Legislature(2003 - 2004)
2004-03-19 Senate Journal
Full Journal pdf2004-03-19 Senate Journal Page 2563 SB 367 SENATE BILL NO. 367 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: "An Act relating to the levy, collection, and administration of sales and use taxes on tourism services; and providing for an effective date." was read the first time and referred to the Transportation, Labor and Commerce and Finance Committees. The following fiscal information was published today: Fiscal Note No. 1, zero, Department of Community and Economic Development Fiscal Note No. 2, zero, Department of Community and Economic Development Fiscal Note No. 3, Department of Revenue Governor's transmittal letter dated March 16: Dear President Therriault: Under the authority of article III, section 18, of the Alaska Constitution, I am transmitting a bill that would impose a five percent sales and use tax on tourism and other services in our state. This tax would apply to a broad range of activities, such as: taxes on items sold or used on cruise ships, shore side activities, transient 2004-03-19 Senate Journal Page 2564 accommodations, and guided tours. The tax would raise approximately $19 million in FY 05 and $49 million for the state's general fund on an annual basis thereafter. In many regards, this proposal represents a modest "user-pay" approach. The state would be partially reimbursed for costs of providing a wide variety of services related to the travel industry. The Office of Management and Budget recently completed an informal survey of state agencies to determine the amount of tourism related expenditures in their respective FY 04 budgets. The resulting list of costs potentially attributable to the cruise industry totaled $116 million, some of which is currently offset by other "user-pay" revenues. Some local communities have benefited over the years as passengers and crewmembers purchased goods and services in communities and paid local sales, use, and "head" taxes. At the same time local communities were taxing the cruise ship industry, passenger traffic increased dramatically. For example, cruise ship passenger traffic to Ketchikan increased from 321,780 passengers in 1993 to an expected 830,000 passengers in 2004. The increase in passenger traffic occurred despite the effects of the SARS epidemic, global terrorism, and moderate economic growth, a record 9.52 million passengers cruised worldwide in 2003 -- a 10.2 percent increase over 2002. Cruise lines anticipate another record year in 2004, with approximately 10.6 million guests. Given the growth of the industry and the fact Alaska is such a unique and wonderful destination for cruise ship companies and their passengers, I am convinced Alaska can recover part of its costs through reasonable taxes without appreciably affecting the growth of the Alaska cruise ship industry. Alaska will always welcome its guests. However, Alaska should join 48 of the other 49 states and such countries as Jamaica and the Bahamas that raise revenue from transient accommodation through some form of tax or fee. This is only fair. Alaska residents have been paying, and will continue to pay, such taxes when travelling or cruising within these states or abroad. 2004-03-19 Senate Journal Page 2565 I urge your support for this bill. Sincerely yours, /s/ Frank H. Murkowski Governor