Alaska will target cruise lines to cure $573 million deficit

JUNEAU, Alaska — Cruise lines would pay $5 per passenger for every night spent in Alaska under a new budget proposed by Gov. Frank Murkowski.

The Republican governor’s budget, announced Monday, also includes a cruise ship gambling assessment based on passenger counts and a 5 percent tax on excursions run by tour operators.

Murkowski is also proposing a $1 increase in the state’s cigarette tax, which would give Alaska the second highest such tax in the nation behind New Jersey.

Cruise ship industry officials — who have been under mounting criticism from Alaskans for not paying state taxes — say they are being asked to shoulder too much of the load.

"We’re hoping to have a discussion with the administration very soon to review the details of this and give our response to the administration," said John Hansen, president of the North West CruiseShip Association.

The industry injects an estimated $800 million into Alaska’s economy including money spent by tourists and taxes and fees paid to local governments, Hansen said. "We pay our own way, and then some," he said.

Alaska faces a $573.5 million deficit in the fiscal year that begins July 1, 2004, according to the state Department of Revenue.

But lawmakers, who last raised the state’s tobacco tax in 1997, are already predicting a tough fight when the Legislature returns in January. House Majority Leader John Coghill, R-North Pole, said the governor’s proposal had "some good discussion points," but that the tobacco tax faced an uphill battle.

House Minority Leader Ethan Berkowitz, D-Anchorage, predicted this budget would be followed by a proposal with a host of taxes aimed at other groups besides tourism.

Murkowski said he will continue to push for more oil and gas development in the state, but administration officials say new revenues are needed in the meantime.