Connect with:
Thursday, March 21, 2019
HomeAlaska NewsJuneau loses lawsuit over use of cruise ship fees

Juneau loses lawsuit over use of cruise ship fees

The wooden walkway to the bronze whale was a bridge too far.

The cruise ship industry in 2016 sued the City and Borough of Juneau because the city was using money that it collects from cruise ship passengers for things not related to the cruise ships. Like walkways far away from the docks.

U.S. District Court Judge H. Russel Holland wrote a decision that agreed with the Cruise Lines International Association of  Alaska: While it’s constitutional to collect a “head tax” from cruise ship passengers, municipalities can only spend that money on “endeavors that facilitate the marine operations of plaintiffs’ members’ vessels.”

The City and Borough of Juneau has been spending the money on an increasingly wide range of things, including crossing guards and other city amenities. But what tipped it over the top was the construction of a seawalk to a manufactured island that now holds a bronze whale statute and reflection pond.

“The proper question as to each category of expenditure by (the CBJ) is: Does the expenditure provide a service to a vessel? If the answer is yes, the expenditure is constitutional. If the answer is no, the expenditure is unconstitutional under the Tonnage Clause,” Holland wrote.

That clause is written into the U.S. Constitution and prohibits states from taxing cargo without the consent of Congress if they aren’t providing some kind of service to the ship itself.

“No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.”

In other words, the tax on passengers (cargo) can only reimburse the city for the actual use and wear and tear on the port itself. Service to the ships might include a gangway and docks, but not crossing guards or sidewalks. The judge didn’t provide an exhaustive list, but made it clear the city should err on the side of caution.

The lawsuit by the cruise lines association said that the artificial island that holds the whale statue is an example of how funds are being misused.

The cruise lines aren’t asking for refund. They just wanted clarification in the law, since Juneau was going further and further out into uncharted waters with the use of the cruise ship passenger tax.

The immediate past national committeewoman for the Alaska Democratic Party, Kim Metcalfe, suggested on Facebook that Juneauites picket the cruise ships this summer.

 

Picketing could cost the city even more than the lawsuit itself, which has been exceedingly expensive. Over a year ago, the CBJ had already spent $847,000, and was expecting to spend nearly double that amount. If the city appeals to the 9th Circuit Court of Appeals, then the case will likely go to the Supreme Court, at great cost to both sides.

THE CAST OF CHARACTERS 

Bruce Botelho, former Juneau mayor and major figure in Alaska Democrat Party politics, was the force behind the project to build the walkway that finally sent the cruise lines to court.

Botelho has, through his advice to city leaders, hurt Ketchikan, Hoonah, Sitka, Haines, and Skagway because he pushed the use of fees too far, and now very tight curbs are in place on them.

Amy Mead was the city and borough attorney who fought for the city position.

She and Botelho got greedy and thought the city could win the case over the artificial island and walkway. She was recently appointed by former Gov. Bill Walker as Juneau Superior Court Judge.

They killed the golden goose, pushing their ambitions so that the rules are now being enforced — rules that are extremely restrictive for ports in Alaska. They have forever ended the use of cruise ship funds for local benefits, and those costs will now be pushed off onto residents.

Juneau Assemblyman Jesse Kiehl was quoted last year saying the city would win the suit: “I think generally the Assembly feels pretty confident that the city’s use of those taxes is appropriate, so we’ll continue to defend the lawsuit. Because we use those monies to serve cruise ships and cruise passengers,” he told reporters.

The city has used over a million from these fees and used it in the city operating budget. The city spent $10 million on the whale park, which is nearly a mile away from the ships.

Kiehl, a Democrat, is now the incoming State Senator for Juneau and the lawsuit loss and repercussions will be his successor’s problem.

The City and Borough Assembly will meet in executive session on Monday to decide whether to appeal the decision.

While the city debates the case, cruise ship passengers will increase by 16 percent.

One observer of the whale park and walkway debate told Must Read Alaska that if the city had only used the cruise ship tax money to build another dock at the Gold Creek area, to take pressure off of downtown, there would never have been a lawsuit.

Donations Welcome
Written by

Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comments

  • That’s a funny decision. They should just use local funds like Anchorage does for it’s flowers and such. What a waste. Fairly ridiculous that those crossing guards aren’t considered appropriate.

  • This is the court decision every student of the Constitution expected. Downtown Juneau businesses that serve the cruise ship industry pleaded with the city to not build all this brass whale infrastructure out there but the city knew better. Honestly, it’s very generous of the successful plaintiffs to not demand any money. Had the decision gone the other way the city would now be demanding costs plus other compensation. Greedy municipal officials and remittance residents of downtown Juneau are Hell-bent on killing this great industry even as they want to take credit for how lucrative it is for the city-owned hospital, the city-owned airport and (especially) sales tax receipts. It’s too bad for Juneau taxpayers that the city is so greedy, but it’s a tragedy that city government is both greedy and stupid.

    • Couldn’t have said it any better!

  • Thinking about Alaska cruise. Screw them. I will go elsewhere

  • Before the whale project was even advertised for construction bids, the City received an offer from a developer to negotiate buying that property to build residential apartments. The City rejected that plan because they were too far along on the whale park…. and the Cruise Industry lawsuit was nothing more than a formality to be brushed aside by their lawyers.

    Meanwhile, guess how many civil lawsuits end in court… unable to settle? Answer: 2%. Everyone knows a courtroom is a ghastly place… to be avoided at any cost. Even when you win you lose. When you lose you lose even bigger. The 2% that go to court are only the few deep-pocketed clients unable to see themselves being played for legal fees. It looks like the CBJ’s fees may be about $1.6-million. Incidentally, the annual cost of the senior sales tax exemption is about $1.2-million.

    Leadership?

  • Liberals are so wasteful, cut them off!

  • Juneauitis; never stop harvesting the goose that laid the golden egg.

  • Metcalfe…..the gift that keeps on giving! Picket the cruise ships? What would those picket signs say? “Welcome to Juneau! Your cruise costs more cuz we misappropriated your head tax dollars!”

  • A brass whale, really? Not more emergency services in case a ship catches fire, or brings a out break of a new flu, or all the seniors on the cruse having a bunch of heart attacks? A chance to upgrade all emergency services and streets and a ton of other stuff you need for large influxes of people that will also benefit the residents. A brass whale. Who made the money from that?

    • Wasn’t that Skip Wallen? He’s very popular with the lefties there in Juneau. If I recall correctly, the surrounding park was dedicated in honor of Bill Overstreet. Kind of ironic when you consider how passionate he was about Juneau and its future.

  • Seeing Juneau lose this battle is titillating… but the titillation is mitigated by the memory that around 2 or 3 years ago the cruise ship industry lobbied to keep Alaska stuck with friggin daylight savings time that i can’t stand. So yeah i harbor a bit of grudge for that. And yeah this is a bit off-topic. Excellent article Suzanne.
    And apt metaphor about the golden goose,… irony that it is killed by a bronze whale. There’s room for comedy there 😉

  • Skip Juneau and come to beautiful Sitka!!