Legislature(2007 - 2008)CAPITOL 106
03/20/2007 11:00 AM House ECONOMIC DEV., TRADE, AND TOURISM
| Audio | Topic |
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| Start | |
| HB147|| HB167 | |
| Presentation by M2z Networks | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 147 | TELECONFERENCED | |
| += | HB 167 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 147-TOURISM CONTRACT MATCHING FUNDS HB 167-APPROP: TOURISM MARKETING 11:02:00 AM CHAIR NEUMAN announced that the first order of business would be HOUSE BILL NO. 147, "An Act relating to matching funds in state tourism marketing contracts with trade associations", and HOUSE BILL NO. 167, "An Act making special appropriations for a contract with a qualified trade association and for a marketing program; and providing for an effective date." CHAIR NEUMAN said that public comment would be held jointly on HB 147 and HB 167 due to the close subject matter of the bills. Following the consideration of the bills, there will be a presentation by M2Z Networks. He requested that staff members review the bills. 11:03:03 AM CHARISSE MILLETT, Staff to Representative Harris, sponsor of HB 147, informed the committee that the current statute for funding tourism marketing requires a 50 percent to 50 percent match. This bill will change that percentage to a 90 percent to 10 percent match, with the state providing 90 percent of the funds. 11:04:04 AM JEANNE OSTNES, Staff to Representative Johnson, sponsor of HB 167, informed the committee that HB 167 is an appropriations bill for funding from the general fund and the vehicle rental tax account. She stated that this increase in funding is an indication of the state's support of marketing for the tourism industry. CHAIR NEUMAN called for questions from the committee prior to public testimony. 11:05:21 AM REPRESENTATIVE DOOGAN asked how the 90 percent to 10 percent match split was determined by the sponsors of HB 147. MS. MILLETT responded that the Alaska Travel Industry Association (ATIA) is currently providing funding in the amount of $8 million; however, the ATIA does not expect the cruise ship industry to continue its contribution of $4 million for the FY 07 budget. In addition, funding from members for FY 07 is estimated at $2 million. A total of $4 million, after the state's contribution, is insufficient to maintain a national and international marketing campaign, she said. The ATIA anticipates the need for a FY 07 marketing budget of $20 million. REPRESENTATIVE DOOGAN observed that the percentage is based on the present situation. He asked whether HB 167 contains details for the use of the additional money. 11:07:44 AM MS. OSTNES explained that the details will be contained in the state's contract with the ATIA. She noted that the funding is for the expansion of marketing and that the ATIA will discuss its budget with the committee. CHAIR NEUMAN added that the tourism industry feels that the Alaska Cruise Ship Initiative (ACSI) will result in a reduction of support from the cruise line industry. MS. OSTNES pointed out that the previous $5 million match with the industry resulted in a net surplus. REPRESENTATIVE DOLL asked if the requested increase in funding will be a permanent change. 11:10:25 AM MS. MILLETT responded that the 90 percent to 10 percent match will be a permanent change in the statute. CHAIR NEUMAN added that all funds are appropriated by the legislature each year. CHAIR NEUMAN asked for public testimony. DAVE COBB, Business Manager, Valdez Fisheries Development Association Inc., informed the committee that he supports HB 147 and HB 167. This legislation, he said, is very important to the future of tourism in Alaska. Marketing campaigns are essential to ensure that the visitor industry remains a strong sector of the economy. Mr. Cobb said that Valdez Fisheries is a local aquaculture program that has developed a successful sport fishing and visitor industry. He said that the visitor industry in Valdez consists of small businesses that depend on a large statewide program for an effective marketing campaign. Mr. Cobb concluded by saying that Alaska's visitor industry is one of the state's largest employers, and is a major element in the economy of Valdez and other small communities. 11:12:48 AM CHAIR NEUMAN recalled previous testimony that stated 51 percent of tourism businesses have 5 or fewer employees. COLLEEN STEPHENS, President, Valdez Convention & Visitors Bureau, informed the committee that the Valdez Convention & Visitors Bureau membership is comprised of 175 small businesses. The economy of Valdez, she said, is tied to tourism and especially to the independent traveler. Beginning in the 1990s, independent travel and public funding for tourism marketing began to decline. Tourism benefits all Valdez citizens and citizens statewide by providing a tax base. Alaska must compete for tourism business to maintain these benefits to its economy. On behalf of small tourism businesses, she urged the committee to support HB 147 and HB 167. 11:15:11 AM BONNIE QUILL, Director, Mat-Su Convention and Visitors Bureau (Mat-Su CVB), said that the Mat-Su CVB's 300 members are asking for the committee's support of HB 147 and HB 167. Through cooperative marketing with the ATIA, the Mat-Su CVB creates an awareness of the Matanuska-Susitna valley as a visitor destination. The Mat-Su CVB does not have a marketing budget sufficient to make connections with visitors. Without the marketing of ATIA the Mat-Su CVB would have difficulty continuing to increase the number of visitors to its area. SANDRA WHITE, Manager, Talkeetna Air Taxi, informed the committee that her family has worked in tourism in Alaska since the late 1960s. She said that she has trained dozens of other Alaskans who are now employed in the tourism industry. Her experience is that the Alaska Cruise Ship Initiative tax has changed the climate of tourism in Alaska. Ms. White opined that, even though her business does not have contracts with the cruise ship industry, the state should now support tourism through the passage of these bills. Tourism in Alaska, she said, should not be allowed to dwindle. The community of Talkeetna benefits from tourism by the development of trails and growth. She continued to say that the original intent of HB 147 is that the funds from the vehicle rental tax are paid to support tourism marketing. She concluded by saying that her small business is unable to continue a sufficient marketing campaign alone. 11:19:14 AM CHAIR NEUMAN asked for the percentage of Talkeetna Air Taxi customers that are from outside Alaska. MS. WHITE answered that 90 percent of her business is from outside the state. DEB HICKOK, President and CEO, Fairbanks Convention and Visitors Bureau; Chair, Marketing Committee, Alaska Travel Industry Association informed the committee that the passage of HB 147 and HB 167 is a vote for small business in Alaska. The ATIA marketing committee is composed of 30 volunteers, most of whom represent small businesses. This committee, she said, directs and monitors the advertising sales and marketing programs. The marketing committee and ATIA staff can provide a detailed proposed spending plan for the FY 07 budget of $26.5 million. In addition, the ATIA organization is a small business program. Research shows that domestic travelers see an Alaska vacation as too expensive and time consuming. Increased funding for marketing is the only way to compete for visitor dollars. Fairbanks and the interior have difficulty attracting independent and winter travelers. A vote for these bills, Ms. Hickok continued, is a vote for committee member's constituents, friends, and neighbors. 11:24:44 AM PARK KRINER, President, American Village of Alaska, Inc., informed the committee that he has been in the tourism business for 35 years. When tourism funding was high, visits from tourists could be credited to national and international television advertising. Today, business in the American Village gift ship is down by 13 percent from the previous year. Mr. Kriner said that the benefits from HB 147 and HB 167 will trickle down to every business in Glennallen and provide jobs for high school and college students. He asked why would we not fund an industry that provides economic stability. He concluded by saying that he supports HB 147 and HB 167, which will enable residents to stay in Alaska through the winter. CHAIR NEUMAN added that a visitor stopping in a town will often stop at several different businesses. DEE DEE KAY, Sales Manager for Lodging, Talkeetna Alaskan Lodge, and Seward Windsong Lodge, testified that her work in tourism has supported her family for 20 years. In her experience she has found that Alaska travel marketing delegations are very small compared to those of other states. Talkeetna Alaskan Lodge is able to provide not only summer lodging, but remains open during the shoulder season to benefit the local community. She said that she believes tourism profits have allowed Talkeetna to build a new clinic, and have supported new businesses in Seward. Ms. Kay encouraged members of the committee to support HB 147 and HB 167 and thereby support the visitor business which is a unique, clean, fun, and competitive industry. 11:30:01 AM ALAN LEMASTER, Owner, Copper River Salmon Charters and Gakona Junction Village, informed the committee that his part of the state, from Valdez to Fairbanks, and Palmer to the Canadian border, has been severely impacted by the reduction of marketing dollars. Fewer highway travelers and border crossings have resulted in the closures of small businesses. Mr. LeMaster recalled that in the past the cruise ship and air line industries dominated tourism in Alaska. Presently, however, 80 percent of ATIA's members are small businesses with fewer than five employees. During 25 years in business, he said, marketing costs have increased and he supports the estimate of $25 million needed to market Alaska tourism at the 1980s level. He stressed that state money for tourism is not a gift but an investment. Research indicates that increased funding will give ATIA the ability to bolster television marketing with an emphasis on travel to rural Alaska and the independent businesses across the state. Mr. LeMaster noted that the increased funding will also be directed at the small businesses that have been neglected. He encouraged the legislature to re- invest the vehicle rental tax money into the marketing efforts of the vibrant visitor industry. The investment will ensure the success of the visitor industry and increase revenue for the state. He urged the committee to make a strong investment in the tourism industry of tomorrow. 11:36:34 AM TRACY BEAUDOIN, Executive Director, Glennallen/Copper Valley Chamber of Commerce, said that she agreed with the previous witnesses and added that rural business owners need help from the state. REPRESENTATIVE DOLL remarked: I'm kind of curious about the effect of the marketing dollars that we're going to be putting in and when the tourism trade started to decline. I see that we have an increase in cruise ship traffic and more and more it would appear that people in this country prefer taking short, quick ... these wonderful trips on cruise ships and they pretty much stay on those ships or they, there's a contract with the ships to certain tour activities and I'm wondering if there's any correlation between the increased number of cruise ships coming and the way they contract and set up their recreational activities for there passengers and the actual decline of business ... to the small tour companies. ... If we add more money into this are we really going to get the benefit for the dollar or are things changing on a world level, that we're no longer going to see that kind of return on that dollar. REPRESENTATIVE LYNN suggested that the increase in the price of gasoline may limit travel on the road system. BRETT CARLSON, Member, Board of Directors, Alaska Travel Industry Association, answered yes; the cruise ship companies are providing vacations that the global market demands. Mr. Carlson said that cruise travel success is based on a trip that is easy to book, short, and available at a competitive price. In addition, the cruise industry spends $70 million per year on advertising. A drive or fly and drive vacation can not compete in cost with a cruise vacation. However, he said that he feels that tourists who are independent travelers are going to other destinations due to a lack of marketing by Alaska. 11:41:39 AM REPRESENTATIVE GATTO confirmed that the cruise industry budgets $70 million per year for marketing. MR. CARLSON answered yes; the cruise industry spends $70 million in marketing and advertising for travel in Alaska. REPRESENTATIVE GATTO observed that, according to the sponsor statement, the cruise industry will no longer be able to contribute voluntarily to the state marketing program. He said: I can't make the connection, between if they're spending $70 million and they can't contribute to the state marketing program, does this mean they're willing to spend $70 million of their own money on advertising, but won't contribute a couple of million to ATIA. MR. CARLSON surmised that Representative Gatto is right. He added that the bottom line is that the tourism industry in Alaska has been able to raise $5 million; $3 million is based on voluntary contributions and $2 million is for contributions that add value. He noted that the cruise industry will be providing $100 million to the state involuntarily through the Alaska Cruise Ship Initiative tax. 11:43:26 AM REPRESENTATIVE GATTO compared the statement "will no longer" able to" with the statement "will no longer." He remarked: Is that an intent? I guess what I'm trying to find out is, did they make a declaration, or is this just an estimate in the sectional analysis of a probability or a likelihood or maybe a guess. MR. CARLSON opined that the statement is a reasonable likelihood, and that no declarations have been made, as yet. He added that the ATIA would not stake the future of thousands of small businesses on the hope that the cruise industry will continue its voluntary contribution. REPRESENTATIVE GATTO asked whether the contribution is truly voluntary or is based on an assessment or dues. MR. CARLSON replied that the cruise industry contribution is voluntary. The purchase of advertising in the ATIA "Vacation Planner" and participation in outside marketing events totals $2.5 million in value added contributions to ATIA's budget. REPRESENTATIVE DOLL asked the bill sponsors whether there is flexibility in the 90 percent to 10 percent match ratio. MS. MILLETT responded that the percentage is a policy call to be made by the legislature. She added that marketing dollars do not go far when funding a competitive national campaign. MR. CARLSON opined that the percentage is based on the $20 million minimum that ATIA estimates is necessary. This minimum amount is determined by comparisons with what is spent by other destinations. Mr. Carlson concluded by saying that ATIA can raise $2 million this year. 11:49:02 AM CHAIR NEUMAN closed public testimony. REPRESENTATIVE LYNN moved to report HB 147, 25-LS0560\C, out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE GATTO objected. 11:49:59 AM A roll call vote was taken. Representatives Doogan, Lynn, Johansen, Doll, and Neuman voted in favor of HB 147. Representative Gatto voted against it. Therefore, HB 147 was reported out of the House Special Committee on Economic Development, International Trade and Tourism by a vote of 5-1. 11:49:57 AM REPRESENTATIVE DOOGAN requested a copy of the detailed ATIA proposed budget for FY 07. 11:51:18 AM REPRESENTATIVE LYNN moved to report HB 167, 25-LS0656\C out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE GATTO objected. 11:52:18 AM A roll call vote was taken. Representatives Johansen, Doll, Doogan, Lynn, and Neuman voted in favor of HB 167. Representative Gatto voted against it. Therefore, HB 167 was reported out of the House Special Committee on Economic Development, International Trade and Tourism by a vote of 5-1.
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