Legislature(1995 - 1996)
03/06/1995 03:08 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 220 - ALASKA TOURISM MARKETING COUNCIL Number 000 CHAIRMAN KOTT stated that the next bill up was HB 220. ROD MOURANT, ADMINISTRATIVE ASSISTANT TO REPRESENTATIVE PETE KOTT, prime sponsor of HB 220, stated that HB 220 extends the sunset date of the Alaska Tourism Marketing Council (ATMC) from the current date of 1996, to 1999. He stated, that with the decline in oil production and oil pricing, alternate sources of state revenue and private sector diversity and expansion become more important each year. This legislation calls on the Commissioner of the Department of Commerce and Economic Development to contract with qualified in- state trade associations to promote tourism, and Alaska as a visitor destination point, through a cooperative marketing effort. Mr. Mourant continued that it states if a qualified in-state trade association exists and is interested. It also enables an industry directed approach rather than one that's bureaucratic directed or bureaucratic run. He stated that the legislation also changes the travel and per diem statutes relating to the ATMC. He explained that at the current time, most in-state travel is borne by the individual board members. This would allow the board members, when travelling out of state, to be reimbursed for their expenses. MR. MOURANT stated that Sections 3 and 4 elevate the importance of the ATMC, to the commissioner's level of respect. It does so by calling on the Commissioner to review the budget as proposed by ATMC, rather than the Director of Tourism, and further by calling on the Commissioner as opposed to the Director of Tourism, to sign a contract with the qualified and selected tourism association. MR. MOURANT stated that Section 5 changes the sunset date from 1996 to 1999. He added that the fiscal note that accompanies shows no expense in FY96 and FY97. It projects the operating budget of the ATMC as the fiscal note. Number 075 REPRESENTATIVE ELTON asked why they chose the date of December 30, 1999, rather than the end of the fiscal year of June 30. MR. MOURANT replied that traditionally, sunset dates are extended in four year increments. The change of the contract language in Section 1, page 2 line 2, allows for development and consistency in the marketing effort, instead of going through the expense and effort of redesigning a marketing effort every two years. Number 104 REPRESENTATIVE ELTON noted that the contract with the industry group ends six months prior to the ending of the ATMC, if the Sunset is not removed. He inquired as to why you wouldn't want both to occur at the same time, instead of being separated by six months. MR. MOURANT stated that this wasn't intentional, but it has worked out so that if they go into a wind down year, it gives the subsequent legislature time to consider the circumstance. CHAIRMAN KOTT added that the bill extends an opportunity for the contract to be extended up to four years, but not mandating it. Number 135 REPRESENTATIVE GENE KUBINA stated that they should leave in Section 1, the language that reads "the best interest in the state." MR. MOURANT explained that the best interest of the state, in regard to ATMC and tourism marketing, is demonstrated already through actions of the legislature. This is done by the extension of the sunset date of ATMC and also with the adoption of a budget. He stated that the purpose of changing the language to "a qualified trade association in-state that has an interest in promoting", is to allow an industry directed promotional effort in Alaska, as opposed to a bureaucracy doing the same thing. REPRESENTATIVE ELTON stated that there is a declaration of intent by the legislature that promoting tourism is in the best interest of the state. We're talking here about taking that legislative intent out. He stated that he would like to keep the statement, "that it is in the best interest of the state to promote tourism." Number 181 MR. MOURANT pointed out that the operative language in the amendment is that the commissioner can determine there is in fact a qualified trade association in the state that is interested in promoting. He commented that they were calling on the commissioner to make the determination that there is one. The commissioner shall contract with a single qualified trade association. Number 194 JEFF BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, testified in support of HB 220. In reference to the December date mentioned earlier, he stated that this language is already in existing law, and there's not any change. He commented that if the committee felt it better to coincide with the fiscal year than the calendar year, there wouldn't be much opposition. He suggested a change the department would like to see. On page 1, line 11, change the word "shall" to "may", so the Commissioner is given some discretion on when to enter into the contract with the qualified trade association. In response to an earlier question of whether "in the state" should be included with respect to the qualified trade association, he stated that this was unnecessary, as this language is already included in the definition of a qualified trade association in the statute. Number 240 REPRESENTATIVE PORTER asked if changing the "shall" to "may", would allow the commissioner to have regional organizations rather than one single organization. MR. BUSH responded that it wouldn't. He explained that the definition of qualified trade association, requires that it be a statewide organization. Number 259 CHAIRMAN KOTT asked if through the negotiating process, some kind of promulgated agreement could occur between the department and the trade association. MR. BUSH stated that if no contract is entered into with a qualified trade association, the ATMC still exists. The Board of Directors of the ATMC consists of the director of the Division of Tourism and two other commissioners, one being the Commissioner of Commerce, the other Commissioner is appointed by the Governor. Mr. Bush stated that there is an interest from both parties' perspective to enter into a contract. CHAIRMAN KOTT asked if the insertion of "may" would allow the department to circumvent the existing trade association and permit the Division of Tourism to promote Alaska. Number 288 MR. BUSH responded under that circumstance, the department would have some discretion to decide to enter into a contract. The department has an interest in promoting ATMC. The insertion of this language gives the state some discretion to negotiate. Number 316 REPRESENTATIVE KUBINA agreed with department. MR. BUSH stated that the AVA's position is that it is the best interest of the state to create a joint cooperative marketing program. He stated taking "it is in the best interest of the state" and inserting changing "shall" to "may", states more accurately that a cooperative marketing program is an appropriate device, but also leaves the department some discretion on negotiating a contract. Number 348 CHAIRMAN KOTT pointed out that this language had been here since 1987, the year prior to the creation of the ATMC. Number 355 REPRESENTATIVE ELTON asked if there was any discussion on the departmental level whether they might want to have three years with three (one year) extensions. MR. BUSH stated that there had been no discussion on that point. He agreed with Representative Elton that a long term contract was the way to go. CHAIRMAN KOTT asked if the length of the contract would give any leverage. Number 373 REPRESENTATIVE KUBINA asked if there were problems with contracts extending longer than a Governor's term. MR. BUSH responded that contracts are cancelable on a certain amount of notice. BOB DINDINGER, VICE CHAIRMAN, ALASKA TOURISM MARKETING COUNCIL (ATMC), testified in favor of HB 220. In reference to the issue travel reimbursement, he explained that some board members had traveled to New York on several occasions to finalize the deal with the Good Morning America Show. The board did not pay them any compensation, salary or otherwise, but did feel that they should be compensated for travel. The board then discovered a possible interpretation of the by-laws that travel expenses were not reimbursable. However, at the time of the negotiation of the ATMC, the non-allowable reimbursement for out of state travel applied if the board were to hold meetings out of state. He pointed out that it is not the intention of the council to hold meetings out of state. But to do the business of the council, some members may have to travel out of state for non-meeting purposes. MR. DINDINGER explained that, on the issue of the sunset date, they chose December as opposed to June 30, to allow for a six month wind down period if the council were to ever sunset. He closed by stating that the ATMC was in concurrence with the department in changing the language from "shall" to "may". Number 458 JOHN LITTEN, ALASKA VISITORS ASSOCIATION (AVA), testified via teleconference in support of HB 220. He stated that he has followed this statute closely since its inception in 1986. Mr. Litten said that the language changes have enabled the ATMC to make adjustment in the programs that help Alaska remain competitive in the national marketplace. He concluded that the changes being proposed today are minor. They enable the council to promote effectively, and they clarify the responsibilities of the Commissioner and the council. Number 477 JOHNE BINKLEY, PRESIDENT OF the ALASKA VISITORS ASSOCIATION, testified via teleconference in support of HB 220. He commented that the extension date would have no material effect on the extension or re authorization of the ATMC. He continued that they didn't have any opposition to the department's recommendation of changing the word "shall" to "may". Number 505 ALAN LEMASTER testified in support of HB 220. He stated that he was an ex-member of the AVA, and he felt that the organization has done a great job over the many years, along with the ATMC, and continues to do the best job it can. However, he explained that he is an ex-member of the AVA, and an ex-advertiser in the ATMC vacation planner, because he can't afford it. He stated that the 25 percent matching fund policy dictated by the legislature is cutting hundreds and hundreds of businesses ability to advertise in this very important place. He stated that the same advertising of a two inch color ad with a two inch narrative, which two years ago cost him $1,200 would now cost him $2,800. He explained that Alaska desperately needs the AVA and ATMC, but also desperately needs a program that won't exclude the small businesses in favor of the large companies that can afford to advertise. Number 527 REPRESENTATIVE KUBINA asked Mr. Lemaster what he felt the legislature or AVA could do to help with that issue. MR. LEMASTER stated that a year or two ago the legislature mandated that the AVA come up with a 25 percent matching fund. In order to raise those funds, the AVA found it necessary to increase the cost of the advertising in the vacation planner, which is the small businessman's tool. He pointed out that the AVA may be getting more money from the legislature this year, so this would further raise advertising costs. The problem he stated was with the 25 percent matching fund. FREDERICK DURE, MEMBER, ALASKA VISITORS ASSOCIATION, ALASKA WILDERNESS RECREATION AND TOURISM ASSOCIATION, testified via teleconference in support of HB 220. He stated that he had 20 years experience in the tourism industry. He is currently a marketing consultant for small and medium sized businesses that generally have sales less than $1 million. He stated he supports HB 220; however, the proposed rewording in Section 1, (b), if approved could have a major negative impact on the several thousand Alaskan tourism businesses. He stated the following four concerns: He supports the general concept; however, he and others are adamantly against the proposed change to Section 1, (b) that reads "if the commissioner determines that it is in the best interest of the state to promote the state as a destination through the cooperative marketing program, the commissioner shall contract with a single qualified trade association to jointly manage the council". This is to be replaced by "there is a qualified trade association in the state that has an interest in promoting the state as a destination". He said that this rewording empowers the AVA to the exclusion of those tourism business interests which are not represented or supported by the AVA. To exclude the qualifier "in the best interest of the state," would do an injustice to businesses not represented or supported by the AVA. There is not equal representation for the majority of the industry segments, with half the seats on the ATMC placed by the AVA, the other half acquired from influence from the AVA. Those that are members of the AVA, and are supported by its powers, are able to leverage their representation in the marketing of Alaskan tourism. Contrary to popular belief, he stated, of the more than 3,000 tourism business in Alaska, only approximately 700 are members of the AVA. He said that he didn't feel this is a fair and equal representation of Alaska. Number 604 REPRESENTATIVE ELTON stated that it was common to hear complaints about the Juneau and Anchorage Chamber of Commerce. One of the ways to assure that those segments of the visitor industry that are under represented in the AVA, is to join AVA so that you can increase your representation and change the corporate culture, as opposed to denying the state the ability to contract exclusively with the AVA. MR. DURE acknowledged that this was an excellent point. However, he stated this was like the chicken with the egg problem. Does the AVA recognize the interests of all the different industry segments, and, therefore, present equal representation, or do the industry suppliers that aren't represented by the AVA join the AVA to change the corporate culture to gain the equal representation they want. Number 618 TINA LINDGREN, EXECUTIVE DIRECTOR, Alaska Visitors Association, testified via teleconference in support of HB 220. She affirmed that the AVA represents members in all segments of the industry. Ms. Lindgren stated that the businesses that feel there is not equal representation should make themselves known to the Governor's Office. She stated that the passage of HB 220 was the number one priority of the AVA, due to the importance of cooperative marketing and the jobs that are directly affected. She agreed that (indisc.---end of tape) TAPE 15, SIDE A Number 000 NANCY LETHCOE, PRESIDENT, ALASKA WILDERNESS RECREATION AND TOURISM ASSOCIATION (AWRTA), testified that they support the reauthorization of the ATMC. However, she suggested changes in the legislation. Ms. Lethcoe stated that they support retaining the language "it is the best interest of the state to promote the state as a destination". She explained that the legislature makes the best interest determination, on a general level, and the commissioner should retain the ability to make that determination on a specific level. In addition, with respect to the language "the commissioner may or shall contract with a single qualified trade association", she requested the word "single" be deleted. Ms. Lethcoe suggested that the commissioner be given the option of allocating some of the state's tourism marketing dollars, to groups that represent specific components of the tourism industry, such as hunting, sport fishing, and wilderness guides, as well as geographic areas such as local convention and visitor's bureaus. She continued that in Section 2, page 2, line 17, they would like the number 10 changed to 8, so the line would read "the contract shall provide that the trade association may select up to 8 members. On line 21 the change would be from 10 to 12, the line would read "the governor shall appoint 12 other board members." The reason for the change is that board members appointed by the trade organization are appointed on the basis of the amount of money their companies contribute to the marketing program, and not on the basis of geographic representation or the segment of tourism they represent. She explained that board members appointed by the Governor are broadly representative of different regions of the state. She stated that the change to line 24 would make sure that the state's marketing dollars are distributed equitably throughout the state. Number 089 REPRESENTATIVE KUBINA asked if her association had ever taken these concerns to the AVA. MS. LETHCOE replied that she had recently spoken with the AVA on the change to the language "best interest to the state" however, she stated that the AWRTA was not a member of the AVA, and they do not support the governing structure of the AVA. She commented that voting rights within the AVA depend on how much money you paid in membership fees. It is difficult for small businesses to effect change from within the AVA. REPRESENTATIVE KUBINA asked if this was brought up during the transition. MS. LETHCOE, stated that she sat on the transition policy team for marketing. The major point of conflict was whether it should be the policy that state money should be spent primarily to market Alaskan owned and operated businesses, or to promote the greatest number of people coming to the state. She stated that cruise ship passengers only spend approximately 17 percent of their travel dollars within the state, whereas independent package visitors spend 84 percent of their money within the state. She asked that there be an independent study on the economic impact of the program. CHAIRMAN KOTT commented that the McDowell Group does a yearly report. MS. LETHCOE responded that they don't study these types of questions. CHAIRMAN KOTT asked if there was any further public testimony. Hearing none, public testimony was closed. Number 187 REPRESENTATIVE PORTER made a motion that on page 1, line 11, the "shall" be changed to "may". CHAIRMAN KOTT stated that there was a motion to change the language on page 1, line 11, from "shall" to "may". He asked if there was an objection to Amendment 1. Hearing none, Amendment 1 was adopted. REPRESENTATIVE KUBINA commented that he would follow up on the suggestions made by Nancy Lethcoe and talk to AVA and the department concerning these issues. Number 209 REPRESENTATIVE ELTON stated that he would argue against removing "single qualified trade association". He explained that if you start taking things from under the umbrella, the umbrella gets many holes. He suggested that instead of trying to designate seats for highway, sport fishing, or eco-tourism, an alternative may be to designate a certain number of seats to those companies that have an Alaskan payroll of over $1 million and a certain number to Alaskan payrolls under $1 million. He made a motion to move the bill forward. Number 237 CHAIRMAN KOTT commented that there was a balance between government and the private sector with the ATMC. He stated that partnership has been instrumental in turning the State's tourism industry around. Since the inception of the ATMC, there has been a steady growth of visitors to the state. Number 249 REPRESENTATIVE PORTER concurred with Chairman Kott. REPRESENTATIVE ROKEBERG made a motion to pass CSHB 220(L&C) out of committee with individual recommendations and accompanying fiscal notes. Number 263 CHAIRMAN KOTT asked if there were objections. Hearing none, the motion passed.
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