Alaska AG, cruise association reach agreement over passenger tax

Chris Rizo Apr. 13, 2010, 1:37pm

Dan Sullivan

ANCHORAGE, Alaska (Legal Newsline)- Alaska Attorney General Dan Sullivan and the leader of the Alaska Cruise Association signed an agreement this week that could settle a federal lawsuit over the state's cruise ship passenger head tax.

The deal signed Sunday by Sullivan and ACA President John Binkley is contingent on whether the state Legislature lowers the state's voter-approved $50 head tax.

The Alaska Cruise Association argues in the lawsuit that the levy violates federal law that prohibits states from charging passenger fees for non-related services.

The lawsuit says $46 of the tax is used to fund infrastructure improvements, while the remaining $4 supports the Ocean Ranger program that monitors pollution in Alaska waters.

The lawsuit points out that some of the money collected from the tax has gone to bankroll projects that have nothing to do with cruise ships and their passengers, including the $1.5 million in funds used to reconstruct a community hall in Ketchikan.

The cruise ship head tax was part of a measure passed by 52 percent of voters in 2006.

"The proponents of this entry fee promoted it as a way to make visitors to Alaska pay for government projects that have nothing to do with the burdens the state and its municipalities bear as a direct result of cruise ships calling in Alaska ports," the Alaska Cruise Association said in its lawsuit.

The group represents such cruise lines as Royal Caribbean Cruises, Carnival Corp. and Norwegian Cruise Line.

For his part, Republican Gov. Sean Parnell has called for a reduction in the head tax, from $46 to $34.50.

The Associated Press reported Monday that the settlement says if Parnell's tax reduction proposal or another tax reduction bill "without material amendment" gains legislative approval and is signed by the governor this year, the association will dismiss its lawsuit.

More News