It’s no secret that Alaska’s tourism industry is facing tough times. Hit with an excessive tax regime and inequitable environmental regulations, cruise companies have begun to deploy their ships to more profitable regions of the world. The taxes and environmental regulations are a result of a 2006 ballot initiative dubbed as the “cruise ship head tax,” but in reality carried four new taxes on the industry, changes in monitoring and compliance policies, and environmental regulations that even the best available technology could not meet.
After the initiative became law, the visitor industry in Alaska began feeling the effects of those changes. Cruise companies resorted to deeply discounting their rates on Alaska cruises, attracting passengers that spend significantly less money in our port communities. With a dramatic drop in net profit from these cruises, companies rerouted ships from Alaska, which has resulted in at least 140,000 less passengers visiting this summer. The loss of $150 million in spending will mean fewer diners in our restaurants, less cars rented, decreased tours and sightseeing trips, and lower occupancy of hotel rooms. The loss of ships is also responsible for the loss of 5,000 jobs in Alaska.
Here lies the heart of the issue – the Alaska businesses that rely on cruise passengers. These are small, many family-owned, businesses that are most devastated by cruise ships leaving because their customer base (cruise ship passengers) has dwindled away. The Alaskan jobs that are created by cruise passengers’ onshore activities have disappeared at an alarming rate. As it turns out, the industry that the initiative targeted wasn’t the party most affected – it was the Alaskan businesses that need those passengers to keep their doors open.
Enter in a group of Alaska business owners that refused to let their entire life’s work disappear. They met and discussed a need to form a grassroots, statewide group with a mission to tell the state that “it’s not about the cruise ships; it’s about Alaska jobs and Alaska businesses.” They brainstormed ideas on how to deliver their message and created a group called the Alaska Alliance for Cruise Travel (AlaskaACT). AlaskaACT engaged RDC in their efforts, and Executive Director Jason Brune served as a founding member on the steering committee.
AlaskaACT held numerous strategy sessions, created a website and began signing up members throughout the state. Hundreds of Alaskans signed on to their mission as they went to Juneau and met with Legislators and the Governor, explaining their peril. They asked the Governor to attend Seatrade, a convention in Miami where cruise line executives meet with representatives of destinations around the globe. They emphasized the importance of the Governor meeting with those executives, and communicating to them that Alaska values their business, and that thousands of Alaska jobs depend on their passengers visiting our state.
The group then reached a milestone: the Governor attended Seatrade! While there, Governor Parnell met with AlaskaACT delegates, community representatives, and the cruise lines. They discussed why it was so important to attract cruise business back, and what state policy changes could be made that would bring the ships and jobs back to Alaska. The dialogue that occurred between the cruise industry and the State of Alaska was an honest, candid discussion in which the Governor represented the needs of Alaskans. In a statement issued following the meeting, Governor Parnell said, “We must make Alaska a more affordable destination to travelers from Outside. I made it clear to cruise ship executives that we would need public assurances about increased deployments and economic activity in Alaska in exchange for these incentives.” Afterward, the Governor visited the Alaska booth in the Seatrade exhibit hall, meeting with several convention-goers and conducted multiple media interviews.
Upon returning from Seatrade, the Governor introduced HB422, a bill to reduce the cruise ship head tax to $34.50 per passenger, and to increase the state’s tourism marketing dollars by creating a corporate tax credit to companies that contribute to Alaska’s marketing campaign. The Senate Finance committee then introduced SB312, which contained only the head tax portion of the Governor’s bill. Both bills were deliberated, during which the Legislature heard from hundreds of Alaskans about the important components of the bills. Amendments were introduced, deliberated, and either adopted or abandoned.
As the hours ticked down toward the session’s end, SB312 passed both houses, allowing for a head tax reduction to $34.50. The legislature also appropriated an additional $7 million to increase tourism marketing. This is a giant step forward in making Alaska a more attractive place for the cruise industry to operate.
“After years of watching a handful of extremists work to destroy another industry and the thousands of Alaska jobs that go along with it, we felt something must be done,” said AlaskaACT President Bob Berto. “We reached out to every area of our state and built support through discussing the far-reaching economic benefits of the visitor industry. Our success really came from communicating the damage caused by a bad tax policy and how changing that policy was really in the best interest of Alaskans, businesses, and our economy.”
For more information on AlaskaACT, visit alaskaact.com.
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