Legislature(2007 - 2008)HOUSE FINANCE 519
04/17/2007 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB133 | |
| HB159 | |
| HB205 | |
| HB147 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 147 | TELECONFERENCED | |
| + | HB 159 | TELECONFERENCED | |
| + | HB 205 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 133 | TELECONFERENCED | |
HOUSE BILL NO. 147
An Act relating to matching funds in state tourism
marketing contracts with trade associations.
CHARISSE MILLETT, STAFF, REPRESENTATIVE JOHN HARRIS,
explained that the legislation changes the current 50/50 to
90/10 match for tourism funding. The Alaska Travel Industry
Association (ATIA) does not believe that they are able to do
a good job at marketing the State of Alaska at the 50/50
match.
BRETT CARLSON, VICE CHAIR, ALASKA TRAVEL INDUSTRY
ASSOCIATION (ATIA), COLDFOOT, spoke in support of HB 147,
noting that it is a "critical must have" piece of
legislation to the future of the tourism industry.
Mr. Carlson pointed out that Alaska's destination marketing
program is facing a 60% fund cut unless the bill passes.
The focus of HB 147 is to determine language to govern
ATIA's ability to access dollars, changing the level at
which the private sector is required to match dollars. He
provided chart handouts - Tourism Marketing Industry Payment
in Lieu of Taxes (Copy on File.)
Mr. Carlson noted that in 2001, the Millennium plan was
introduced, in which the Alaska tourism industry faced two
options:
· Tax themselves, trusting that future legislatures
would reinvest new travel industry tax dollars back
into destination marketing, or
· Attempt to raise destination marketing funds through
voluntary payments in lieu of taxes, from cruise
ships. That is what ATIA choose.
2:57:46 PM
Mr. Carlson pointed that during the years of a payment in
lieu of taxes scenario, destination marketing did survive,
but did not thrive. ATIA met match through payments in lieu
of taxes. He recommended the need for change.
In recent years, legislators through the vehicle rental tax
and cruise taxes made the tax versus the payment in lieu of
taxes decision. Changes in the tax landscape called for a
return to a more traditional destination funding model.
Mr. Carlson informed members that travelers come to Alaska
and leave their money behind. State and local governments
take a portion and reinvest it, as does private industry.
He maintained that HB 147 returns the legislation to the
norm.
Mr. Carlson continued, $2 million dollars is the level of
non-cruise, pay to play dollars that can be generated by
ATIA. The goal is $20 million, $18 million, which hopefully
will come from the State.
Mr. Carlson stressed that if the State only contributes $8
million, ATIA would still contribute $2 million. There is
incentive to contribute the maximum possible. ATIA's goal
is to have a match that will work this year and in the
future without additional legislative changes. ATIA
believes that the 90/10 match is the answer & will help
prepare Alaska for the future.
3:04:22 PM
Representative Gara questioned the number of ATIA members
that contribute. Mr. Carlson estimated that there is about
1,000 contributing members. Representative Gara observed
then the average would then be about $2,000 each. Mr.
Carlson indicated there are large and small contributors.
Representative Gara asked the percentage of businesses that
pay a corporate tax back to the State. Mr. Carlson did not
know.
3:06:14 PM
Co-Chair Meyer inquired if a bed tax had been considered,
noting that Anchorage collects a bed tax & then pays it into
regional tourism. Mr. Carlson acknowledged that a bed tax
was a potential option. He noted that small businesses are
concerned with additional taxes being reinvested; he
discussed the vehicle rental tax, which initially was not
reinvested.
3:08:21 PM
Co-Chair Meyer advised that car rental tax brings in about
$8 million dollars, of which about $5 million is reinvested
into tourism. He expressed concern that the tourism
industry relies so heavily on support from the General Fund.
STAN STEPHENS, PRESIDENT, STAN STEPHENS WILDLIFE CRUISES,
VALDEZ, spoke in support of HB 147. He noted that the
changes that took place last fall with the new cruise ship
tax initiative changed the financial structure of the ATIA
marketing program. Two-thirds of the ATIM Board represents
small businesses in Alaska reflecting the make-up of
membership. Also, even though the cruise industry
represents the smaller number of board members, they still
voluntarily contributed 60% of State required match. With
the amount of unknowns about the initiative, ATIA's mission
is to find a way to save the marketing program, hence HB
147.
Mr. Stephens continued, in FY07, the total combined funds
from the State and private contributions was $l0 million
dollars; $5 million State matched by $5 million voluntarily
contributed by the travel industry. With the passage of the
cruise ship initiative, the cruise industry will now be
required to pay millions of dollars directly to the State
and no longer is likely to pay a voluntary contribution to
Alaska's travel marketing campaign targeted at the non-
cruise travelers.
3:13:36 PM
Representative Crawford referred to the Cruise ship
Initiative, questioning what would occur if the cruise ship
industry withheld their contribution. Mr. Stephens said
they would have to wait to see, emphasizing the importance
of marketing.
3:14 :53 PM
Co-Chair Meyer questioned if the cruise ship industry would
withhold their support. Mr. Stephens emphasized that all
business must help in the generic marketing program.
3:16:29 PM
In response to a question by Co-Chair Meyer, Mr. Carlson
noted that the cruise ship industry has indicated that they
would not contribute the previous $2 million. Mr. Carlson
stressed that those benefits do not spread evenly into each
area and that the independent visitors must be reached. The
program should be by and for Alaskans, offering vacation
planning and allowing all visitors to connect with the 3,000
plus independent tourism businesses.
3:18:22 PM
Co-Chair Chenault inquired how many tourism businesses exist
statewide. Mr. Carlson estimated that there are between
2,500 to 3,000. He explained that some businesses are so
small that they contribute only to their local tourism
marketing effort.
Co-Chair Chenault commented on the tourism level in Kenai.
Mr. Stephens noted that ATIA does represent all the very
small business statewide even though there are not members.
The State has a responsibility to help all business
advertise.
Co-Chair Meyer commended the track taken, while encouraging
the membership to participate at a higher level.
Representative Kelly noted something must shift. ATIA was
funded at a higher amount than last year; he was intrigued
with the percentage option, but supported the cruise ship
choice.
3:26:33 PM
Representative Hawker observed that the issue appears to be
the passage of the cruise tax, which changed the Industry.
He noted the number of communications from the general
public and the tourism industry was done deliberately and is
off limit funds. Understanding that, he commented that the
cruise industry will pass the tax on to their customers. He
did not have sympathy for that industry. He emphasized that
the concern is "big".
3:30:21 PM
Vice Chair Stoltze mentioned the vehicle rental tax
relationship to the visitor industry and questioned if
"history was being revised". Mr. Carlson recalled that it
was not a tax that the visitor industry supported or
proposed. The final bill did hurt the independent traveler.
There was language added indicating that funds raised would
be placed into a separate account and could be used for
marketing.
Vice Chair Stoltze asked if a lower rate had been proposed
for recreational vehicles. Mr. Carlson said yes, lowered
from 10% to 3% for recreational vehicles only.
In response to a question by Vice Chair Stoltze, Mr. Carlson
commented on the long term vision for Alaska's marketing
program. It would not be bad if the independent small
business, in order to meet their match, could be completely
cruise focused. He wanted to see that the State of Alaska
program become a generic program to help all travelers.
Vice Chair Stoltze asked about language requiring ATIA to
come in at least 10%, if that allows the Department of
Community & Economic Development the required flexibility.
Mr. Carlson determined that should be the minimum.
3:36:35 PM
Representative Gara commented that the legislation initially
"rubbed him the wrong way" when anticipating that the
Industry should not get the rental car tax funds back; he
did not accept that tourism related dollars should be
returned.
3:41:42 PM
Representative Gara commented on his personal frustration on
the $15 million dollar increase request to the tourism
industry. He thought that the industry should be taxed at
the State level. He asked the total amount included in the
operating budget for tourism marketing. Co-Chair Meyer
advised that the State was in for $6 million dollars for the
50/50 match program and another $3 million dollars for the
independent travelers. Representative Kelly pointed out
that the difference comes from the Senate's position. The
House Finance Committee version proposed $6 million dollars
plus $720 thousand for the independent marketing. Mr.
Carlson corrected, the Senate has recommended $8 million and
$1.5 million for the independent traveler portion.
Representative Joule was surprised by the various
approaches. He commented that tourists are no longer coming
to his area. He hoped for an arrangement with the cruise
industry to bring more visitors in. He pointed out that his
district gets about 1,000 tourists a year now. He did not
think that the State's tourism dollars would get to people
off the beaten track. He commented that it was important to
invest in Rural Alaska. He appreciated the effort of the
legislation.
Mr. Stephens concluded that the tourism industry puts about
$20 million dollars into the General Fund. The Industry is
between a rock and hard spot at this time. In FY06, ATIA
placed $1.5 billion dollars into the State's economy. Many
statewide businesses could not survive without tourism
during the summer. If the future holds corporate and
gambling taxes, then maybe there could be funds taken from
those 1090's.
At present time, the gas line is about 10 years away. If
not for the price of oil, Alaska would be hurting. He
thought that tourism was the answer until the gas line comes
on. Alaska has tourism potential and the Legislature needs
to help find that potential. He urged a long range plan,
which includes funding tourism.
3:53:24 PM
HB 147 was HELD in Committee for further consideration.
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