Legislature(2017 - 2018)BARNES 124
03/29/2018 11:35 AM House ARCTIC POLICY, ECONOMIC DEV., & TOURISM
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| Audio | Topic |
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| Start | |
| Confirmation Hearing(s) | |
| HB383 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 383 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ARCTIC POLICY,
ECONOMIC DEVELOPMENT, AND TOURISM
March 29, 2018
11:35 a.m.
MEMBERS PRESENT
Representative John Lincoln, Chair
Representative Bryce Edgmon
Representative David Talerico
Representative Mark Neuman
Representative Chris Tuck
Representative Andy Josephson
MEMBERS ABSENT
Representative Gary Knopp
COMMITTEE CALENDAR
CONFIRMATION HEARING(S):
Commissioner, Department of Commerce, Community & Economic
Development
Mike Navarre - Juneau
- CONFIRMATION(S) ADVANCED
HOUSE BILL NO. 383
"An Act establishing the Travel Alaska Board; relating to a
tourism marketing assessment; and establishing a tourism
marketing fund."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 383
SHORT TITLE: TOURISM MARKETING:BOARD;ASSESSMENT;FUND
SPONSOR(s): REPRESENTATIVE(s) GRENN
02/21/18 (H) READ THE FIRST TIME - REFERRALS
02/21/18 (H) AET, FIN
02/27/18 (H) AET AT 11:30 AM BARNES 124
02/27/18 (H) Heard & Held
02/27/18 (H) MINUTE(AET)
03/06/18 (H) AET AT 11:30 AM BARNES 124
03/06/18 (H) Heard & Held
03/06/18 (H) MINUTE(AET)
03/15/18 (H) AET AT 11:30 AM BARNES 124
03/15/18 (H) -- MEETING CANCELED --
03/20/18 (H) AET AT 11:30 AM BARNES 124
03/20/18 (H) -- Meeting Postponed to 3/22/18 at
11:35 am --
03/22/18 (H) AET AT 11:35 AM BARNES 124
03/22/18 (H) -- MEETING CANCELED --
03/29/18 (H) AET AT 11:35 AM BARNES 124
WITNESS REGISTER
MIKE NAVARRE, Commissioner Designee
Office of the Commissioner
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions during his confirmation
hearing to be commissioner of the department.
REPRESENTATIVE JASON GRENN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 383 as the sponsor of the
bill.
BROOKE IVY, Staff
Representative Jason Grenn
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions and presented an
overview of the changes to the proposed committee substitute,
Version R.
ACTION NARRATIVE
11:35:05 AM
CHAIR JOHN LINCOLN called the House Special Committee On Arctic
Policy, Economic Development, and Tourism meeting to order at
11:35 a.m. Representatives Lincoln, Edgmon, Tuck, and Josephson
were present at the call to order. Representatives Talerico and
Neuman arrived as the meeting was in progress.
^CONFIRMATION HEARING(S)
CONFIRMATION HEARING(S):
Commissioner, Department of Commerce,
Community & Economic Development
11:36:05 AM
CHAIR LINCOLN announced that the first order of business would
be the confirmation hearing for Commissioner, Department of
Commerce, Community & Economic Development.
11:36:20 AM
MIKE NAVARRE, Commissioner Designee, Office of the Commissioner,
Department of Commerce, Community & Economic Development, shared
his "fairly diverse background in government" pointing out that
he had obtained a Bachelor of Arts degree in government. He
reported that, as he had been a member of the Alaska State
Legislature for 12 years and the Mayor of the Kenai Peninsula
Borough for 9 years, in 3 separate terms, he had both a
legislative and an administrative background, as well as an
educational background. He added that his role as president of
the family company had given him a diverse business background.
He expressed his growing concern for the Alaska economy and its
preparedness for taking advantage of all the opportunities
available, citing the state's natural resources and its
geographic location to world markets.
11:39:27 AM
REPRESENTATIVE EDGMON lauded Mr. Navarre as a practical
legislator and a problem solver, willing to work with both sides
of the aisle, especially during some tough times. He asked for
some background on the various dimensions of the Department of
Commerce, Community & Economic Development and why Mr. Navarre
was qualified to be appointed commissioner.
COMMISSIONER NAVARRE acknowledged that, for the past ten years,
this was a combination of two departments, and its mission
included oversight and regulation of insurance, banking and
securities, and professional licensing. He noted that the
department was currently working to speed up the process for
issuance of professional licenses. He spoke about the work in
rural communities by the Division of Community and Regional
Affairs. He pointed to the revolving loan funds administered by
the Division of Economic Development which were used to generate
economic activity throughout the state. He reported that his
responsibility as commissioner was to offer assistance in areas
identified as needing improvements. He declared that regulation
and customer service were not mutually exclusive, and that the
department's responsibilities included "getting back to people
quickly, addressing what their concerns are, and, at the same
time, meeting out responsibilities for regulation."
11:45:15 AM
CHAIR LINCOLN asked what the best opportunity for the state
regarding economic development was which was not related to oil
and gas.
COMMISSIONER NAVARRE offered his belief that the best
opportunities were the "tremendous, world class mining deposits
around the state," an area for continued growth if energy could
be brought to those project areas. He added that further global
exploration for markets to the vast fisheries resources through
the Alaska Seafood Marketing Institute and for increased visitor
numbers in the tourism market, especially for the northern
lights in the winter shoulder season, were also expanding areas.
CHAIR LINCOLN asked about administration of the municipal land
trust with communities which were not incorporated.
COMMISSIONER NAVARRE relayed that there had been discussion for
a strategy to distribute these lands into communities where
municipalities would never form as those economies or
populations were not significant enough to support them.
11:48:44 AM
REPRESENTATIVE TUCK, reflecting on the new marijuana industry
and the current fiscal crisis, asked if Alaska should have a
state bank.
COMMISSIONER NAVARRE, in response, pointed out that the state
had the ability to charter state banks, and that there had been
some inquiries with respect to the issues associated with the
marijuana industry, such as the federal conflicts with state
laws. He reported that the Division of Banking and Securities
was exploring this.
REPRESENTATIVE TUCK asked if there were still any opportunities
in the timber industry.
COMMISSIONER NAVARRE opined that, although there were statewide
opportunities, these were dependent on the worldwide demand in
the timber market. He addressed the federal roadless rule
regarding access to the timber resources in the Tongass National
Forest in Southeast Alaska. He stated that mining, timber,
agriculture, oil and gas, and tourism were all critically
important, and that it was necessary to position the state to
take advantage. He explained that, absent a broad-based state
tax, Alaska may not be well positioned to take advantage of the
opportunities for the vast natural resources. He declared that
it was necessary to "spread the tax burden a little bit further
in order to build an economic foundation for Alaska that will
allow us to take advantage of the vast opportunities that we
have." He opined that a strong economy was not a party issue
and that agreement was necessary for the foundation to allow
this.
11:53:14 AM
REPRESENTATIVE JOSEPHSON emphasized that Mr. Navarre was as well
suited for the commissioner position "as anyone I've seen. His
background is impeccable, he's experienced everything there is
to experience in local and state government, and he's a great
asset and he's a great choice." He expressed his confidence
that Mr. Navarre would continue to do a good job.
REPRESENTATIVE TUCK expressed his agreement that Mr. Navarre
could "navigate through the web of obstacles."
REPRESENTATIVE EDGMON offered his belief that "in the current
times, he's the perfect guy for the job."
CHAIR LINCOLN moved to advance the confirmation of Mike Navarre,
commissioner designee for the Department of Commerce, Community
& Economic Development to a joint session of the House and
Senate for consideration. He reminded members that signing the
reports regarding appointments in no way reflects individual
members' approval or disapproval of the appointee, and that the
nominations are merely forwarded to the full legislature for
confirmation or rejection. There being no objection, the
confirmation was advanced.
11:55:17 AM
The committee took an at-ease from 11:55 a.m. to 12:00 p.m.
HB 383-TOURISM MARKETING:BOARD;ASSESSMENT;FUND
11:59:55 AM
CHAIR LINCOLN announced that the next order of business would be
HOUSE BILL 383, An Act establishing the Travel Alaska Board;
relating to a tourism marketing assessment; and establishing a
tourism marketing fund.
12:00:52 PM
The committee took a brief at-ease.
12:01:09 PM
REPRESENTATIVE TUCK moved to adopt the proposed committee
substitute (CS) for HB 383, labeled 30-LS1214\R, Nauman,
3/21/18, as the working draft. There being no objection,
Version R was before the committee.
12:01:36 PM
REPRESENTATIVE JASON GRENN, Alaska State Legislature, expressed
his appreciation for the committee work on this "new, innovative
idea that's come before our legislature" and "to really clean up
and make it a better bill." He acknowledged that more work was
still necessary.
12:03:07 PM
BROOKE IVY, Staff, Representative Jason Grenn, Alaska State
Legislature, said that she would describe the changes from
Version O to Version R of proposed HB 383. She paraphrased from
the "Explanation of Changes" [Included in members' packets],
which read [original punctuation provided]:
Throughout the bill: The term "Department of Revenue"
is changed to "department." The terms "tourism
segments" and "business segments" have been
abbreviated to "segments" for clarity and consistency.
Additional changes were adopted as recommended by
Legislative Legal to conform to amendments made to the
bill, as well as legislative drafting standards.
MS. IVY continued her paraphrase of the changes, which read:
Page 1, Line 1: Amends the bill title to include
reference to a Vehicle Rental Tax credit.
Page 1, Lines 5-12: Deletes Sections 1-4 and replaces
with a new Section 1. Replaces the Vehicle Rental Tax
(VRT) mechanism in the original bill with a VRT
credit, addressing structural concerns raised by the
Department of Revenue and Legislative Legal. Renumbers
remaining bill sections accordingly.
MS. IVY explained that there had been some issues with the
Department of Revenue for the deposit of revenues from the
Vehicle Rental Tax (VRT) into the Tourism Marketing Fund as
there was not a precedent in statute for this mechanism, and
there were concerns by the Legislative Legal Services that this
"could trigger some federal tax code issues for those entities."
She declared that this would now be like other tax credits
existing in statute.
MS. IVY continued to paraphrase the changes, which read:
Page 2, Lines 25-26: New language permits the Travel
Alaska Board to remove ex officio nonvoting members in
44.25.205(d), which previously only allowed them to
elect nonvoting members.
Page 2, Lines 28-29: Amends 44.25.205(d) to add
electing a chair or vice-chair to the list of actions
for which nonvoting members may not be counted.
Page 3, Lines 1-6: New subsection 44.25.205(f)
clarifies that if an assessment is terminated, the
Travel Alaska Board can remain active through June 30
of the following year to performing its remaining
duties. A new assessment may be proposed and voted on
during this time.
Page 9, Lines 14-30: Adds new subsection 44.25.270(c)
clarifying procedures for board member elections:
(c)(1) requires notice to be provided, either by mail
or electronically, to voters in advance of a board
member election. This subsection also clarifies that
in the case of a board member election in which an
assessment is also being voted on, voters will consist
of all tourism businesses who would be subject to the
proposed assessment, should it pass. In the case that
no assessment is being voted on (only board members),
voters will consist of tourism businesses currently
subject to an existing assessment.
(c)(2) clarifies that ballots for board member
elections will also be mailed by the Director of
Elections 45 days before the required postmark date.
Outlines required elements to be included on board
election ballots, and that the Director of Elections
will count ballots.
Renumbers following subsections accordingly.
MS. IVY explained that this would allow the board to remain
active through June 30 of the following year to spend any
remaining funds and fulfill the remaining marketing plan in
order to resolve any issues resulting from the termination of
assessments. She added that an additional assessment could be
proposed during this time.
12:07:47 PM
MS. IVY returned to the changes, which read:
Page 9, Lines 22-27: Adds new subsection 44.25.270(d)
clarifying that assessment election ballots must list
proposed and existing assessments for all segments,
and be approved or rejected in total, as a single
vote. If an existing assessment is up for renewal and
the vote fails, the assessment terminates. If an
existing assessment is up for amendment and the vote
to change the assessment fails, the existing
assessment remains. If an assessment is up for
termination and the vote passes, the assessment
terminates.
Renumbers following subsections accordingly.
MS. IVY explained that an assessment would terminate
automatically after six years, but that these changes clarified
three possible scenarios: a reauthorization vote, an election
to amend the assessment, or a vote to terminate the assessment.
12:09:26 PM
MS. IVY, in response to Representative Tuck, acknowledged that
although it was not clarified in the proposed bill, an
assessment was good for six years; if it was amended prior to
this, it was good for another six years.
REPRESENTATIVE TUCK asked whether a new assessment was required
should there be a sunset to the proposed bill.
MS. IVY explained that it would be necessary to vote for
reauthorization of the assessment, which could include changes
to the assessment.
12:11:09 PM
MS. IVY returned attention to the changes, which read:
Page 10, Line 18: Amends the vote threshold in
44.25.275 from "at least 50 percent" to "more than 50
percent" of the weighted votes received in an
election.
Page 10, Line 24: Inserts language in 44.25.275 to
ensure the weight of a tourism business's vote remains
confidential.
Page 10, Lines 25-28: Adds new subsection 44.25.275(b)
giving the Department of Revenue the authority to
establish a method for weighting votes of tourism
businesses when gross revenue information is not
provided to the Department.
12:12:57 PM
REPRESENTATIVE TUCK asked for clarification whether the first
vote was for qualification or for self-assessment.
MS. IVY replied that the first assessment would require more
work to acquire gross revenue information for the weighting of
the vote. She said that it would be necessary to reach out to
new businesses in the first year to acquire gross revenue
information to determine estimates for future payment, and after
that, the payments in the previous calendar year would be used
for determination.
12:14:04 PM
REPRESENTATIVE NEUMAN requested additional information for ways
the department would structure the tourism business to provide
the information necessary to weigh their vote.
MS. IVY offered her understanding that the department had a
method to reach out to businesses to establish a tax payer
relationship.
REPRESENTATIVE NEUMAN said that this was "pretty critical
information."
12:16:08 PM
REPRESENTATIVE TUCK offered his understanding that, as the
Department of Revenue would have the information, it would
determine the weight of the business in order to ascertain its
number of votes. He asked how the weight would be defined.
MS. IVY replied that the weight would first be determined on the
estimated payment in the upcoming calendar year, based on gross
revenues and the proposed assessment rate. After that, the
weight would be based on the actual payments.
REPRESENTATIVE TUCK asked how this was determined.
MS. IVY replied that the proposed bill did not yet determine a
specific level.
REPRESENTATIVE NEUMAN shared his concern that there was not any
specific information.
12:18:56 PM
REPRESENTATIVE TUCK asked about the recourse should someone
refuse to report revenue.
12:19:20 PM
MS. IVY shared that this concern had been raised by the
Department of Revenue. She offered her understanding that
currently the department did not have the authority to require
any gross revenue information for payment until an assessment
was in place; hence, the inclusion of amended language in the
proposed bill to ensure the authority to "come up with a method
to address" the lack of access to the information. She noted
that AS 44.25.260 did address the confidentiality requirements
related to the information collected by the Department of
Revenue.
MS. IVY returned to paraphrasing the "Explanation of Changes,"
which read:
Page 11, Lines 17-21: Amends 44.25.295 to ensure the
Legislature is not appropriating both into, and out
of, the Alaska tourism marketing fund established in
this section, addressing a drafting concern raised by
Legislative Legal. This section now clarifies the
Department of Revenue will deposit collected
assessment revenue and donations into the fund.
Page 11, Lines 22-24: Adds language in 44.25.295
allowing money to be appropriated out of the Alaska
tourism marketing fund to cover costs of administering
the assessment, as well as executing a marketing plan.
Page 11, Line 30 Page 12, Line 3: Adds definitions
in 44.25.300 for "department," "fund," and "gross
revenue." Renumbers following subsections accordingly.
Page 12, Lines 10-27: Amends Section 3(a)-(c) to
ensure a Governor-appointed transition board is
established before any Travel Alaska Board
member/assessment election takes place. Under this
structure, the "leading statewide nonprofit tourism
marketing association" forwards a list of names to the
Governor for the appointment of a 24-member transition
board. At the recommendation of Legislative Legal,
this would ensure the entity working with the
Department of Revenue to define tourism "segments" and
holding an initial assessment election would be a
Governor-appointed board, versus an industry
association independent of state government. Renumbers
following subsections accordingly.
Page 12, Line 28 Page 13, Line 6: Amends Section
3(d) and (e), and deletes previous Section 3(f),
renumbering accordingly. Adds clarifying language that
the Director of Elections and Department of Revenue
are involved in the first election process, just as
they would be in all future elections. Ratification of
the first approved assessment by the Travel Alaska
Board is no longer required, as payers will have voted
on its approval. Finally, this section now also
clarifies that the transition board will dissolve upon
the appointment of the first Travel Alaska Board.
12:24:38 PM
REPRESENTATIVE NEUMAN asked about the [VRT] credit.
MS. IVY offered her understanding that this credit was like the
education tax credit. She said that an entity subject to the
VRT could donate funds to the Alaska Tourism Marketing Fund
established in the proposed bill and then apply for a credit
against their VRT tax liability.
REPRESENTATIVE NEUMAN asked if this would be "back-filled by UGF
dollars."
MS. IVY opined that the appropriations would be dependent on the
Alaska State Legislature.
REPRESENTATIVE NEUMAN offered current examples of the
supplemental use of UGF (unrestricted general fund) dollars with
taxes. He declared that the State of Alaska did not have the
ability to continue to give away money. He shared that there
were a lot of questions.
REPRESENTATIVE GRENN offered his belief that these were valid
questions requiring answers. He reiterated that the intent of
the proposed bill would be a focus for the House Finance
Committee.
REPRESENTATIVE NEUMAN shared his belief that, as there were
already a lot of proposed bills in the House Finance Committee,
the committee was not the place for solutions.
12:28:36 PM
REPRESENTATIVE TALERICO observed that, because of geographical
location, gross revenues were not always equal. He shared his
concerns that, as this approach did not consider the operational
costs, the assessment process would be more complicated and
would require a better definition. He offered his belief that
this needed a careful approach.
REPRESENTATIVE GRENN replied that he "was more than happy to dig
into that more."
12:31:56 PM
MS. IVY, in response to Representative Talerico, explained that
the specific definition was in statute, although the concept for
use of gross revenues was commonly used in other tourism
improvement districts.
REPRESENTATIVE TALERICO said it was difficult for him to compare
other transportation corridors to the geographical challenges
that created the cost differentials for goods and services in
Alaska.
12:33:21 PM
REPRESENTATIVE JOSEPHSON shared that he was not receiving a lot
of communications for the grievances alluded by Representative
Talerico. He said that the TID (tourism improvement districts)
formula had worked in other states. Although he expressed
support for the proposed legislation, he shared his concern that
the House Finance Committee would find another solution to the
VRT which Department of Transportation & Public Facilities and
Department of Natural Resources had relied. He acknowledged the
need for a fiscal plan.
12:34:59 PM
REPRESENTATIVE TUCK stated that it was his understanding that
there were two reasons for necessitating the financial records
of a company. First, it was necessary to weight the vote and
second, it was necessary to determine the assessment. He asked
if there was an appeal process for either. He suggested that
there should also be an appeal process if a business was being
assessed even though they were not doing any tourism business.
MS. IVY, in response, said that currently there was not any
appeal process in the proposed bill. She offered her belief
that there was not an appeal process in the Alaska Seafood
Marketing Institute statute, either. She explained that there
was a termination mechanism included in the proposed bill, which
was intended to allow industry to terminate or amend an
assessment.
REPRESENTATIVE TUCK asked if a new business was immediately
assessed, whether or not it was initially profitable.
MS. IVY deferred to the Department of Revenue, although she
surmised that a business would be subject to assessment as soon
as gross revenues were available.
REPRESENTATIVE TUCK offered an example of a bicycle shop which
added bicycle rentals and asked if the entire business would
then be assessed.
MS. IVY explained that the transition board would work with
Department of Revenue to determine and identify exactly what
those segments included based on those definitions outlined in
the bill. She reported that the industry had requested to "let
us figure that out as a group and come up with definitions and
come up with proposed rates for segments." She pointed out that
the proposed bill was enabling legislation "to allow that
conversation to happen."
12:39:09 PM
The committee took an at-ease from 12:39 p.m. to 12:42 p.m.
12:43:04 PM
REPRESENTATIVE GRENN acknowledged that this was a complex bill
offering a new, innovative path for the industry to work toward
a solution. He pointed out that tourism marketing was the
second largest private sector in the state, and that it was
vital to the economy. He pointed out that this assessment was
passed on to customers and would not directly impact the
businesses.
12:44:49 PM
REPRESENTATIVE TUCK pointed out that he was a sponsor of the
bill, and that he supported the idea. However, he questioned
whether the legislature could "give away its taxing authority"
other than to municipalities and sub-governments. He expressed
concern that, although the Alaska Seafood Marketing Institute
worked, it had not been challenged in the courts. He expressed
the desire to better prepare and develop a clear, clean cut bill
that would not incur litigation and jeopardize similar systems.
He said that he was not comfortable in moving the bill forward
at this point.
12:48:04 PM
CHAIR LINCOLN announced that proposed HB 383 would be held over.
12:48:46 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee On Arctic Policy, Economic Development, and
Tourism meeting was adjourned at 12:48 p.m.
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