Alaska House approves cruise passenger tax cut

MIXED BAG: Lawsuit would be dropped but ships may not return.

April 18, 2010 

JUNEAU -- The Legislature passed a bill Sunday evening, aimed at bringing more cruise ships back to Alaska and settling a lawsuit over the state's passenger head tax.

The House vote followed extensive recesses in which members tried to secure votes for amendments or the bill's passage. The Senate concurred with House changes without debate.

The way the bill got to the House floor threatened to sink it. Late Saturday, House Majority Leader Kyle Johansen called for a vote on a version of the bill that he considered more favorable to his district. It went unnoticed by some in chambers, who'd been working long hours during the Legislature's last expected throes and were back on the floor around 10:30 p.m.

Johansen, R-Ketchikan, acknowledged it would benefit his community. But he also said he believed it had the better chance of passing than one drafted by the House Finance Committee early Saturday, and in winning concurrence from the Senate.

The bill the House passed Sunday would lower the state head tax from $46 a passenger to $34.50 and allow deeper offsets for ships stopping in at least one of two ports, Juneau and Ketchikan. Gov. Sean Parnell's proposed those levels, and they're the basis of an agreement that would settle the Alaska Cruise Association's lawsuit against the state over the tax that voters approved in 2006 to help fund infrastructure projects.

But debate over how to divvy cruise ship passenger taxes among ports -- completely unrelated to the settlement talks -- caused dissension among members.

Juneau and Ketchikan have their own head taxes, $8 and $7, respectively; other communities get a share of the tax from the state. The bill the House passed Sunday gives both the highly popular cruise stops Juneau and Ketchikan a cut from the state, along with their local fees, for passengers passing through them.

Johansen said communities like his shouldn't be penalized for passing their own taxes for infrastructure needs. But critics of the so-called "double-dip," including Rep. Bill Thomas, R-Haines, said ports should be treated more fairly.

Thomas also felt this was a slap at people who voted for the tax in 2006. He said their voice "has been shut down."

The cruise association has agreed to drop its suit if the Legislature passes, and the governor signs, the tax cut this year.

House Minority Leader Beth Kerttula, D-Juneau, said she has "really great qualms" about whether the settlement will result in more ships returning.

The industry has blamed state regulations and tax costs for the expected 142,000 fewer cruise passengers to Alaska this season. But some lawmakers see the settlement as less than rock-solid in providing assurances that cruise lines will increase deployments.

Kerttula said small businesses that rely on tourism are hurting, and she believes they've made their case, that a tax cut could help.

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