The cruise ship Norwegian Pearl sails south through Chatham Strait on its final voyage of 2013. (Ed Schoenfeld/CoastAlaska News)

The cruise ship Norwegian Pearl sails south through Chatham Strait on its final voyage of 2013. (Ed Schoenfeld/CoastAlaska News)

Leaders in cruise ship communities breathed a sigh of relief this week. As it stands today, $15 million in cruise ship head taxes will be distributed to port of call communities. That money was threatened when a legislative conference committee removed the language that would allow for its distribution. But the budget approved by the legislature this week reverses that decision.


“If we didn’t get the money, we would have a budgetary crisis,” says Skagway Mayor Mark Schaefer.

The roughly $4 million the town expects to receive this year from cruise passenger taxes is used to pay for capital improvements and strains on services that come from the huge number of visitors.

“We have a town of 1,000 and today we probably have 14,000 or 15,000 visitors,” Schaefer said. “So the impacts are very large.”

Skagway is just one of more than a dozen coastal communities that receive $5 for each cruise visitor who docks in town. Cruise lines pay the tax to the state, which then distributes funds to communities. A legislative conference committee decision in May took out the language that would allow that disbursement to take place.

Eagle River Sen. Anna MacKinnon, who was on the committee, called the passenger tax system ‘broken.’ KHNS was unable to reach MacKinnon for comment.

Rep. Sam Kito’s district includes three cruise ship ports: Juneau, Haines and Skagway.

“My understanding is there were representatives from the cruise industry that were in Juneau last year expressing concerns over how some of the money was being spent by communities,” Kito says.

Communities are required to spend the passenger tax funds on port facilities or other services that benefit cruise visitors. A recent review from the State Division of the Legislative Audit found that towns mostly follow the rules when spending passenger taxes. But it did raise concerns about the future of the system.

“There is a potential that the more ports a vessel visits, the less solvent that fund becomes,” Kito says.

For now, he thinks the millions of dollars the state receives from cruise ship passenger taxes should be distributed to the communities they visit.

“I’m hoping that this puts that topic to rest and that there are a few small statutory things that need to be done but I think the program’s working very well for the state. It’s a program that I think we need to continue.”

The budget is now in the hands of Gov. Bill Walker.