We’ve all seen the T-shirt that says, “Grandma went to Alaska and all I got was this lousy T-shirt.”
To borrow the sentiment — Juneau has put a lot of money and effort into making our community a welcoming destination for grandma and her kin, and all we got was a lousy lawsuit.
In April, Cruise Lines International Association Alaska and Florida-based Cruise Lines International Association filed a lawsuit challenging Juneau’s fee for cruise passengers, often referred to as a “head tax.” The history of this tax dates to 1999, when increasing cruise visitor traffic began to weigh heavy on local infrastructure and public services; Juneau voters used the initiative process to levy a $5 fee on passengers arriving in our community aboard large cruise ships. In 2002, Juneau enacted an additional $3 per passenger port development fee. Federal law mandates that the cruise passenger fees be used to promote infrastructure or services calculated to promote passenger “safety” and “efficiency.”
Over the years, Juneau has used a combination of passenger fees, public funds, and private donations to develop infrastructure and provide services that benefit the cruise passenger and the cruise industry. Among other things, Juneau has worked to reinvigorate the downtown historic district, including refurbishment of sidewalks and streets to make the area more tourist-friendly and safer for passengers. Our community has diligently improved downtown wharfs and greatly enhanced the infrastructure vital to successfully host cruise passengers. Significantly, in response to cruise industry deployment of much larger vessels, Juneau has embarked on a program to replace wharves to accommodate more and bigger cruise ships in a manner that preserves access for all to the downtown sea walk.
In their lawsuit, the associations argue Juneau has misused the passenger fees on numerous occasions. They cite money spent on a sea walk and infrastructure to support the new whale sculpture installed about a mile from the cruise ships’ wharves. Now, it must be noted that no passengers have signed on to the cruise lines’ lawsuit, though they are the ones that pay the fees. This makes us wonder whether the complaints advanced by the cruise lines are legitimate and properly before the court.
The lawsuit goes far beyond seeking clarity on Juneau’s use of passenger fees. The associations are also challenging the legality of the fees under federal statutory law and the Constitution and are seeking a permanent injunction from Juneau imposing or collecting passenger fees in any amount. If Juneau’s passenger fee is struck down based on federal law, it could set a precedent for lawsuits against other Alaska communities, the state, and local governments nationwide.
The basic question: Why sue us now? Juneau’s passenger fee regime has been in place for years. There is no obvious movement to raise or otherwise change the fee structure, and the fees have been spent appropriately. The passenger fees placed in the public treasury have been used to fund private cruise ship wharves in recent years, an expenditure that seems to reflect support for the cruise industry, not animosity or misuse of the funds as claimed by the industry.
To us, the cruise association’s claim — that using passenger fees for the construction of a sea walk somehow violates federal legal requirements or is discriminatory — doesn’t make sense. It is obvious the walkway will benefit cruise ship passengers and be used primarily by them. Furthermore, the sea walk project leading to the whale has been discussed and actively pursued for more than a decade. The sea walk is part of the 2004 Long Range Waterfront Plan written with the cruise industry in mind and with its participation. Additionally, the Juneau Assembly passed resolutions supporting the project in 2007 and 2012. We believe using cruise passenger fees to complete the sea walk is precisely the kind of project that adheres to the “safe” and “efficient” criteria called for in federal law.
As for the whale sculpture, the bronze work of art is being entirely funded by donations acquired through the hard work of local Juneau residents. No passenger fees are being spent on the whale sculpture.
All of this makes us question the timing of the association’s peculiar lawsuit and leads to speculation that the suit is nothing more than a political ploy to intimidate the City and Borough of Juneau.
A number of close observers have wondered whether the associations are hoping for a quick settlement that results in a lower local passenger fee or gives them more say in how the fees are spent. This was, after all, a tactic that worked when the Alaska Cruise Association and nine cruise lines filed a similar lawsuit against the state over the statewide passenger fee approved by voters in 2006. The suit was filed in 2009. Like the current lawsuit against Juneau, that legal dispute with the state challenged the legality and constitutionality of passenger fees. In response, the state administration entered into a settlement with the industry that called for the dismissal of the lawsuit if the 2010 legislature enacted legislation in harmony with the settlement. The legislature followed through and reduced the statewide fee from $46 to $34.50 and agreed that the state would deduct passenger fees collected by Juneau and Ketchikan or other local ports from the statewide passenger fee. This dramatically reduced the total fees available for infrastructure funding for many of the smaller ports where large cruise ship passengers disembark on occasion. In 2010, the association and the companies “accepted” the reductions enacted by the legislature and the settlement took effect.
There is also some speculation that the current legal dispute filed against Juneau may be nothing more than an attempt by the cruise associations to avoid the 2010 settlement agreement with the state. In the earlier agreement, the association and cruise ship companies that were a party to the suit were barred from challenging the statewide passenger fee in the future. By suing a local government’s passenger fee, the associations can raise the same legal and constitutional issues they raised with the state. If a court rules in their favor, cruise lines that were not part of the settlement might decide to challenge the statewide fee.
Finally, more than one person has wondered whether Juneau is being singled out. These individuals wonder if our community is being set up as an example of what could happen in other Alaska communities or in the Lower 48 where a cruise ship passenger fee might be in consideration. Unfortunately, the cruise industry has resorted to threats, bluster and intimidation when confronted with regulatory and tax proposals by local communities. The current lawsuit against Juneau appears to be part of a practice by the cruise industry that we hoped they had abandoned.
Juneau’s decision to implement a passenger fee was not driven by greed. The tax on cruise passengers was enacted to ensure that our community is a better place for visitors and residents alike. Our community allocates the passenger fees in conjunction with our local tax resources to make Juneau a worthy tourist destination.
We urge the cruise associations to do the right thing. Drop the lawsuit and work thoughtfully with our community to make sure that Juneau continues as a safe, clean and welcoming destination. We also call on Juneau’s business leaders and groups, such as the Juneau Chamber of Commerce, to support our community and join us in asking the associations to drop their suit.
We live in a remarkable place with gorgeous scenery and abundant attractions for tourists and residents. Working together, we can continue to develop Juneau as a premier tourist destination in a way that benefits everyone.
• Empire Readers’ Council editorials are written by members Joe Geldhof, Abby Lowell, Tom Rutecki, Lisa Weissler and Alex Wertheimer.
