Legislature(2001 - 2002)

03/19/2001 01:30 PM Senate CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
           HB  24-BOROUGH REVENUES FOR TOURISM MARKETING                                                                    
                                                                                                                                
REPRESENTATIVE  JIM WHITAKER, prime sponsor, testified  that this is                                                            
a simple  bill that  allows  a local option  with regard  to use  of                                                            
borough revenues  for an ongoing tourism marketing  effort. He noted                                                            
that Tam Cook was present to answer questions.                                                                                  
                                                                                                                                
SENATOR PHILLIPS  said he's not opposed to the concept  but he wants                                                            
to know  how it becomes a  local option. It  says that the  money is                                                            
collected,  put into a general pot  and then it's distributed  on an                                                            
area wide basis.  He doesn't believe the wording is  specific enough                                                            
to ensure that it is local  option and asked for interpretation from                                                            
Tam Cook.                                                                                                                       
                                                                                                                                
TAMARA  COOK, Director  of  Legislative  Legal Services,  said  that                                                            
existing statute  is a simple statement  that if a borough  collects                                                            
revenue on  an area wide  basis then it must  use that money  for an                                                            
area wide function.  If it collects money on a non-area  wide basis,                                                            
which is the territory  within the borough that is outside of cities                                                            
within  the  borough,  then it  must  use  it for  a  non-area  wide                                                            
function. The  bill adds a subsection that says the  principle above                                                            
doesn't apply in a very  narrow case. This means that if the revenue                                                            
source  at issue is  a sales  tax upon  room rentals  that is  for a                                                            
tourism marketing campaign,  then whether the money was raised on an                                                            
area  wide   basis  or  non-area   wide  bases  is  not   an  issue.                                                            
Furthermore, whether the  tourism marketing campaign is performed on                                                            
an area  wide or non-area  wide basis is not  an issue because  time                                                            
because tourism  marketing campaigns don't need to  track the origin                                                            
of the revenue.  It is assumed that tourism marketing  is so general                                                            
to the  region that  identifying it  as area wide  or non-area  wide                                                            
function  doesn't make  sense. It  benefits the  people of the  area                                                            
that tourists  are attracted to whether  they visit the city  or are                                                            
out in the country.                                                                                                             
                                                                                                                                
CHAIRMAN  TORGERSON said his  understanding of  the vote is  that it                                                            
was area wide and the city of Fairbanks was exempted.                                                                           
                                                                                                                                
REPRESENTATIVE  WHITAKER  said he's  aware of  no vote specifically                                                             
related to the legislation.                                                                                                     
                                                                                                                                
CHAIRMAN  TORGERSON  said  it  wasn't this  one  in  particular;  it                                                            
occured  when they put  the bed tax  on originally.  It was  an area                                                            
wide vote.                                                                                                                      
                                                                                                                                
REPRESENTATIVE WHITAKER said he thinks that's probably correct.                                                                 
                                                                                                                                
CHAIRMAN TORGERSON  wondered why there  is need for a bill  if there                                                            
was already an area wide vote.                                                                                                  
                                                                                                                                
REPRESENTATIVE  WHITAKER  said he asked  the same  question and  the                                                            
answer from Tam Cook was Title 29 requires a bill.                                                                              
                                                                                                                                
MS. COOK added,  "Assuming that they  wish to use it for  a non-area                                                            
wide function."                                                                                                                 
                                                                                                                                
CHAIRMAN  TORGERSON said  they're not making  that determination  by                                                            
calling tourism marketing a non-area wide function.                                                                             
                                                                                                                                
MS. COOK said, "In the  case of Fairbanks, it may be because I think                                                            
economic development  is a non-area wide function  for that borough.                                                            
If you take a  look at what the powers are of second-class  boroughs                                                            
you'll  see   that  second-class   boroughs  can  perform   economic                                                            
development.  It's a  general power  without having  to acquire  the                                                            
power  from a city  or have  a vote on  it. It's  a granted  general                                                            
power, but only to exercise on a non-area wide basis."                                                                          
                                                                                                                                
CHAIRMAN TORGERSON said unless you have an area wide vote.                                                                      
                                                                                                                                
MS.  COOK said,  "No, because  they  would have  to  have the  power                                                            
transferred to them to  become an area wide power for the borough to                                                            
acquire it. They'd  have to acquire that power from  the cities, all                                                            
the cities in the borough."                                                                                                     
                                                                                                                                
CHAIRMAN TORGERSON said he understood.                                                                                          
                                                                                                                                
SENATOR  PHILLIPS  said that  basically,  the discussion  was  about                                                            
second-class boroughs, not home rule.                                                                                           
                                                                                                                                
MS. COOK said it could possibly apply to a home rule.                                                                           
                                                                                                                                
SENATOR PHILLIPS said to use Anchorage as an example.                                                                           
                                                                                                                                
MS. COOK said  no, Anchorage is unified; it has no  cities. It can't                                                            
apply  to  a unified  municipality  because  there  are  no  cities.                                                            
There's  no distinction  between area  wide and  non-area wide  in a                                                            
borough  with no  cities. There  are home  rule  boroughs that  have                                                            
cities  in them that  aren't unified.  If those  boroughs happen  to                                                            
have a non-area  wide source of revenue  but are trying to  exercise                                                            
an area wide  tourism marketing campaign,  they would be  faced with                                                            
the same  situation.  When you're  talking about  home rule,  what a                                                            
borough  does area wide  versus non-area  wide becomes  a matter  of                                                            
their individual charter and wouldn't be reflected in statute.                                                                  
Therefore, it is theoretically  possible to have a home rule borough                                                            
that has  an area wide  tourism marketing  power but was  collecting                                                            
revenue  on a non-area  wide basis.  In that case,  this bill  would                                                            
affect such a borough and allow them to spend that money.                                                                       
                                                                                                                                
SENATOR  PHILLIPS  said  that  with the  exception  of  the  unified                                                            
boroughs, this bill affects the organized areas of the state.                                                                   
                                                                                                                                
MS. COOK said,  hypothetically it  could. "Whether or not  a borough                                                            
exercises its power on  an area wide versus a non-area wide basis is                                                            
very specific  to that borough. It  has to do, if it's general  law,                                                            
with whether the general  law has granted them an area wide power or                                                            
whether they have  chosen to acquire it or whether  they have gotten                                                            
it when they filed  their original petition for incorporation,  they                                                            
must list the  powers they are going  to exercise. So each  of these                                                            
boroughs,  regardless of  classification, might  have variations  in                                                            
the relationship between the boroughs and the cities."                                                                          
                                                                                                                                
SENATOR  PHILLIPS asked  whether it  would still  require a vote  in                                                            
Representative  Whitaker's  area if  the bill  is  passed and  local                                                            
option is allowed or whether it just happens automatically.                                                                     
                                                                                                                                
MS. COOK said it would  happen automatically, but a vote is required                                                            
in order to get a sales tax imposed originally.                                                                                 
                                                                                                                                
SENATOR PHILLIPS said they've already done that.                                                                                
                                                                                                                                
MS. COOK  said they've done  that and apparently  they have  an area                                                            
wide sales  tax in that  particular borough.  This bill will  say if                                                            
you have an area  wide sales tax and it is on room  rentals, or that                                                            
portion on  room rentals, that revenue  could be used on  a non-area                                                            
wide basis for tourism marketing.                                                                                               
                                                                                                                                
REPRESENTATIVE  WHITAKER said the  key word is could, it's  still at                                                            
the discretion of the local governing body.                                                                                     
                                                                                                                                
SENATOR  PHILLIPS said  that's why  he's referring  to an area  wide                                                            
vote or  through the assembly  or city council.  Somebody must  make                                                            
the determination.                                                                                                              
                                                                                                                                
MS. COOK  said it  would be  up to the  governing  body; there  is a                                                            
prohibition in  subsection (a) and this removes the  prohibition and                                                            
leaves the option open as to whether they chose to act or not.                                                                  
                                                                                                                                
SENATOR  PHILLIPS said  that, upon  passage, this  would be  another                                                            
decision made at the local level.                                                                                               
                                                                                                                                
CHAIRMAN  TORGERSON  commented that  they  would have  to adopt  the                                                            
power by ordinance.                                                                                                             
                                                                                                                                
SENATOR PHILLIPS agreed.                                                                                                        
                                                                                                                                
CHAIRMAN  TORGERSON  asked for  assurance  that this  wouldn't  give                                                            
differential  rates between a general  law sales tax and  a bed tax.                                                            
"If they happen  to put on a borough wide sales tax  of four percent                                                            
then they must raise or lower the bed tax to that same figure."                                                                 
                                                                                                                                
MS. COOK said it doesn't  get into any issues of whether a sales tax                                                            
rate has to be equal. [Tape indiscernible]                                                                                      
                                                                                                                                
DEBBIE   TILSWORTH,  President   of  the   Alaska  Travel   Industry                                                            
Association  in Fairbanks,  testified that  the statewide and  local                                                            
visitor  industry  supports  HB  24. Currently  the  mayor  and  the                                                            
borough are  formulating the budget  for FY02. It is important  that                                                            
destination-marketing funds  be built into the budget and passage of                                                            
this legislation will allow that.                                                                                               
                                                                                                                                
Number 558                                                                                                                      
                                                                                                                                
FRANK  ROSE,  Chair  of  the  Alaska  Travel  Industry  Association                                                             
Legislative   Affairs   Committee,   testified  that,   from   their                                                            
perspective,   the  funds  for  destination   marketing   should  be                                                            
available at  the option of the local  community. One of  the issues                                                            
in Fairbanks  is that  there has  been considerable  migration  from                                                            
city hotels to borough  hotels. This has lowered the bed tax revenue                                                            
in the  city and  increased the  revenue available  in the  borough.                                                            
Under current  Title 29 provisions,  they can't  use that money  for                                                            
destination  marketing. There  are other communities  that  could be                                                            
similarly affected  and this is why  they urge passage of  the bill.                                                            
                                                                                                                                
SENATOR  PHILLIPS  asked   Mr.  Rose  whether  there  is  any  known                                                            
opposition to the bill in the community.                                                                                        
                                                                                                                                
MR.  ROSE said  none  that  he's aware  of  but  there may  be  some                                                            
assembly members  who will wonder  what to do. However, since  there                                                            
is local option, "they're in the drivers seat."                                                                                 
                                                                                                                                
WANETTA AYERS,  Director of Community  and Economic Development  for                                                            
the Kenai  Peninsula  Borough,  testified in  favor of  HB 24.  They                                                            
currently fund  tourism marketing through PILT funds  via a contract                                                            
with  the Kenai  Peninsula  Tourism Marketing  Council,  which is  a                                                            
regional  destination marketing  organization.  The Kenai  Peninsula                                                            
Borough  is in  favor of  forming options  to increase  funding  for                                                            
destination marketing.  HB 24 will provide borough  governments with                                                            
greater  options to fund  economic development  through destination                                                             
marketing.                                                                                                                      
                                                                                                                                
CHAIRMAN  TORGERSON commented  that  it doesn't  affect his  borough                                                            
much since there is no borough wide bed tax.                                                                                    
                                                                                                                                
MS. AYERS said that it might in the future.                                                                                     
                                                                                                                                
SENATOR PHILLIPS  moved HB 24 with  zero fiscal note from  committee                                                            
with individual recommendations.                                                                                                

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