State legislators are floating ideas almost daily to trim spending from the budget and Alaskans are having a hard time keeping up with how those proposals will affect them. One of the proposals getting attention in Southeast directs about $15.5 million dollars in cruise ship passenger taxes to state coffers rather than distributing that money to coastal communities who see the most cruise passengers.
Skagway is expected to get 800, 000 cruise ship passengers this summer. But they may not see any of the head tax that those passengers pay to cruise Alaska waters. That would mean the loss of more than $4 million dollars in revenue.
For Haines, it could mean a loss of about $190,000– and several other coastal communities would be hit hard as well. That money is often used for major projects like cruise docks and other infrastructure to support the industry in communities that depend on those visitors for revenue.
Eagle River Republican Sen. Anna MacKinnon proposed cutting the Commercial Passenger Vessel Excise Tax, or CPV, to communities during the senate finance committee in early April.
That move was opposed by Juneau Democratic Sen. Dennis Egan. He also represents Skagway and Haines, and combined, the CVP fund last year paid out more than eight-and-a-half million in revenues to the communities he represents. He is defended his stance in senate chambers on April 3rd.
“Many of these ports have taken out bonds to pay for cruise ship docks and other upgrades.” Egan said. “By law they have to use this money serving the ships and the passengers and fixing infrastructure. The state can’t spend this money on school and troopers. By federal law, it can’t close our budget gap.”
MacKinnon says she’s reaching out to communities to try to understand what debt and obligations they have that they are relying on the head tax to cover.
“But we can’t afford to advance pay people’s bond based on someone coming nor can we afford to go into the red as we did this last year on the cruise ship head tax,” she said.
The CVP was passed as a voter initiative in 2010. A portion of it is directed to the state general fund and the rest is paid out to communities.
Skagway Mayor Mark Schaefer says the loss of those funds would reverberate community-wide for his town. That community gets ten to twelve times the number of visitors as there are residents, meaning demand for town services skyrocket in the summer.
Schaefer says the tax revenue is used for everything from funding water, sewer and public works infrastructure to the library, visitor’s center, clinic and police operations.
In Haines, the proposal to nix the distribution of the tax to communities caught borough manager Dave Sosa off-guard. He and his staff are still trying to figure out the effects of potentially losing that money.
“If we lose that $190,000 that’s money we use to provide support to ensure the people coming here have a good time when they’re there and that the resources and services provided to them are what they would expect when they are going someplace,” Sosa said.
Skagway, Haines and other communities are lobbying lawmakers in the last days for the session to educate them on the potential effects on losing that revenue. Sosa says the way the money is used in individual communities reflects on tourism for the entire state.
“I would hope that it would be understood that without that money people visiting communities in Alaska may not have the experience they expected,” he said.
The proposal is in the Senate operating budget, but it will be debated again when the Senate and House meet in conference committee to hash out budget details.