<b>Cruise tax decision a dilemma</b>
U.S. District Court Judge Russel Holland’s decision on litigation over cruise passenger fees levied by coastal municipalities has created a dilemma for those communities. The decision, on a case brought against the City and Borough of Juneau by the Cruise Lines International Association, was not unexpected. Holland ruled that Juneau’s use of the cruise tax revenue to build tourism enhancements was illegal. The ruling was narrow, however, find- ing that expenditures of the revenues could only be used for improvements to aid cruise vessels, and not cruise passengers. Thus, a port improvement to aid docking of vessels would be acceptable, but support for public services to aid tourist passengers would not. The problem being cited is that municipalities must have services on hand, for example emergency medical, to aid passengers on the ships, which are now carrying about 1 million a year.
Seward, for example, funds its summer tourist bus shuttle, which operates only when cruise ships visit, with its share of cruise tax revenues. The city also contracts for more emergency medical services but also uses some of the $458,165 it receives for infrastructure upgrades. Seward officials say they believe many services will still fit within the guide- lines of Holland’s ruling but acknowledge that this is a gray area in the decision.
As for port improvements, there is a disconnect between needs for port improvements in some
coastal communities and revenues collected by them. The cruise lines have proposed that municipal tax revenues be shared in a fund to finance port development across regions where cruise
ships are operating. This issue is assuming greater importance with the increasing size of cruise ships and improvements needed at ports to handle them. Also, cruise lines are expanding their destination stops into smaller communities where port facilities
are less well developed