well agreed on defending the suit.”
• Contact reporter Alex McCarthy at alex.mccarthy@juneauempire.com or 523-2271.
