Legislature(1999 - 2000)
02/29/2000 01:45 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 420
An Act relating to tourism marketing contracts; and
providing for an effective date.
Co-Chair Therriault stated that HB 420 had been introduced
at his request and would address the shift in the contract
date between the Department and ATIA.
ANNE CAMPBELL, (TESTIFIED VIA TELECONFERENCE), CHAIR, ALASKA
TRAVEL INDUSTRY ASSOCIATION (ATIA), ANCHORAGE, voiced her
concern regarding the timing scheduled to sign the upcoming
contract. She requested that it be changed because of
production expense and fund raising activities which need to
take place six to eight months before an advertising
campaign can be initiated.
She commented that visitors planning a trip to Alaska
require information approximately one year prior to their
intended travel date. Starting distribution of the 2001
Vacation Planner in October 2000 is critical to visitor
industry businesses. Research has shown that the peak
planning period for an Alaska vacation is 6 to 9 months
prior to the intended date of travel.
Ms. Campbell stated that ATIA is concerned that there needs
to be more clarity regarding the industry intent. The
industry understands that at this time, the fund will not be
available until July. By making that an earlier date would
provide ATIA a target date to address other activities
regarding production, marketing and raising commitments from
the private sector.
Co-Chair Therriault interjected that if the contract date
were changed, the Legislature would still be in session and
would be able to address concerns resulting from the
transition year. He thought that the Legislature should be
able to balance the marketing activity. He wanted to see
that written in contract and signed during session. He
asked if there would be problems completing the negotiations
by April 1st.
Ms. Campbell replied that ATIA hopes to be able to meet that
date. She pointed out that currently there is communication
between the Department and ATIA. She noted that there are
philosophical differences with the Department, however, both
parties are attempting to have a contract resolution as
expeditiously as possible.
Representative Phillips voiced concern that HB 420 had not
yet come to the Tourism Committee. She emphasized that the
proposed legislation changes more than the date.
Representative Phillips requested that the Department
testify on the changes which the legislation would make.
JEFF BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY &
ECONOMIC DEVELOPMENT testified that the Department does have
concerns with the proposed legislation and listed the
general concerns. He noted that the April 1st date was to
early, however, August 1st would be better for everyone
involved. It is very difficult to negotiate a contract when
the amount of the contract is indefinite. Mr. Bush pointed
out that in the manner in which the legislation was
structured last year, the Department is responsible to
decide which components must exist in a tourism contract.
He stressed that it would be difficult to accomplish that
without knowing in advance what the funding level is going
to be.
Mr. Bush pointed out that an additional concern is that the
proposed April date falls at the end of the Legislature.
That is a very busy time for the Department and private
industry as well. He pointed out that the fund raising
takes place through the selling of the Vacation Planner ads
through May. He projected that it would be difficult for
industry to guarantee fund raising by the April 1st date.
Under statute, the industry would need to guarantee a match
requirement. He reiterated that it would be difficult to
raise the funds by the April 1st date.
Mr. Bush advised that the Department's concerns are more
magnified this year in as much as it is the transition year.
The legislation requires that the Department approve a
marketing plan. That marketing plan is supposed to be put
together by a marketing team. He indicated that the team
was just recently formed a couple of weeks ago. There has
not been a plan yet proposed by the industry. He stated
that the Department is confident that a plan will not be
available by April 1st.
Mr. Bush quoted AS 44.33.125(B), which lists the essential
components that should be included in a marketing contract.
Mr. Bush reiterated that creating such a plan is unrealistic
given the short period of time remaining before April 1st.
He mentioned the fund raising issue. He added that if a
contract is not entered into, then theoretically, the
Department is supposed to do the marketing without even
considering entering into a contract.
Mr. Bush noted that the State is responsible to determine
that the entity that they are contracting with has a set
membership. That membership is set, based upon who actually
joins the organization. The permanent members are not yet
known and the Department can not enter into a contract with
them until that information is available.
Representative Phillips inquired if the Department thought
that the concerns expressed could be handled by July 1st.
Mr. Bush replied that they could be addressed by then and
that it would be good timing as that is the beginning of the
new fiscal year.
Co-Chair Therriault interjected that the Department
negotiates contracts all the time that are contingent on
funding from the Legislature. He asked why that would be a
problem for this contract. Mr. Bush explained that it would
be uncomfortable with concerns such as the Internet
coverage. In conclusion, he stated it would be the
components "at the edge" that would be an issue for budget
concerns.
Co-Chair Therriault advised that the industry has indicated
that they would take the current plan and move it forward.
Mr. Bush explained that a proposal being rolled forward has
been expected since the beginning of the process. However,
the language of the statue reads that the marketing plan
must be put together by their marketing organization and
that it must meet the requirements of the statute. He
argued that there might be a dispute over some of the
details of that plan. Until the plan is presented to the
Department, there is no assurance that the existing program
will roll forward.
Vice Chair Bunde supported the idea of an April date giving
the Legislature long-term oversight, however, he understood
that this was a transition year and that the July might work
better. Mr. Bush acknowledged that moving the date to July
1st would alleviate many of the Department's concerns. He
admitted that there remain concerns regarding appropriations
following the contract issue.
Ms. Campbell clarified that the ATIA marketing committee has
been meeting for the past two weeks in order to able to meet
the deadlines. She requested more discussion regarding what
needs to be included in the marketing plan. Ms. Campbell
noted that April 1st is the goal.
Co-Chair Therriault inquired if the funding amount "slipped"
a little, would that language is expected in the contract.
Ms. Campbell explained that industry understands the
position of the Department, however, the reality is that
there are targets which will continue to work well for ATIA.
Co-Chair Therriault pointed out that there is a condensed
time period during the summer months when the tourism
activities are at their peak. He believed that last year,
the Legislature made the wrong decision when choosing the
August date. If the July 1st date were used, that would be
in conflict with the peak tourism period. Ms. Campbell
agreed the wrong date had been chosen.
Ms. Campbell pointed out that ATIA does not collect all the
funds at one time. ATIA is prepared to bring the match in
as the funds are brought in. Co-Chair Therriault inquired
the latest date that would work for ATIA that would not be
interuptive with seasonal business. Ms. Campbell replied
that industry could go with the May 1st date this year.
Representative J. Davies suggested an option would be to
forward fund the contract for one year, which would then
provide time for ATIA to raise the match. He agreed that
this year, presents a unique circumstance. Co-Chair
Therriault responded that he did not anticipate funding this
component for two years.
Representative Phillips pointed out that at present time,
the Department does not have an "entity" to negotiate with.
She agreed that there would be great merit in establishing
an earlier time for the industry in years out, but not this
year, the transition year. Representative Phillips
recommended that for this year only, the date be established
for July 1st and from then forward, the date could be set for
either April or May 1st.
CAROL KASZA, (TESTIFIED VIA TELECONFERENCE), ARCTIC TREKS,
FAIRBANKS, agreed with Department's recommendations
regarding the date change. She commented that she is a
member of ATIA. She believed that there would be a "shake
down" in the original negotiations. Ms. Kasza commented
that in the future, the April date would make more sense and
that the idea of forward funding would be the best idea.
Ms. Kasza voiced full support of fully funding the budget
for the Division of Tourism.
Co-Chair Therriault MOVED to adopt Amendment 1, which would
change the date to May 1, on Page 1, Line 6. Representative
Phillips OBJECTED. She reiterated that one more month would
not work this year and that ATIA needs the time to get the
program in place so that it will be effective and the
transition has time to work.
Representative Grussendorf commented that the proposed
change would place the Division into a "state of flux" that
it would spread the Department to "thin". He supported a
date change to July 1st. Co-Chair Therriault reiterated that
it is important that the Legislature be in session in order
to comment on the final product.
Vice Chair Bunde questioned the urgency for this year. He
noted that May 1st would be too late for the Legislature to
have much input. Co-Chair Therriault explained that it is
important to get through the transition year. He believed
that this would be the most important year.
Representative G. Davis pointed out that this "plan" has
been thought out and discussed for a long time. He believed
that the plan could already be put in place. Co-Chair
Therriault reiterated his intent that the Committee was here
to look at the contract.
Representative Phillips emphasized that it is important to
realize that until the membership is set, the Department
does not have anyone to contract with. She pointed out the
concern has not yet been addressed.
A roll call vote was taken on the motion.
IN FAVOR: Williams, Bunde, G. Davis, Foster, Mulder,
Therriault
OPPOSED: Phillips, J. Davies, Grussendorf, Moses
Representative Austerman was not present for the vote.
The MOTION PASSED (6-4).
Co-Chair Mulder MOVED to report CS HB 420 (FIN) out of
Committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
CS HB 420 (FIN) was reported out of Committee with "no
recommendation".
(TAPE CHANGE, HFC 00-43, Side 2)
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