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Cutting cruise head tax will keep us afloat

Governor's proposed legislation aims to preserve jobs.

After decades of steady growth in our tourism industry, Alaska lost more than 260,000 cruise and independent visitors, more than $400 million in direct and indirect spending in Alaska, and up to 5,000 jobs. We need to reverse these declines, bring visitors back to Alaska, and restore the small business jobs that are critical to our economy.

For decades, Alaska's visitor industry has grown steadily and enjoyed a reputation for being one of our state's leading employers. A recent economic impact study completed by McDowell Group estimates that peak employment directly or indirectly connected to the visitor industry exceeded 40,000 jobs in 2009. Tourism accounted for more than $3.4 billion in direct and indirect spending over a one-year period -- a very nice economic boost for this state.

But last year, visitor numbers declined by 125,000, and those who came here spent a total of $270 million less than was spent in 2008. Alaska visitation will continue to drop this summer, as more than 140,000 fewer cruise passengers will be traveling to our state. Another $90 million in direct spending with Alaska businesses could be lost, and as much as $150 million in total direct and indirect spending.

These are very troubling trends.

Many Alaskans who own businesses that rely on tourism are suffering and will to continue to cut jobs again this year. The McDowell Group study brings this issue into sharp focus when it reports that the total employment lost since tourism's peak in 2008 could be as much as 5,000 jobs. With so many jobs at stake, it is essential that we reverse these declines.

This is not just a coastal concern. Dwindling visitor traffic has far-reaching statewide effects, and a lingering decline is unsustainable. Lost jobs affect a multitude of small businesses owned and operated by Alaskans and their families. The businesses run the gamut from fishing guides on the Kenai Peninsula, hotels and tour companies in Anchorage and Fairbanks, and restaurants and tour operators in our coastal communities. Additionally, there are hundreds of businesses throughout Alaska that provide goods and services to the tourism industry, including seafood processors, mechanics, fuel providers, and numerous professional services.

But they're hardly the only ones taking an economic hit. Communities also suffer. The visitor industry as a whole contributes about $208 million in direct payments to state and local governments through various taxes and fees. So as visitation and spending decline, so does tax revenue. If this situation persists, it could lead to additional tax burden being placed on Alaska property owners and residents.

In recognition of the significant impact the visitor industry has on Alaska, Gov. Parnell has proposed legislation to make Alaska a more affordable and visible destination. By adjusting the head tax from $46 to $34.50, and increasing the state's tourism marketing program, we can convey a strong, clear message that Alaska welcomes travelers.

Gov. Parnell and representatives from the Department of Commerce took this message with them last month, when they met with cruise industry executives in Miami. The meetings were productive. It is clear that they understand the need to work together to reverse the recent declines and heal the industry. They have already agreed to drop their lawsuit against the state if the head tax is reduced. Additionally, the industry is re-evaluating its ship deployment strategy for 2012 and beyond and additional ships are likely to visit Alaska ports in the future. To be clear, this is not about allowing cruise lines to dictate the economic fate of Alaskans. This is about strengthening Alaska's economy and protecting small businesses. It is about jobs, and it is about a decent, sustainable quality of life for Alaska families.

Curtis Thayer is deputy commissioner of the state Department of Commerce, Community and Economic Development. He has many years of public- and private-sector experience in economic development.

By CURTIS THAYER

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