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.