2010 Redeployment Schedules Reflect Passenger Loss
As of April 27, 2009
By: Gary Droubay
It is very disconcerting to see the sponsors of the Cruise-ship tax Initiative still defending this unnecessary legislation. They successfully convinced most of the citizens of Alaska who are not directly impacted by the Cruise Industry, that these companies were giant international corporate entities who were taking advantage of us by polluting our air, discharging dirty water into our oceans and not paying taxes anywhere. We sent them a message that they weren’t really welcome here unless they paid dearly!
Make no mistake, for years to come this Initiative will negatively impact every business in Alaska that depends on income from cruise-ship passengers. One of the sponsors of the Initiative, Gershon Cohen cites a 2007 report by the McDowell group that says it did not affect tourism in 2007. Since the cruise companies plan their itineraries several years in advance, it was not possible for them to make changes that quickly. However, we now see the changes being made for the coming years. They are reducing the number of ships coming to Alaska because they know they can do better in other ports-of-call around the world. Other ports-of-call are begging them to come by offering them incentives, not taxing them unnecessarily.
The cruise line companies are owned by shareholders who demand a good return on their equity, and their management must plan and operate those companies accordingly. Yes, it was very profitable once to come to Alaska, but in the corporate world, past profits do not make up for future uncertainty, particularly when there are other choices with more certain results. We had an equitable partnership with the cruise companies – they made a good profit, and by bringing hundreds of thousands of people to our state, our local businesses and our local governments benefited as well. This partnership between industry and the people of Alaska was damaged by the State of Alaska inserting its hand into the mix, and taking a share of the profits that it neither needed, nor knows what to do with now that it has collected millions.
Goldbelt shareholders have been significantly impacted by the state’s greed. A planned $200 million development on Goldbelt property at Hobart Bay, 60 miles south of Juneau, was cancelled last year by investors, because they immediately saw the dampening effect that the Initiative would have on the cruise Industry. The economic impact of this project on Southeast Alaska would have been phenomenal.
We now see that the City and Borough of Juneau is struggling to determine how it can best deal with projected shortfalls in sales tax revenues for 2009 and beyond. These shortfalls are obviously occurring because the source of much of that revenue is tax on the spending by cruise ship passengers, which will decline this year and next.
If Southeast Alaska ever wants to see growth in the cruise industry again, it should find a way to repeal the most onerous parts of this initiative, which include the Ocean Ranger program, the tax on cruise income in Alaska waters, and the head tax. If we do this, it will still take several years to have any effect, but eventually, we may get them back.