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Audit says some Alaska towns need to track cruise ship passenger taxes better

  • Author: Annie Zak
  • Updated: September 30, 2016
  • Published April 15, 2016

Some Alaska communities have spent money raised from a cruise ship passenger tax without proper documentation to show it was used in accordance with state law.

That's one of the main findings from an audit released Thursday from the state Division of Legislative Audit.

The tax, called the commercial passenger vessel excise tax, adds $34.50 per passenger, per voyage, for cruises lasting longer than 72 hours in Alaska's waters.

The state has received about $271 million from the tax since 2007, the audit found, and $99 million of that has been sent back to port communities as part of a shared tax program.

"Shared tax revenues spent by communities to improve port facilities and harbor infrastructure were expended in compliance with state law," the report said. However, it continued, "funds expended by communities for services other than port facilities and harbor infrastructure often lacked the documentation necessary to verify the expenditures complied with state law."

Money from the shared tax has to be used by the communities for port facilities, harbor infrastructure and other services for cruise ships and their passengers.

In one instance, the taxes were spent on something not allowed: Skagway Borough management spent $114,450 of the funds on playground equipment for an elementary school.

The report recommended Skagway should only use the revenues as they're allowed, and the Ketchikan Gateway Borough and the City and Borough of Sitka make sure the money is used appropriately. It also found a big increase in the number of passengers who visit a high number of ports might threaten the solvency of the revenue fund.

Sen. Anna MacKinnon, R-Eagle River, requested the audit in March of last year.

"It has been asserted that some communities are 'stockpiling' their CPV shared taxes and not using them on appropriate projects," she wrote in her request.

Also this week, Cruise Lines International Association and its Alaska affiliate filed a federal lawsuit against the City and Borough of Juneau over the legality of entry taxes there for cruise ships. The suit also alleges misuse of that revenue on projects that don't benefit cruise passengers, including a planned 50-foot whale sculpture.