Legislature(1995 - 1996)
02/22/1995 03:00 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HL&C - 02/22/95 HB 147 - SPORT FISHING MARKETING COUNCIL/SURCHARGE Number 379 REPRESENTATIVE JOE GREEN, PRIME SPONSOR OF HB 147, stated he introduced the bill to establish, within the state, a proponent for encouraging non-resident sports fisherman to come to the state and enjoy what we can offer them. He said the bill would not be geared to bringing non-residents to places suffering from over use such as the Russian and Kenai Rivers. The purpose of this council would be to appeal to non-resident sports fisherman, the people who want to be in the "out back." The council would direct publicity and advertising towards that end. JEFF LOGAN, LEGISLATIVE ASSISTANT TO REPRESENTATIVE JOE GREEN, stated Alaska was a maturing tourism market. He made reference to specialized marketing, such as eco-tourism, which focuses on environmental tourism, and senior citizen tourism, which brings senior citizens up during the off seasons. He stated that this market was ready for the Alaska sport fishing experience, as a specialized market. This bill does not create a new organization as much as it helps bring together the members of an existing industry to promote themselves. He stated in the committee member's packet was a page from the Governor's transition report, where the Governor's Task Force on Fisheries recognizes that an effort to market a sport fishing experience is something the state needs to do. HB 147 creates a marketing council, which is directed by a board, and managed jointly by the Commissioner of Commerce and a qualified trade association. As the bill was initially written, the board would have 19 members. Mr. Logan stated he had some proposed amendments for HB 147. He stated that they would amend the number of members to 11. The board then would be comprised of the director of the Division of Tourism, and the director of the Division of Sport Fish, in which both would be permanent positions. The sport fishing industry would nominate five members, and the Governor would nominate four. The board would be responsible for directing the efforts of the council in entering into agreements with private and public organizations to market Alaska as a sport fishing destination. The bill says that the board may not hire employees. It brings an existing industry together to promote itself. The board and the council would have the ability to enter into contracts to accomplish their duties, but it wouldn't be necessary to hire any new people to do this. Number 476 CHAIRMAN KOTT stated since the legislature was appropriating some money in the form of per diem, it would be creating another layer of bureaucracy. Whether this was essential or necessary is the issue. REPRESENTATIVE PORTER said it was his understanding that the Alaska Tourism Marketing Council (ATMC) members pay their own way to board meetings, and that would be the case here as well. Number 493 REPRESENTATIVE GREEN stated that the bill allows per diem expenses within the state but not outside the state. He stated that there would be a self generating extreme surplus of funding. The current fiscal note shows a large amount of money going to this council; however, that isn't the intent of the council. It would be less than $100,000 for the first couple years. He stated that it would never approach the $900,000 shown on the fiscal note. In essence, the added layer would be more of a kin to an advisory council. Number 511 REPRESENTATIVE ELTON stated that the fiscal note reflects over $1 million a year. He inquired as to how they estimated their expenditures at substantially less than that amount. REPRESENTATIVE GREEN commented that this was one of the items to which Mr. Logan referred to, in that the fiscal note should be down sized considerably. He stated that the misunderstanding in the preparation of the note was in thinking that all of the items were expenditures, with the balance of the fund being used by the council for advertising. He stated that in reality, the fiscal note would be 15 percent of that. MR. LOGAN added that in the preparation of the fiscal note, there were a number of assumptions the department utilized. There were a large number of unanswered questions in the preparation of the fiscal note. Now that they'd seen it, the note would be a working document. He acknowledged that it posed a number of questions, and that they would answer those questions. The fiscal note then would change. Number 528 REPRESENTATIVE ELTON noted that some of the outstanding costs would be for travel. To accomplish the purposes of the council, he assumed there would be a substantial amount of contractual money. He inquire regarding the anticipated size of that expenditure. Number 538 REPRESENTATIVE GREEN said the amount utilized would depend on what the Department of Fish and Game actually allocates. There's the possibility that once the funds are realized, Fish and Game wouldn't allocate anything. MR. LOGAN stated that a marketing program would take a lot of money. He referred to the difference is in the fiscal notes for FY 96 and 97 and said they don't expect to have too much income generated by that point, so those numbers will be reduced considerably. Number 559 REPRESENTATIVE PORTER surmised that there wouldn't be any net impact on the general fund. He stated that with the program receipts going back into the general fund from the sale of brochures and the $5 increase on the 220,000 out of state licenses, there was a chance that the receipts would never come back to the program. He stated that it was not inappropriate to dedicate them all to this program. Number 571 REPRESENTATIVE GREEN stated the proponents of this council were concerned in having money coming in then having to allocate back out, they were willing to take that chance. The more money available, the better the advertising. REPRESENTATIVE ROKEBERG stated he had concerns with the memorandum sent by Mr. Bertke and Mr. Hodson, dated the February 21. He said the committee should be talking about whether they should continue considering the bill before the problems were cleared up. The point of the memorandum was that they could be guilty of diverting federal funding and be in jeopardy of losing $10 million of federal funds. REPRESENTATIVE KOTT pointed out to Jeff Logan that on page 4, line 30 of the bill, it suggests that the council shall deposit the money in the general fund, and on page 5, line 16, the money collected from the $5 surcharge will be deposited into the fish and game fund. He asked if the $5 surcharge goes to the fish and game fund, we don't have to divert monies from the general fund to the fish and game fund, which is currently being done. He asked if under federal law, the money that went to the fish and game fund would have to stay there. MR. LOGAN stated that in the committee member's packet, there is a memorandum from George Utermohle, Attorney, Legislative Affairs Agency, explaining the workings of the fish and game fund. He further stated that once the $5 surcharge went into the fund, it stayed there and could only be used for sport fish research or management. REPRESENTATIVE KOTT asked if there was an anomaly between the two sections on pages 4 and 5. MR. LOGAN answered, "No." Number 619 JOHN BURKE, DEPUTY DIRECTOR, SPORT FISH DIVISION, ALASKA DEPARTMENT OF FISH AND GAME (ADF&G), AND FEDERAL AID COORDINATOR, explained he is in charge of federal aid to sport fish restoration for the ADF&G, and stated he had spoken several times with the Federal Aid Office in Anchorage and was told they would view this as a diversion of funds. Money collected for licenses must, in turn, be used to directly benefit sports fisherman. TAPE 95-8, SIDE B CHAIRMAN KOTT asked if the Sport Fish Division receives any money at this time. MR. BURKE replied no. They were asking for $200,000 next year, specifically to support the Earl West Cove project through the Crystal Lake Hatchery. Outside of this, they have no general funds. Number 013 REPRESENTATIVE PORTER stated there had to be a way to craft this legislation so that it didn't fall under the federal mandate. He was requesting those involved try to get around this. REPRESENTATIVE ROKEBERG agreed with Representative Porter. He stated that he was conceptually in full support of the council, but at this stage, he would be uncomfortable moving on the bill. Number 041 JEFF BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT, stated that his department favored any efforts to market Alaska in any form. However, he regretfully stated that the department would oppose this bill as it is currently written. His concern with the bill is that essentially the Alaska Tourism Marketing Council (ATMC) has always run a generic marketing campaign, but this bill sounds like the sponsors would like to essentially make marketing "target specific" for sport fish. The concern was that the state has a limited amount of marketing money available. If they start fragmenting those efforts, by taking out $1 million for sport fish, the next people at the table would be the hotel operators and other specialized groups. He stated that he didn't oppose these efforts. If the money is there for more marketing, then great. What he opposes was that they have a finite amount of money, and he didn't want it being fragmented. Another problem he had is that it was a state entity. If the state can raise $1 million and the legislature deems that they can use this for sport fish marketing, then they could do this through a grant. He doesn't want the Department of Commerce and Economic Development to be creating an association for this particular industry. He felt that this would end up having a snowball effect. Number 190 CHAIRMAN KOTT asked if current marketing, in Alaska, within ATMC or the Division of Tourism, couldn't use its own staff to assist in this procurement or delineation of (indisc.). MR.BUSH answered, "certainly." But, what they would be asking them to do was to take on more work with an already overworked staff. This would be taking efforts away from what they do on a daily basis. Since they are working with program receipts, he didn't feel it would be unreasonable to add a Marketing Coordinator. The response he has received from the people supporting this legislation is that they don't want to create more bureaucracy. They feel they can contract out. They need to find a person who is a specialist in advertising or marketing. He said that what they need is an administrator. He stated that you need one state employee to administer this program. Number 160 REPRESENTATIVE ELTON stated that he was sympathetic to Mr. Bush's plight. GEORGE UTERMOHLE, ATTORNEY, LEGISLATIVE AFFAIRS AGENCY, stated that the issues raised by the Department of Fish and Game, on behalf of the Federal Fish and Wildlife Service, concerns the diversion of fish and game license fees. The state participates in the federal aid program for sport fisheries. As a result, the state gets a large sum of money from the federal government. The state has to dedicate its fish and game license fees to a particular fund that can only be used for sport fishing purposes. If participation in the federal program was to be suspended, we would lose the ability to be able to dedicate those funds. We cannot divert the fish and game license fees to a purpose other than the management of sport fisheries. The federal regulations relate only to the diversion of license fees, not to the diversion of any other state money that might go to the ADF&G or the Division of Sport Fisheries. It does not address the issue of general funds. Mr. Utermohle stated that HB 147 does not provide for any diversion from the fish and game fund. He felt there was no logic behind the position of the Fish and Wildlife Service. Number 283 REPRESENTATIVE PORTER asked if there was a similar program where this problem had been addressed. He asked if we could have the existing license fee, with an additional $5 marketing surcharge directed to the general fund as opposed to this other dedicated fund. MR. UTERMOHLE replied that we can't, under the terms of the federal program. The fish and game license fee is any fee imposed upon a person which conveys the right to engage in sport fishing. If you can't go sport fishing without a sport fishing marketing fee, its considered a license fee for purposes of the federal program and must be dedicated to this program. REPRESENTATIVE ELTON said if the Sport Fish Program does not receive general funds, are they taking general funds out of a different part of the ADF&G or another department's budget? MR. UTERMOHLE stated that would be the case, but he didn't see how that could come out of the Commercial Fisheries Division's budget. The loss to their budget in general fund dollars could not be offset by money taken by the Sport Fish Program because that money is restricted to sport fish purposes. Therefore, the commercial fisheries program would take a loss, and that would be out of the jurisdiction of the Fish and Wildlife Service. BUD HODSON, OWNER, TIKCHIK NARROWS LODGE; FOUNDING MEMBER, ALASKA SPORT FISH INDUSTRY ASSOCIATION, stated that he was a proponent of this bill. He stated that they had a mechanism to be self-funding, but they are running into some roadblocks. What they are trying to establish with the marketing council is not to bring more people into problem areas. He stated that they wanted to provide a vision for sport fishing and to target fisheries that were under utilized. It also is a goal to help the industry identify where it could expand or recuperate closed fisheries. Their intent is not to pump more anglers into the Kenai, it is to educate the public and the industry to look at what the options are for helping people survive closures. The industry and the state needs to look at where they are going to be in ten years. Number 373 DUKE BERTKE, CHELATNA LAKE LODGE; FOUNDING MEMBER, ALASKA SPORT FISHING INDUSTRY ASSOCIATION, stated that the sport fishing industry was in no way trying to fragment the ATMC. He felt they could operate under the umbrella, doing value-added marketing to help keep the tourists happy. They felt they could direct people out of problem areas out and into Western Alaska, Prince William Sound, or parts of the valley that haven't been utilized. The funding mechanism is in no way an assault on the ADF&G or the general fund. They felt they had something in mind to carry its own weight. They are willing to go back and do whatever it takes to accomplish that goal. MITCH GRAVO, LOBBYIST, ALASKA SPORT FISHING INDUSTRY ASSOCIATION, stated with respect to fragmentation issue, they do not take any money from any marketing organization. If that happens, he stated, he would ask the House and the Senate to withdraw the bill. Number 373 BEN ELLIS, EXECUTIVE DIRECTOR, KENAI RIVER SPORT FISHING INCORPORATED, testified via teleconference. He stated that he was speaking in tentative support of HB 147, providing that the funding mechanism can be addressed. He gave the following testimony: "Alaska contains some of the world's best sports fishing opportunities. It is only right that the state market this potential in a clear concise, accurate, and logical manner. We believe that it is fair to say that, regardless of whether you're a strong advocate of commercial fisheries or a staunch supporter of sport fishing, we all agree that the states fisheries have been a crucial part of Alaska's past and will be an important aspect of the state's future. I think we can also agree that Alaska's fishing footprint is changing. Depressed prices in commercially caught fish, overseas competition from pen reared salmon and the waste of hundreds of thousands of tons of incidental by-catch each year has sent commercial fishing not only in Alaska but across the United States in a tailspin. While the state's commercial fishing industry is facing its toughest decade ever, sport fishing has grown from a `wet behind the ears toe head,' to a `full blown adult' in the state's economic employable arena. Sport fishing continues to fuel a growing tourist economy that accounted for more than $1 billion. In a recent memo to the Governor's fisheries transition, former Deputy Commissioner of the Department of Fish and Game, Chuck Meacham, underlined the potential for sport fishing across the state, and he quotes, `We have great challenge ahead in terms of how we promote and develop our fisheries he wrote under the section of sport fishing. Alaska contains more than 40 percent of the nation's surface water resources, while not all of our lakes and streams contain sport fish resources, there are over 12,000 known anadromous fish streams with 120,000 to 180,000 linear miles of fresh water. Alaska also has thousands and thousands of coastline and adjacent marine waters rich with sport fishing opportunities. With over half of the sport fishing effort presently concentrated in the Cook Inlet Region, there is substantial area into which this industry can be encouraged to expand." MR. ELLIS continued by stating that the need for marketing a quality sport fishing experience was noted in a recent report by the Governor's Fisheries Transition Team. For the state sport fishing industry to grow, it is imperative to advance the concept that is behind this bill. He stated that HB 147 will provide the tool to polish this jewel in the ruff, called Alaska's sport fishing. Number 467 PAUL DALE, representing THE KING SALMON FUND, testified via teleconference. Mr. Dale stated that The King Salmon Fund is a non-profit organization in the Kenai area interested in protecting the Kenai River habitat. He stated that he was pleased to hear that this legislation would not increase user activity on the Kenai River; but the bill does not specifically prohibit marketing increased sport fishing on the Kenny Peninsula or the Kenai River. He stated that people fishing for halibut off the coast, or fishing for salmon in Seward, would be in the area. He felt that would result in increased pressure on the Kenai River. He would feel much more comfortable with the legislation if it specifically precluded the Kenai Area from being marketed. There should be a consensus among agency people, or user participants, that we have addressed the habitat concerns and developed policies and infrastructure to handle the load that exists currently. Number 503 MAX LOWE, GENERAL MANAGER, REGAL ALASKAN HOTEL, testified via teleconference, that he has watched the continued positive impact of the Alaska sport fishing industry on individual tourism related businesses. He feels it imperative that tourism, sport fishing, and smaller businesses have a voice in their own future, especially as it relates to visitor preferred activity. The Alaska Sport Fishing Industry Marketing Council is a good idea, and it allows fair representation by all the individuals in Alaska who actually have invested in our state resources. He stated that, like any other marketing effort, it will create more jobs, more revenue, and it will bolster the state of Alaska, the sport fishing industry, and all related industries. Number 536 BILL SIMS, OWNER, LAKE ILLIAMNA LODGE, testified via teleconference that we need this council because the fisherman that normally would come to Alaska are now traveling to foreign countries that we are competing with. He stated many of his clients are traveling to Russia because of their advertising campaigns. He also pointed out when there are closures, we need to let people know that the whole state is not being closed. A closure in the Cook Inlet area doesn't mean that Bristol Bay and the Prince William Sound areas are also closed. BARBARA BINGHAM, MEMBER, SITKA CHARTER BOAT OPERATOR'S ASSOCIATION, testified via teleconference that, in Sitka, the state marketing of sport fishing to non-residents will aggravate an already tense situation. Many resident anglers and charter operators are very concerned about local fish recourses. She explained that, in the Southeast king salmon are allocated between commercial and sport anglers. The proposed allocations of halibut between Alaska sport and commercial users is currently before the North Pacific Fisheries Management Counsel. She noted that the local Sitka's Visitor's Bureau and the private sector were doing a good job marketing in Sitka Number 580 JOSEPH JOLLY, BOARD MEMBER, UNITED COOK INLET DRIFT ASSOCIATION, and COMMERCIAL FISHERMAN, stated that there was nothing in HB 147, as it is currently written, to insure that only remote location promotion will be done. As it stands, the people who would benefit from this act would be the sport fish entities in the already overworked areas with habitat problems. He stated that the commercial fisheries industry would be harmed further by the reduction in raw fish taxes, jobs would be lost, and the trucking and support industries would suffer. This, he said, would keep snowballing and the taxpayer would end up paying the bill. Mr. Jolly stated he was against HB 147. Number 616 KEITH JOHNSON explained he was the owner and operator of a lodge in Southwest Alaska. He stated he was in favor of HB 147. It has the potential to start the organizational business of taking care of the sport fishing, guiding, and lodge activities throughout the state. He agreed that the Kenai, Russian, Deshka, et cetera, were over worked. The way to ease that pressure would be to build a road from Wasilla across the drainage ditches to Talkeetna Bay. He concluded that HB 147 would bring in money and let the people in the lower 48 know that there's is organized fishing all over the state. TAPE 95-9, SIDE A ROD BERG, testifying via teleconference, stated HB 147 has some merits; however, the ATMC, the Kenai Peninsula Tourism Council and other entities, were adequately promoting all angles of tourism within the state. He noted when the king salmon stamp was added onto licenses a few years ago, funds were suppose to go back into a king salmon enhancement fund. However, 60 percent to 70 percent of the funds are generated in Southcentral Alaska, but less the 50 percent is going back into that area. Being from the Kenai Peninsula area, he testified that he was totally opposed to any more governmental involvement in the promotion of the area. CHAIRMAN KOTT closed public testimony on HB 147, and pointed out that the basic problem with the bill was the funding mechanism He stated that he was hopeful that Representative Green would be able to work out the funding problems and, thereafter, bring the bill back before the committee. Number 119 REPRESENTATIVE GREEN noted that the funding problem had been brought to his attention only just prior to the meeting. Had he known about it sooner, he stated, he wouldn't have brought the bill before the committee. He pointed out though, that it had been a very beneficial meeting, addressing a wide cross section of ideas. He thanked the committee and said he would bring the bill back with changes.