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Originally published Saturday, September 19, 2009 at 12:09 AM

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Cruise-ship owners group sues over Alaska head tax

An association of cruise-ship companies filed a lawsuit Friday challenging Alaska's head tax on the approximately 1 million cruise-ship passengers who visit Alaska each year.

The Associated Press

ANCHORAGE — An association of cruise-ship companies filed a lawsuit Friday challenging Alaska's head tax on the approximately 1 million cruise-ship passengers who arrive in the state each year.

The Alaska Cruise Association filed a federal lawsuit seeking relief from the $50 fee imposed on each passenger arriving aboard large cruise ships. Alaska voters approved the fee in 2006.

"We feel that the entry fee as implemented is illegal and that Alaskans are being hurt by the tax, and that the court system is the best venue to resolve the issues," said John Binkley, Alaska Cruise Association president.

He said the per-passenger head tax has contributed to a decline in cruise-ship passengers visiting Alaska.

The association argues that the head tax far exceeds the expenses the state incurs in providing services and facilities to cruise ships, and in some cases the money is going to fund projects that do not directly benefit cruise-ship passengers.

The association's members include nine cruise lines, including Carnival Cruise Lines, Celebrity Cruises, Holland America Line and Princess Cruises.

Alaska Attorney General Dan Sullivan said the state will fight the lawsuit.

"The cruise-ship industry has been threatening to sue the state ever since Alaska citizens voted to require passengers to pay their fair share of the costs of services and facilities provided to host them," Sullivan said. "The Department of Law will vigorously defend the state in this lawsuit."

The lawsuit was filed against Patrick Galvin, the state's revenue commissioner, who is responsible for collecting the fee. It alleges the fee violates federal constitutional and statutory protections limiting permissible charges to a vessel or its passengers.

The association is seeking relief from $46 of the $50 per-passenger head tax. The tax passed by voter initiative in 2006 includes a $4 fee to operate an environmental-monitoring program that put observers aboard ships.

Joe Geldhof, the Juneau lawyer who helped craft the 2006 initiative, said the cruise-ship industry's lawyers and lobbyists decided not to participate when the Legislature was deciding how to spend the head-tax money.

"Now they hire a bunch of high-toned lawyers to grumble and complain about this," he said.

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The lawsuit is not about the legality of the head tax but how the Legislature is spending the money, Geldhof said.

The lawsuit says Alaska voters were sold the head tax as a way to make out-of-state visitors pay for government projects not directly related to cruise-ship visitors — an idea it says was not lost on the Alaska Legislature.

Projects funded with head-tax money include constructing a dock in Valdez to accommodate smaller cruise ships, whose passengers aren't charged the tax, and reconstruction of the Saxman Community Hall, the lawsuit says.

It says money went to state parks and road-and-sidewalk improvements in eight communities, as well as to the Alaska Aviation Heritage Museum; the Alaska Zoo; a bear sanctuary for education, awareness and research; an exhibit gallery at the visitors center in Fairbanks; a railroad station in Wasilla; and convention centers in Anchorage and Fairbanks.

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