Legislature(2001 - 2002)
03/19/2001 01:30 PM Senate CRA
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 24-BOROUGH REVENUES FOR TOURISM MARKETING
REPRESENTATIVE JIM WHITAKER, prime sponsor, testified that this is
a simple bill that allows a local option with regard to use of
borough revenues for an ongoing tourism marketing effort. He noted
that Tam Cook was present to answer questions.
SENATOR PHILLIPS said he's not opposed to the concept but he wants
to know how it becomes a local option. It says that the money is
collected, put into a general pot and then it's distributed on an
area wide basis. He doesn't believe the wording is specific enough
to ensure that it is local option and asked for interpretation from
Tam Cook.
TAMARA COOK, Director of Legislative Legal Services, said that
existing statute is a simple statement that if a borough collects
revenue on an area wide basis then it must use that money for an
area wide function. If it collects money on a non-area wide basis,
which is the territory within the borough that is outside of cities
within the borough, then it must use it for a non-area wide
function. The bill adds a subsection that says the principle above
doesn't apply in a very narrow case. This means that if the revenue
source at issue is a sales tax upon room rentals that is for a
tourism marketing campaign, then whether the money was raised on an
area wide basis or non-area wide bases is not an issue.
Furthermore, whether the tourism marketing campaign is performed on
an area wide or non-area wide basis is not an issue because time
because tourism marketing campaigns don't need to track the origin
of the revenue. It is assumed that tourism marketing is so general
to the region that identifying it as area wide or non-area wide
function doesn't make sense. It benefits the people of the area
that tourists are attracted to whether they visit the city or are
out in the country.
CHAIRMAN TORGERSON said his understanding of the vote is that it
was area wide and the city of Fairbanks was exempted.
REPRESENTATIVE WHITAKER said he's aware of no vote specifically
related to the legislation.
CHAIRMAN TORGERSON said it wasn't this one in particular; it
occured when they put the bed tax on originally. It was an area
wide vote.
REPRESENTATIVE WHITAKER said he thinks that's probably correct.
CHAIRMAN TORGERSON wondered why there is need for a bill if there
was already an area wide vote.
REPRESENTATIVE WHITAKER said he asked the same question and the
answer from Tam Cook was Title 29 requires a bill.
MS. COOK added, "Assuming that they wish to use it for a non-area
wide function."
CHAIRMAN TORGERSON said they're not making that determination by
calling tourism marketing a non-area wide function.
MS. COOK said, "In the case of Fairbanks, it may be because I think
economic development is a non-area wide function for that borough.
If you take a look at what the powers are of second-class boroughs
you'll see that second-class boroughs can perform economic
development. It's a general power without having to acquire the
power from a city or have a vote on it. It's a granted general
power, but only to exercise on a non-area wide basis."
CHAIRMAN TORGERSON said unless you have an area wide vote.
MS. COOK said, "No, because they would have to have the power
transferred to them to become an area wide power for the borough to
acquire it. They'd have to acquire that power from the cities, all
the cities in the borough."
CHAIRMAN TORGERSON said he understood.
SENATOR PHILLIPS said that basically, the discussion was about
second-class boroughs, not home rule.
MS. COOK said it could possibly apply to a home rule.
SENATOR PHILLIPS said to use Anchorage as an example.
MS. COOK said no, Anchorage is unified; it has no cities. It can't
apply to a unified municipality because there are no cities.
There's no distinction between area wide and non-area wide in a
borough with no cities. There are home rule boroughs that have
cities in them that aren't unified. If those boroughs happen to
have a non-area wide source of revenue but are trying to exercise
an area wide tourism marketing campaign, they would be faced with
the same situation. When you're talking about home rule, what a
borough does area wide versus non-area wide becomes a matter of
their individual charter and wouldn't be reflected in statute.
Therefore, it is theoretically possible to have a home rule borough
that has an area wide tourism marketing power but was collecting
revenue on a non-area wide basis. In that case, this bill would
affect such a borough and allow them to spend that money.
SENATOR PHILLIPS said that with the exception of the unified
boroughs, this bill affects the organized areas of the state.
MS. COOK said, hypothetically it could. "Whether or not a borough
exercises its power on an area wide versus a non-area wide basis is
very specific to that borough. It has to do, if it's general law,
with whether the general law has granted them an area wide power or
whether they have chosen to acquire it or whether they have gotten
it when they filed their original petition for incorporation, they
must list the powers they are going to exercise. So each of these
boroughs, regardless of classification, might have variations in
the relationship between the boroughs and the cities."
SENATOR PHILLIPS asked whether it would still require a vote in
Representative Whitaker's area if the bill is passed and local
option is allowed or whether it just happens automatically.
MS. COOK said it would happen automatically, but a vote is required
in order to get a sales tax imposed originally.
SENATOR PHILLIPS said they've already done that.
MS. COOK said they've done that and apparently they have an area
wide sales tax in that particular borough. This bill will say if
you have an area wide sales tax and it is on room rentals, or that
portion on room rentals, that revenue could be used on a non-area
wide basis for tourism marketing.
REPRESENTATIVE WHITAKER said the key word is could, it's still at
the discretion of the local governing body.
SENATOR PHILLIPS said that's why he's referring to an area wide
vote or through the assembly or city council. Somebody must make
the determination.
MS. COOK said it would be up to the governing body; there is a
prohibition in subsection (a) and this removes the prohibition and
leaves the option open as to whether they chose to act or not.
SENATOR PHILLIPS said that, upon passage, this would be another
decision made at the local level.
CHAIRMAN TORGERSON commented that they would have to adopt the
power by ordinance.
SENATOR PHILLIPS agreed.
CHAIRMAN TORGERSON asked for assurance that this wouldn't give
differential rates between a general law sales tax and a bed tax.
"If they happen to put on a borough wide sales tax of four percent
then they must raise or lower the bed tax to that same figure."
MS. COOK said it doesn't get into any issues of whether a sales tax
rate has to be equal. [Tape indiscernible]
DEBBIE TILSWORTH, President of the Alaska Travel Industry
Association in Fairbanks, testified that the statewide and local
visitor industry supports HB 24. Currently the mayor and the
borough are formulating the budget for FY02. It is important that
destination-marketing funds be built into the budget and passage of
this legislation will allow that.
Number 558
FRANK ROSE, Chair of the Alaska Travel Industry Association
Legislative Affairs Committee, testified that, from their
perspective, the funds for destination marketing should be
available at the option of the local community. One of the issues
in Fairbanks is that there has been considerable migration from
city hotels to borough hotels. This has lowered the bed tax revenue
in the city and increased the revenue available in the borough.
Under current Title 29 provisions, they can't use that money for
destination marketing. There are other communities that could be
similarly affected and this is why they urge passage of the bill.
SENATOR PHILLIPS asked Mr. Rose whether there is any known
opposition to the bill in the community.
MR. ROSE said none that he's aware of but there may be some
assembly members who will wonder what to do. However, since there
is local option, "they're in the drivers seat."
WANETTA AYERS, Director of Community and Economic Development for
the Kenai Peninsula Borough, testified in favor of HB 24. They
currently fund tourism marketing through PILT funds via a contract
with the Kenai Peninsula Tourism Marketing Council, which is a
regional destination marketing organization. The Kenai Peninsula
Borough is in favor of forming options to increase funding for
destination marketing. HB 24 will provide borough governments with
greater options to fund economic development through destination
marketing.
CHAIRMAN TORGERSON commented that it doesn't affect his borough
much since there is no borough wide bed tax.
MS. AYERS said that it might in the future.
SENATOR PHILLIPS moved HB 24 with zero fiscal note from committee
with individual recommendations.
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