Legislature(2007 - 2008)BARNES 124
04/10/2007 05:00 PM House ECONOMIC DEV., TRADE, AND TOURISM
| Audio | Topic |
|---|---|
| Start | |
| HB217 | |
| Presentation: Alaska Works Partnership | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 217 | TELECONFERENCED | |
HB 217-TOURISM DISCLOSURES AND NOTICES 5:04:24 PM CHAIR NEUMAN announced that the first order of business would be HOUSE BILL NO. 217, "An Act relating to required onboard disclosures and displays about tours, flight seeing operations, other shoreside activities, and visitors bureaus; and providing for an effective date." CHAIR NEUMAN opened the hearing to public testimony on HB 217. 5:06:01 PM RICHARD BENEVILLE, owner of Nome Discovery Tours, member of the Nome Chamber of Commerce, and board member of the Alaska State Chamber of Commerce, expressed his belief that HB 217 is punitive to the small business owner and to the cruise ship companies. He added that the bill is against fair play and the spirit of small business in Alaska. He urged the committee to not support the [bill]. 5:07:52 PM CHAIR NEUMAN asked how the bill is anti-business. MR. BENEVILLE stated that he was looking at a copy of the bill, and noted the language regarding the disclosure of fees. Mr. Beneville stated his understanding of the intent, but that the language of the bill is counter to free enterprise. He acknowledged that Nome does not have the cruise ship traffic of Southeast. 5:09:07 PM REPRESENTATIVE GATTO asked whether Mr. Beneville voted against the Alaska Cruise Ship Initiative (initiative). 5:09:32 PM MR. BENEVILLE answered yes. 5:09:43 PM REPRESENTATIVE GATTO opined that, after passage of the initiative, HB 217 was written to implement the decision by the voters. The initiative can not be repealed, it can only be modified. 5:10:17 PM MR. BENEVILLE suggested that the voters may have been confused by the wording of the initiative. 5:10:40 PM STAN STEPHENS, president, Stan Stephens Glacier & Wildlife Cruises, expressed his support of HB 217. Mr. Stephens stated that he participated in the advertising against the initiative and has always supported small business. He said that he saw the initiative as a grudge against the cruise ship industry and the disclosures required by its passage shut down competition, are un-American, and set a new precedent. He concluded by saying that HB 217 will dissolve some of the problems caused by the initiative. 5:13:04 PM REPRESENTATIVE DOLL asked whether there should be any regulation of cruise ship commission rates. 5:13:30 PM MR. STEPHENS expressed his feeling that there is no need for regulation. He said that he would not want his business pricing to be open to his competitors. 5:14:23 PM REPRESENTATIVE DOLL expressed her impression that the initiative was to protect small business and to regulate the cruise ship industry. MR. STEPHENS opined that this initiative hurts small business and could have an impact to businesses outside of the cruise ship industry. 5:15:09 PM LOREN GERHARD, vice president of Marine Operations, Four Seasons Tours, informed the committee that Four Seasons Tours employs about 70 workers in the summer, and contributes $1 million to the local economy. His business sells its tours on the cruise ships and to do so must meet standards of quality and of volume. He stressed that his company uses invoices to transfer payments and that transactions are monitored by taxing agencies. Mr. Gerhard said that his negotiations with the cruise ships are private, as are most negotiations between retailers and wholesalers. He expressed his belief that there are no other businesses, outside of tours sold on the ships, that are required to disclose wholesale prices. To be fair, he said, all commissions for travel agents should also be disclosed. He opined that the initiative was about the head tax, and the voters were unaware of this provision. Mr. Gerhard told the committee that he supports HB 217 because it reveals that a commission is paid, but will not disclose the wholesale price. He concluded by saying that the legislature has the authority and responsibility to modify the initiative. 5:19:54 PM CHAIR NEUMAN asked whether Mr. Gerhard would describe his business as a wholesale provider to the cruise ship industry. 5:20:17 PM MR. GERHARD answered yes. In response to a question, he noted that there is no commitment from the ship to a specific level of volume. The commission is negotiated periodically and is a routine business decision that balances a lower profit margin with a level of potential volume. 5:21:08 PM CHAIR NEUMAN asked whether a new competitor has an equal opportunity to approach the cruise industry about sales aboard the ships. 5:21:51 PM MR. GERHARD responded yes. However, the cruise ship companies will decide what activities to offer to their passengers and cannot offer every vendor. He opined that if the industry discloses the availability of other shoreside vendors, that disclosure should satisfy the intent of the initiative. In addition, the tours offered on the ship are a better product for the passengers. 5:23:02 PM CHAIR NEUMAN asked whether there is a high level of competition between on-shore tour operators for a sales arrangement with the cruise lines. 5:23:32 PM MR. GERHARD replied that the strong competition is the reason he does not want to disclose his wholesale price. 5:23:45 PM REPRESENTATIVE DOLL asked whether Mr. Gerhard has an interest in knowing what discount rates his competitors pay to the cruise lines. 5:24:09 PM MR. GERHARD assured the committee that he would be interested in the information; however, the state government does not have the right to require this information to be made public. 5:25:32 PM REPRESENTATIVE DOOGAN remarked: We had an election in which the voters decided that this should be done. ... Apparently, if I understand your argument correctly, you don't like that they did that, you don't think it's fair that they did that and you think that we ought to do something that changes what they approved, under the theory that they didn't really understand what they were doing.... 5:26:19 PM MR. GERHARD acknowledged that the initiative has passed, even though tour operators tried to inform the public about the disclosure measure. He expressed his belief that the intent of the voters is met by HB 217. 5:27:11 PM REPRESENTATIVE DOOGAN asked: Don't we have to assume that the voters knew exactly what they were doing and voted to do this on purpose?" ... If we did that, don't we have to assume that their intent was to do just this, to require exactly what the initiative says it requires? 5:27:40 PM MR. GERHARD remarked: I think that the intent is, is to describe to tourists that the relationship with these cruise ship companies involves a commission. I have no problem admitting that. But for me to have to provide my precise ... wholesale prices, it's overreach, is what it is. 5:28:17 PM REPRESENTATIVE DOOGAN said: This is not, in my view, a particularly discretionary matter for us. ... I don't think that we can assume that we know why they did it, or what parts of it they were voting on, or what parts of it they didn't pay any attention to. ... I just want everybody who wants to make this argument to the committee to understand what it is they're asking us to do here. 5:29:30 PM MR. GERHARD expressed his understanding that the change can be made through the Legislative Legal and Research division of the Legislative Affairs Agency. 5:30:04 PM CHAIR NEUMAN observed that it is the legislature's job to review the initiative; in fact, subtle changes have been made to the 90 Day Session Initiative. 5:30:33 PM REPRESENTATIVE GATTO recalled that the Gas Reserves Tax Initiative failed and inquired whether it was appropriate for the legislature to repeal the initiative and impose the tax. He inquired also whether the legislature should alter the 90 Day Session Initiative. He then said: Should we go to this bill, in front of us, and say the public probably wasn't aware of what they were voting on for the head tax. What they were really voting on was part four, which was the information that is supposed to be revealed. ... I don't want to simply object to the people's wishes out of hand and say, and support essentially what your testimony was, was that people may have erred, in not understanding what was there. ... I don't know how I could possibly sit here and say they didn't know. ... What I will do, though, and I'm in favor of the bill myself, is to say, I think what we can do to make this somewhat easier for businessmen, ... but not to repeal it. 5:33:50 PM REPRESENTATIVE LYNN stated that Sec. 1 of the bill includes what the voters approved and expands to include another alternative disclosure. He indicated his support of the bill at this time. 5:34:46 PM ROBERT JACOBSEN, president of Wings of Alaska and Wings Airlines, informed the committee that his small airline began to sell tours on board the ships 25 years ago. Last year, Wings flew 80,000 passengers on excursions. He expressed his belief that initiatives should be about a single issue and that the lieutenant governor made a mistake by sanctioning the Alaska Cruise Ship Initiative. If the initiative concerned one issue, there would be no doubt about the intent of the voters. Mr. Jacobsen said that competition is open to new operators. In fact, one marine tour company began operations five years ago, and it was able to establish sales on the cruise ships without any problem. He said that HB 217 refers to his business as a "paid promotion" and that is an inaccurate representation of his airline. He remarked: But, if we're going to say that ... [in HB 217], "other alternatives may be available at a lower price," then I suggest that we also say that "they are also available at a higher price, and they are also available at lesser quality, they're also available by fly-by-nights" ... How far do we go there, when we start saying that they're available at a lower price? ... 5:39:24 PM CHAIR NEUMAN stated that the language in the bill is just to inform the passengers about alternatives. 5:39:36 PM MR. JACOBSEN agreed that alternatives are great; however, the alternatives must be qualified with more information. 5:39:53 PM REPRESENTATIVE GATTO stated his belief that on-shore tours have no opportunity to compete with the tours sold on ships. The motivation for this part of the initiative is that other businesses can not get to the passengers to market their tours. He said this raises the question of whether the cruise ships own the port or whether there is a free market. 5:41:52 PM MR. JACOBSEN replied that the alternatives referred to should include: higher value, lesser value, lesser quality, and fly- by-nights. 5:42:41 PM CHAIR NEUMAN announced that public testimony was closed for this meeting and that the sponsor will present a committee substitute at the meeting scheduled for April 17, 2007. [HB 217 was held in committee]
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