Ruling limits how Juneau can spend cruise passenger fees

By December 6, 2018 December 10th, 2018 Economy, Juneau, Southeast, Tourism
A pair of Panamax cruise ships docked in downtown Juneau on Aug. 30, 2017. (Photo by Jacob Resneck/KTOO)

A pair of Panamax cruise ships docked in downtown Juneau on Aug. 30, 2017. (Photo by Jacob Resneck/KTOO)

A federal judge has ruled Juneau can keep collecting fees from cruise ship passengers. But the judge sided with the cruise industry which sued over how the funds are spent.

Juneau’s local government collects $8 per cruise ship passenger. It uses those funds to build things like bigger docks for bigger cruise ships.

But it’s also funded things like extra crossing guards, public bathrooms and a seawalk it says serves the million-plus cruise ship visitors arriving downtown annually.

The industry sued in 2016 alleging the city spends the money too freely. Its complaint challenged the legality of the fees which brought in more than $8 million last year and is expected to increase with the number of visitors.

In his 35-page ruling, Judge H. Russel Holland accepted the industry’s arguments that fees need to be connected to the vessel. He used an example: Funding a gangplank used by both passengers and the general public would be okay. But funding a nearby sidewalk — which isn’t attached to a ship — would not be.

“We don’t know exactly what this means yet and we’re still trying to digest the sum total of his order,” Juneau City Manager Rorie Watt said Thursday.

This week the city put out a call for proposals from the public on how to allocate the next round of passenger fees.

“We’re going to be closely reading Judge Holland’s order in figuring out what our next steps are,” Watt said.

Maritime lawyer Joe Geldhof wrote the initiative that Juneau voters passed in 1999 creating the marine passenger fee.

“This isn’t a win so much for the cruise ship lines and the cruise ship industry as rebuking the sort of undisciplined spending on the part of the city and borough and the recommendations by the city and borough staff,”  Geldhof said. “Judge Holland appears to have said that collecting the fees is fine, but how the funds derived from the passenger ship fees is where the big problem is.”

There are also wider implications. Other coastal communities — like Ketchikan — levy their own passenger fees. And there’s the statewide head tax passed by voters in 2006 which is similarly structured. The state collected more than $18.5 million last year in passenger fees; the lion’s share went to port communities.

Geldhof said the state’s attorney general needs to give guidance to other communities on how it should spend this revenue going forward.

The cruise industry welcomed Thursday’s ruling.

“We are pleased with the ruling and the clarity with which the judge detailed his opinion,” Cruise Lines International Association Alaska President John Binkley said in a statement. “Our primary goal was to seek guidance from the court so both the industry and communities understand the rules going forward.”

The cruise lines, he added, won’t appeal.

Without further appeals, this decision marks the end of a two-and-a-half-year saga that cost the City and Borough of Juneau $800,000 for its legal defense.

Some of which was paid for with passenger fees.

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