By Jessica Edwards
The Haines Borough last week received $6,290 from the state Department
of Revenue’s first disbursement of the head tax on large cruise ships, and state
representatives are gearing up to tackle the appropriation of additional tax money.
The money paid to the Haines Borough is based on a $5 per head tax
remitted by large cruise ships to their first five ports of call. The number of cruise
passengers coming to Haines before July 1, the tax deadline that ended fiscal year 2007,
determined the dollar amount.
Eight Alaskan communities received money from the $5 head tax, part of
a $50 tax levied by the state on ships larger than 250 berths.
A total of $744,580 was distributed. Skagway topped the list at $339,
855 and the tax remitted to Haines brought in the lowest amount. The communities of
Seward, Kenai, Hoonah, Whittier, Ketchikan, and Sitka also received tax money this year,
ranging from $14,000 to $200,000.
Borough manager Robert Venables said the borough had yet to determine
how this and future money would be spent, but revenues from the head tax had to be used
for cruise industry related capital improvements.
"There are stipulations on how the money gets spent. It has to be
on cruise-related projects," he said, adding that the language of the statutes
guiding expenditures is fairly broad. "There is a lot of discretion."
Projects defined by the borough that might qualify include a beach
boardwalk between the cruise dock and Totem Park, downtown sidewalk improvements, and
dockside restroom facilities.
In addition to $5 for the first five ports of call, the cruise ship
disbursement formula ascribes $4 for an on-board environmental compliance monitor, $11.50
for a regional cruise ship impact fund, and $19.50 to be deposited in a commercial vessel
passage tax account.
Spending of the latter two is administered by the Alaska State
Legislature and is guided by federal and state laws that dictate the expenditure of cruise
ship tax dollars.
But discretion in the statutes has led the Alaska Department of
Transportation to recommend some cruise tax money be used to improve roads impacted by
cruise ship tourism.
The Department of Revenue estimates money from the commercial vessel
passage tax account will amount to $19 million annually. Uses for the tax dollars in the
account will be determined by the state legislature in upcoming sessions. According to
law, the funds from this account "can be used for state projects in specific
communities."
With the use of the money yet to be determined, state agencies,
including DOT, are eyeing the funds.
In October, Malcom Menzies, DOT regional director, addressed a letter
to state Rep. Bill Thomas, requesting some of the tax money be used for DOT projects in
southeast communities.
The letter states that while DOT funding usually comes from the Federal
Highway Administration and the State general fund, "federal funding is shrinking and
less money is available for local needs."
Menzies said although legislators "may have some concern that
these funds can only be used for port facilities…Alaska statute…states
‘that the legislature may appropriate money for state-owned port and harbor
facilities, other services to properly provide for vessel and watercraft visits, to
enhance safety and efficiency of interstate and foreign commerce and other such lawful
purposes as determined by the legislature."
Attached to the letter to Rep. Thomas is a list of potential projects
for Haines and Skagway, with price tags and Menzies’ assessment of the percent each
project is related to cruise impact.
Projects for Haines include reconstructing the road between the ferry
terminal and town (20 percent related), widening Beach Road and Front Street (100 percent
related), installing restroom facilities at Portage Cove (100 percent related), and
constructing a sidewalk along the old Haines Highway (50 percent related).
In an interview, Thomas said some the cruise ship tax money could
conceivably be used for some of DOT’s recommendations, but "only if they
qualify.
"The money is not for general purposes," Thomas said.
"It’s (use is) very restricted."
He said when a legislative committee was formed, representatives of the
cruise industry would help oversee appropriations. "There’s only a certain way
you can spend cruise ship money.
"Cruise ship people will be on the committee," said Thomas.
"We want to make sure we don’t have a lawsuit. They’ll be able to say yay
or nay."
Johanna Bales, deputy director of the Alaska Department of
Revenue’s tax division, said that in interpreting the federal and state law guiding
cruise tax expenditures, lawmakers were navigating uncharted waters.
She said in her opinion, roads impacted by cruise-ship associated
industries qualified for the funds. "Widen(ing) roads because cruise ship passengers
are using buses for tours off their ships," seems like an appropriate use, Bales
said.
She said she had testified to this at a session of the state
legislature. "There is only so much money to go around for DOT projects; everyone is
looking for these funds." Bales said the money could be used to get needed road
projects accomplished that would facilitate traffic and commerce.
"The bottom line is that (the laws) are subject to
interpretation," said Bales. "We have no guidance or court cases" to help
determine the boundaries, she said. "The cruise ship industry would say (guidelines)
are extremely strict.
"The statute does say funds are to be used for cruise-related
impacts, but it’s fairly broad."
She said the final lines of the state statute, which discuss enhancing
the safety and efficiency of interstate and foreign commerce, would play a key part in
determining how funds from the tax might be used. She said it would likely take a court
case to define spending restrictions.
