Legislature(2015 - 2016)BARNES 124
02/13/2016 10:00 AM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB248 | |
| HB252 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 159 | TELECONFERENCED | |
| += | HB 194 | TELECONFERENCED | |
| += | HB 248 | TELECONFERENCED | |
| += | HB 252 | TELECONFERENCED | |
HB 252-ELCTRNC TAX RETURNS; VESSEL PASSENGER TAX
11:27:39 AM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 252, "An Act requiring electronic submission of a
tax return or report with the Department of Revenue; repealing
the tax reduction for local levies for the commercial vessel
passenger excise tax; amending the definition of 'voyage'; and
providing for an effective date."
11:27:40 AM
CHAIR OLSON opened public testimony on HB 252.
11:27:49 AM
CAROL FRASER, General Manager, Lakefront Anchorage Hotel, said
she was speaking as an Alaskan and as a member of the tourism
industry. The Lakefront Anchorage Hotel employs over 120
Alaskans year-around as housekeepers, bussers, clerks, drivers,
and servers. She opined HB 252 is a jobs bill. The hotel
operates year-around but primarily relies on tourism; 70 percent
of the hotel's revenue is received between 5/15 and 9/15, during
the cruise ship season. The bill proposes to increase the
cruise ship passenger tax, and she urged legislators to review
the impacts of the [Alaska Cruise Ship Tax Initiative Measure 2,
approved 8/22/06 (cruise ship initiative)] that resulted in
taxation which made Alaska the "most expensive destination in
the world for cruise ship operations." The cruise ships are
floating hotels and can move anywhere in the world; in 2010, as
a result of the additional tax, the cruise lines moved their
ships to other destinations that brought a higher return -
subsequently 140,000 less customers came to Alaska and there was
a loss of 5,000 jobs. In 2009, through agreements between the
tourism industry and state government, there was a reduction in
taxes and the cruise ships moved vessels back to Alaska; since
2012, the tourism industry in Alaska has increased each year and
tourism is expected to have a banner year in 2016. Ms. Fraser
said this will create more jobs for Alaskans, more revenue for
communities, and more taxes for the state. Tourism employs
almost 40,000 Alaskans, many of which are entry jobs that can
lead to careers. She stated there is a need to protect the
tourism industry - which is a renewable resource for Alaska -
and HB 252 will again make Alaska uncompetitive in the worldwide
cruise market. She concluded, noting that Alaska cannot afford
to lose any more jobs.
11:31:34 AM
GIDEAN GARCIA, Chief Operating Officer, CIRI Alaska Tourism
Corporation, stated his opposition to HB 252. He said CIRI
benefits from a strong cruise industry as many passengers stay
at CIRI lodges in Seward and Talkeetna, or take CIRI wildlife
cruises. Not all cruise ship guests stay at affiliated hotels,
but many do support other Alaska-owned businesses. Mr. Garcia
said additional costs to passengers reduces potential "guest-
spend" in the state. He questioned what can be gained from
funds that are restricted by federal law and cannot be used in
the general fund. In 2015, the number of visitors was the
highest on record, and strong growth in the industry is
returning after many years; he cautioned against risking growth
by raising taxes. Although the state has a significant budget
shortfall, his organization is generally against targeted taxes,
and he urged for legislators to look for broad-based and
equitable sources of new revenue.
11:33:24 AM
PATTI MACKEY, president and CEO, Ketchikan Visitors Bureau,
asked the committee to consider the negative impacts of
repealing the tax reduction in communities where a local
passenger fee is also imposed. Although she is aware of the
state's fiscal issues, the [Commercial Passenger Vessel Excise
Tax] fund is not a source of revenue for the general fund. At
the time of the initial state fee, there was an adverse impact
on communities that depend on the cruise industry; high taxes
and fees caused the cruise lines to take a look at the high cost
of doing business, which resulted in fewer ships and passengers,
and less revenue. When the tax reduction was put in place five
years ago, growth returned to the cruise ship industry.
Ketchikan is more dependent than ever on locally-generated
revenue, such as sales taxes paid by visitors, and the state
faces competition from other cruise destinations; Alaska's
market share has declined steadily from 7 percent in 2007 to
about 4 percent today. The state needs to be mindful of its
high operating costs for cruise lines. Ms. Mackey stated that
the tax reduction was recognition that cruise lines help pay for
services directly to port communities, and that Alaska is open
for business.
11:35:35 AM
BOB SIVERTSEN, speaking on his own behalf, said he is opposed to
HB 252. In 2010, former Governor Sean Parnell worked to address
industry concerns regarding cruise ship operations in Alaska.
The governor and the legislature lowered the cruise passenger
head tax out of concern for the future of Alaska's cruise
industry. Mr. Sivertsen opined the state should honor the past
agreement, and if necessary, the state and the industry should
work out an equitable agreement. The present tax promotes
investment and meets applicable federal and state laws regarding
the use of the taxes. Mr. Sivertsen said increased taxes will
hurt local and state tourism businesses and will not reduce the
state deficit. What HB 252 may do is jeopardize the economy and
send the wrong message to an Alaska-friendly industry. The
state should learn from past mistakes and successes.
11:37:04 AM
RYAN BINKLEY, President, Riverboat Discovery, stated his
opposition to HB 252. He informed the committee he is a life-
long Alaskan and his family's business has been building and
operating boats across the state for over 100 years. In 1950,
his grandparents began a river tour and became part of the
tourism business and the economy in Fairbanks. He observed that
Fairbanks is a cruise port, and relies on the visitors who
cruise to Alaska; in fact, the effects of cruise visitors is
felt even more in Fairbanks because the itineraries that bring
visitors there are the longest and most expensive and are the
first eliminated by barriers to travel, such as a tax. Mr.
Binkley said one-third of cruise ship passengers cross the Gulf
of Alaska, thus a negative effect is magnified in the Interior.
Policy effects of legislation are usually speculative, but the
state has seen the impacts of head tax increases to the visitor
industry in 2006. In the Interior in 2008, there was almost a
40 percent drop in the number of visitors, and his business was
forced to eliminate 70 positions. Also, the Interior has not
rebounded as completely as other parts of the state, and remains
at 30 percent off of the tourism business levels prior to
passage of the cruise ship initiative. Mr. Binkley acknowledged
that the state must work together to solve budget problems, and
inquired as to why the state would harm the economy of Alaska,
when HB 252 does not contribute to closing the fiscal gap.
Furthermore, there may be litigation that jeopardizes "the
entire tax program." He cautioned that cruise companies will
not be harmed by HB 252, but small Alaska businesses will feel
its effects. He urged the committee to oppose HB 252.
11:40:48 AM
STEVE HITES, said he and his wife own the Skagway Street Car
Company and have been in business for 30 years. He recalled
that when the cruise ship initiative passed, the cruise industry
pulled its ships out of Alaska due to the increased cost of
doing business, and in subsequent years his family's company
hired fewer employees. Former Governor Sean Parnell saw the
need to address the problem and met with officials of the
international cruise industry, which Mr. Hites said had not
happened before in his 40 years of experience in the cruise
industry. Mr. Hites said the governor and the legislature
reduced the head tax and the ships were redeployed to Alaska.
He said [HB 252] will not do any good and will create a giant
hole in an industry that is a bright spot in the economy, and
that provides an engine for the private sector. The Skagway
Street Car Company pays $70,000 in city sales tax in Skagway,
and pays $23,000 in property tax. In addition, his small
business employs people and provides help. The bill will drive
away a sector of the economy, and because Alaska is in
competition with the Asian market, cruise companies are looking
globally at operating costs. He recalled that Alaska was 14
percent of the global cruise ship industry and is now 4 percent.
He stressed that Alaska must remain competitive by not imposing
additional taxes.
11:44:42 AM
LAWRENCE GAFFNEY, CEO, Huna Totem Corporation, informed the
committee Huna Totem Corporation has 1,300 shareholders and owns
and operates Icy Strait Point, which is the largest employer and
the largest payer of sales tax in the City of Hoonah, a rural
community of 760 residents. Last year, Huna Totem Corporation
provided 125 jobs, 85 percent of which were local hire, and
contributed over $4 million into the community. The last cruise
ship tax increase resulted in a 30 percent decline in business
and, 7 years later, the business has not fully recovered. This
May, his firm is completing a $40 million new investment
program, in conjunction with the City of Hoonah, as a public and
private partnership, building a new cruise ship dock and
expanding facilities. This tax increase will have a chilling
effect on the attractiveness of Alaska to the cruise industry,
which provides 90 percent of Huna Totem Corporation's revenues
and is responsible for many jobs. The result will be fewer
ships, less profitability, fewer jobs, and a blow to the
economic driver of Hoonah.
11:47:28 AM
The committee took an at ease from 11:47 a.m. to 12:00 p.m.
12:00:44 PM
CHAIR OLSON announced that public testimony would remain open.
[HB 252 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB248 Supporting Documents-Email Perry Ahsogeak 02-12-16.pdf |
HL&C 2/13/2016 10:00:00 AM |
HB 248 |
| HB248 Opposing Documents-Written Testimony- Bill Howell 02-13-16.pdf |
HL&C 2/13/2016 10:00:00 AM |
HB 248 |
| HB248 Opposing Documents-Written Testimony-Larry Hackenmiller 02-13-16.pdf |
HL&C 2/13/2016 10:00:00 AM |
HB 248 |