Alaska AG: Cruise passenger tax legal

JUNEAU – Alaska has a strong case to defend itself in the cruise ship industry’s lawsuit on a passenger tax, according to the state attorney general.

Attorney General Dan Sullivan told legislators Thursday that the voter-approved tax challenged under tonnage and commerce clauses of the U.S. Constitution is clearly legal.

“It is well established under the U.S. Constitution, whether the commerce or tonnage clauses, the law allows for the user of such service to pay their fair share of what the costs are,” Sullivan said.

The Alaska Cruise Association in September sued in federal court challenging the constitutionality of the $46 tax on visitors to Alaska on large cruise ships. An additional $4 that pays for environmental monitoring was not challenged.

Defending Alaska’s tax may depend on tying the tax to actual costs and the state has begun to document that, Sullivan said.

House Finance Committee Co-chairman Mike Hawker, R-Anchorage, said the tax money does not have to be spent only on direct costs such as docks and harbors.

Sullivan agreed, saying that “we believe that the law would allow, anywhere there is a large number of passengers from the cruse ships, to provide services in those areas; it is not just in the ports.”

Former Gov. Sarah Palin vetoed certain cruise ship tax expenditures on items directly linked to ships, while approving expenditures such as money for an Anchorage convention center. Lawmakers overturned the vetoes.

Sullivan said tax expenditures on projects related to vessels do not have to be an exact match to revenue from the passenger tax, but they should be close.