Legislature(2007 - 2008)BARNES 124

04/17/2007 05:00 PM House ECONOMIC DEV., TRADE, AND TOURISM


Download Mp3. <- Right click and save file as

Audio Topic
05:07:44 PM Start
05:08:15 PM HB217
06:21:47 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+= HB 217 TOURISM DISCLOSURES AND NOTICES TELECONFERENCED
Moved CSHB 217(EDT) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
 HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL                                                               
                       TRADE AND TOURISM                                                                                      
                         April 17, 2007                                                                                         
                           5:07 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mark Neuman, Chair                                                                                               
Representative Carl Gatto                                                                                                       
Representative Kyle Johansen                                                                                                    
Representative Vic Kohring                                                                                                      
Representative Bob Lynn                                                                                                         
Representative Andrea Doll                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Doogan                                                                                                      
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                              
Representative Lindsey Holmes                                                                                                   
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
HOUSE BILL NO. 217                                                                                                              
"An  Act relating  to required  onboard disclosures  and displays                                                               
about   tours,    flightseeing   operations,    other   shoreside                                                               
activities, and visitors bureaus;  and providing for an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - MOVED CSHB 217(EDT) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 217                                                                                                                  
SHORT TITLE: TOURISM DISCLOSURES AND NOTICES                                                                                    
SPONSOR(s): REPRESENTATIVE(s) HOLMES                                                                                            
                                                                                                                                
03/22/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/22/07       (H)       EDT, JUD                                                                                               
04/03/07       (H)       EDT AT 5:30 PM CAPITOL 106                                                                             
04/03/07       (H)       Heard & Held                                                                                           
04/03/07       (H)       MINUTE(EDT)                                                                                            
04/10/07       (H)       EDT AT 5:00 PM BARNES 124                                                                              
04/10/07       (H)       Heard & Held                                                                                           
04/10/07       (H)       MINUTE(EDT)                                                                                            
04/17/07       (H)       EDT AT 5:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                              
REPRESENTATIVE LINDSEY HOLMES, Member                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as the sponsor of HB 217.                                                                        
                                                                                                                                
ROB SCHEER, Owner                                                                                                               
Great Alaska Lumberjack Show and Experience Alaska Tours                                                                        
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 217.                                                                            
                                                                                                                                
PATRICIA SCHAUGHNESSY, Employee                                                                                                 
Experience Alaska Tours                                                                                                         
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the hearing on HB 217.                                                                    
                                                                                                                                
CARSTENS JASPER, Employee                                                                                                       
Experience Alaska Tours                                                                                                         
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the hearing on HB 217.                                                                    
                                                                                                                                
CHUCK SLAGLE, Owner                                                                                                             
Baranof and Company                                                                                                             
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the hearing on HB 217.                                                                    
                                                                                                                                
STACEY HUNT, Employee                                                                                                           
Great Alaska Lumberjack Show                                                                                                    
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:   Testified during the hearing on HB 217.                                                                   
                                                                                                                                
JANICE GARCIA, Employee                                                                                                         
Great Alaska Lumberjack Show                                                                                                    
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:   Testified during the hearing on HB 217.                                                                   
                                                                                                                                
JOHN DUNLAP, Manager                                                                                                            
Allen Marine Tours                                                                                                              
Allen Marine Inc.                                                                                                               
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT: Testified during the hearing on HB 217.                                                                     
                                                                                                                                
KARI ERICKSON, Division Manager                                                                                                 
Gray Line of Alaska                                                                                                             
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 217.                                                                            
                                                                                                                                
DOT WILSON, Owner                                                                                                               
Coastal Helicopters Inc.                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the hearing on HB 217.                                                                    
                                                                                                                                
CHIP THOMA                                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the hearing on HB 217.                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR MARK NEUMAN called the  House Special Committee on Economic                                                             
Development, International Trade and  Tourism meeting to order at                                                               
5:07:44 PM.   Representatives Kohring, Lynn,  Johansen, Doll, and                                                             
Neuman were present  at the call to order.   Representative Gatto                                                               
arrived as  the meeting was  in progress.   Representative Holmes                                                               
was also in attendance.                                                                                                         
                                                                                                                                
HB 217-TOURISM DISCLOSURES AND NOTICES                                                                                        
                                                                                                                                
5:08:15 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN announced  that the only order of  business would be                                                               
HOUSE  BILL  NO.  217,  "An  Act  relating  to  required  onboard                                                               
disclosures  and displays  about tours,  flightseeing operations,                                                               
other shoreside  activities, and visitors bureaus;  and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
5:08:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHANSEN  moved  CSHB 217,  25-LS0696\L.    There                                                               
being no objection, Version L was adopted.                                                                                      
                                                                                                                                
5:09:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   LINDSEY   HOLMES,  Alaska   State   Legislature,                                                               
informed the committee  that previous testimony on  HB 217 raised                                                               
some concerns  about the language of  the bill.  In  an effort to                                                               
preserve  the  language  of the  Alaska  Cruise  Ship  Initiative                                                               
(initiative), HB  217 created an  "and/or" option.  She  said the                                                               
Committee Substitute  corrects that  situation by setting  up one                                                               
set of  criteria that is applicable  to all tours that  are sold.                                                               
In  addition, it  creates a  three or  four part  disclosure that                                                               
reveals:  that the on-board sale  is a paid promotion; that other                                                               
alternatives  are available  for a  lower  price at  the port  of                                                               
call;  and the  address,  website, and  telephone  number of  the                                                               
visitor's bureaus  in future ports  of call  with a list  of tour                                                               
operators.   Representative Holmes  continued to explain  that if                                                               
the commission paid to the cruise  ship exceeds 33 percent of the                                                               
total cost  of the  excursion, an  additional disclosure  of that                                                               
fact  is  required.     This  change,  she   said,  will  protect                                                               
proprietary information  of local Alaska businesses  and will set                                                               
a threshold of  what a consumer might conclude  is the reasonable                                                               
and expected cost of a commission.                                                                                              
                                                                                                                                
5:13:21 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN remarked:                                                                                                          
                                                                                                                                
     There was one  more change from what  had been probably                                                                    
     a  sponsor substitute.   And  that  would have  removed                                                                    
     language that  is in the  initiative, and in  trying to                                                                    
     reach  a boundary  between all  the parties  concerned.                                                                    
     ... That  has to do  with the words that  shall "...and                                                                    
     shall result  in a  penalty of not  more than  $100 for                                                                    
     each  violation."   That is  in Sec.  C, of  the cruise                                                                    
     ship  regulation  disclosure  in 45.50.474,  so  that's                                                                    
     been retained in there....                                                                                                 
                                                                                                                                
CHAIR NEUMAN  indicated that he  had discussed the  percentage of                                                               
the threshold  with the sponsor  and the drafter of  the original                                                               
initiative.   He pointed  out that over  one-half of  the tourist                                                               
related businesses in  the state have five or  less employees and                                                               
that he  was searching for  an accord for  all parties.   He then                                                               
referred to  the change  on page  1, line  14, that  replaced the                                                               
words "all ports of call" with "each future port of call."                                                                      
                                                                                                                                
                                                                                                                                
5:16:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN asked whether there  would be a definition in                                                               
the statute of "paid promotion."                                                                                                
                                                                                                                                
5:16:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES replied  that the  language came  from the                                                               
initiative.    She said  that  she  would  consider a  change  to                                                               
"commission."                                                                                                                   
                                                                                                                                
5:17:17 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  indicated that the  definition of  "paid promotion"                                                               
is in statute.                                                                                                                  
                                                                                                                                
5:17:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN  inquired as to  whether the sponsors  of the                                                               
initiative are comfortable with [Version L].                                                                                    
                                                                                                                                
5:18:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOLMES  responded that  she has  not been  able to                                                               
contact the sponsors and that she  does not believe that they are                                                               
comfortable with Version  L.  She added that she  did not want to                                                               
speak for them.                                                                                                                 
                                                                                                                                
5:18:38 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  added that Sec. 2  was in the original  language of                                                               
the initiative;  thereby, the original  language was  retained in                                                               
Version L.                                                                                                                      
                                                                                                                                
5:19:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN asked  whether Representative  Holmes agreed                                                               
with Representative Neuman's statement.                                                                                         
                                                                                                                                
REPRESENTATIVE   HOLMES   expressed   her   understanding,   from                                                               
discussions with the original  initiative sponsors, that previous                                                               
to the passage of the  initiative, a violation of disclosure laws                                                               
was considered  an Alaska Unfair  Trade Practices  Act violation.                                                               
The initiative  unintentionally added  language that  lowered the                                                               
penalty  to  $100  for each  violation.    Representative  Holmes                                                               
continued to explain  that Version K reinstated  the unfair trade                                                               
practices  act   penalty;  however,  Version  L   reinstates  the                                                               
original language  of the initiative  and again sets  the penalty                                                               
at $100 for each violation.                                                                                                     
                                                                                                                                
5:20:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN asked  again  whether Representative  Holmes                                                               
felt  that  HB   217  reasonably  reflects  the   intent  of  the                                                               
initiative  sponsors  and  of  the  voters.   He  said,  "Are  we                                                               
violating the intent of that initiative,  if we were to pass this                                                               
out?"                                                                                                                           
                                                                                                                                
5:21:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES  replied   that  the  initiative  sponsors                                                               
indicated that the language of the  initiative "is a floor, not a                                                               
ceiling."  The  Alaska Supreme Court has indicated  that a change                                                               
can  be made  to  the  initiative unless  there  is  a change  of                                                               
direction.   The intent of  HB 217  is to keep  strong disclosure                                                               
provisions  and  take  care  of  unintended  consequences.    She                                                               
acknowledged that the sponsors have not read Version L.                                                                         
                                                                                                                                
5:22:50 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN reiterated  that the original ballot  language is in                                                               
Version L.                                                                                                                      
                                                                                                                                
5:23:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  said that  the original  sponsor is  out of                                                               
town.   He expressed his  belief that the original  sponsor would                                                               
not accept the change of the  percentage of the threshold from 25                                                               
percent  to  33  percent.    Representative  Gatto  said  that  a                                                               
commission of  33 percent of  the total cost of  a tour is  not a                                                               
reasonable percentage and that he would not support Version L.                                                                  
                                                                                                                                
5:24:01 PM                                                                                                                    
                                                                                                                                
CHAIR  NEUMAN requested  that Representative  Holmes explain  how                                                               
the percentage is determined.                                                                                                   
                                                                                                                                
5:24:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOLMES  explained that if  a tour costs  $100, and                                                               
the commission  is $33 or  less, the  disclosure would be  that a                                                               
paid  promotion is  being paid.   If  a tour  costs $100  and the                                                               
commission was  $34 or higher,  that commission would need  to be                                                               
disclosed as a paid promotion of 33 percent or greater.                                                                         
                                                                                                                                
5:25:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DOLL expressed  her  concern  about the  possible                                                               
conflict  with unfair  trade practices  statutes.   She suggested                                                               
that HB 217 should conform to existing statutes.                                                                                
                                                                                                                                
5:26:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES  informed   the  committee  that  existing                                                               
statutes for  penalties for unfair  trade practices are  to apply                                                               
under Version  L, and  they allow  for penalties  of up  to three                                                               
times damages or  $500, whichever is greater.   Existing statutes                                                               
also  allow  for  the  attorney  general to  file  suit.    Those                                                               
penalties, she said are for a  minimum of $1,000 and a maximum of                                                               
$25,000  per occurrence.   Representative  Holmes suggested  that                                                               
there is confusion  over whether the penalties  in the initiative                                                               
override those  contained in the  unfair trade practices  act and                                                               
that a legal analysis may be needed.                                                                                            
                                                                                                                                
5:27:43 PM                                                                                                                    
                                                                                                                                
CHAIR  NEUMAN said  that  the legal  aspect of  HB  217 could  be                                                               
studied by the House Judiciary Standing Committee.                                                                              
                                                                                                                                
5:28:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  noted that  the majority of  the discussion                                                               
has been  from the perspective of  the vendor and that  he wanted                                                               
to hear  from the  consumer.   He suggested  that the  33 percent                                                               
commission cost is infuriating.                                                                                                 
                                                                                                                                
5:29:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN  referred to  page 2,  line 1,  and asked                                                               
for the reason flight seeing operations are specified.                                                                          
                                                                                                                                
5:30:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES   replied  that   "...tours,  flightseeing                                                               
operations,  or other  shoreside activities..."  is the  original                                                               
language of the initiative.                                                                                                     
                                                                                                                                
5:30:47 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN invited public testimony.                                                                                          
                                                                                                                                
5:31:21 PM                                                                                                                    
                                                                                                                                
ROB SCHEER,  owner, Great Alaska  Lumberjack Show  and Experience                                                               
Alaska Tours, informed the committee  that he is concerned by the                                                               
member's comments  regarding the  value of  the commission.   Mr.                                                               
Scheer  said  that  the  commission pays  for  a  very  extensive                                                               
eight-month marketing campaign provided  by the cruise lines that                                                               
market to  millions of  consumers around the  world.   Mr. Scheer                                                               
stated that  his business model  is built to achieve  success for                                                               
his tour, which  has happened after an investment  of millions of                                                               
dollars in the Ketchikan community.   He said the commissions are                                                               
proprietary  information  and  should  not be  disclosed  in  any                                                               
manner.    Mr. Scheer  expressed  his  support  of  HB 217  as  a                                                               
beginning step to change the  initiative that was enacted to hurt                                                               
the  cruise  lines.    He suggested  that  the  committee  should                                                               
research  the  "free market  abusiveness"  model  of the  tourism                                                               
industry.   Mr.  Scheer  concluded by  saying  that his  business                                                               
employs  70 workers  and his  customers  support his  community's                                                               
economy with millions of dollars.                                                                                               
                                                                                                                                
5:35:08 PM                                                                                                                    
                                                                                                                                
PATRICIA  SCHAUGHNESSY  informed the  committee  that  she is  an                                                               
employee of  Experience Alaska Tours.   She said that  the cruise                                                               
line  provides  advertising  and  booking  services  that  extend                                                               
beyond a paid promotion, and  that these are services her company                                                               
can not afford.   In addition, she pointed out  that if she hired                                                               
an advertising  firm, her  contract with  them would  be private.                                                               
Ms.  Schaughnessy  concluded by  saying  that  the commission  is                                                               
reflected in the  total price of the tour and  the consumer makes                                                               
his/her decision based on the total price.                                                                                      
                                                                                                                                
5:36:51 PM                                                                                                                    
                                                                                                                                
CHAIR  NEUMAN asked  whether a  commission of  any percentage  is                                                               
acceptable.                                                                                                                     
                                                                                                                                
5:37:12 PM                                                                                                                    
                                                                                                                                
MS. SHAUGHNESSY answered yes.                                                                                                   
                                                                                                                                
5:37:29 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN further asked whether  a disclosure of any amount is                                                               
acceptable.                                                                                                                     
                                                                                                                                
5:37:46 PM                                                                                                                    
                                                                                                                                
MS. SHAUGHNESSY answered no.                                                                                                    
                                                                                                                                
5:37:54 PM                                                                                                                    
                                                                                                                                
CARSTENS JASPER informed the committee  that he is an employee of                                                               
Experience Alaska  Tours.  Mr.  Jasper expressed his  belief that                                                               
visitors  to  Alaska  are very  satisfied  with  the  experiences                                                               
provided by  the Alaskan tourism  industry.  He noted  that other                                                               
industries have  large mark-up margins  and the cost  of products                                                               
and  the  infrastructure  to  support them  must  be  taken  into                                                               
consideration.   He said that  this disclosure  requirement could                                                               
apply to any business.                                                                                                          
                                                                                                                                
5:39:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DOLL   asked  at  what  point   should  there  be                                                               
regulation of unfair business practices.                                                                                        
                                                                                                                                
5:40:17 PM                                                                                                                    
                                                                                                                                
MR. JASPER  opined that dissatisfaction  with the industry  or an                                                               
outcry  from consumers  would call  for regulation;  in contrast,                                                               
his tours often have repeat  customers.  He stressed that tourism                                                               
is the only industry that is thriving in Southeast.                                                                             
                                                                                                                                
5:41:18 PM                                                                                                                    
                                                                                                                                
CHUCK SLAGLE, owner, Baranof and  Company, informed the committee                                                               
that he has been selling  tours through the cruise industry since                                                               
1981.   Since  then, the  market has  grown dramatically  and the                                                               
cruise  lines  have lowered  prices  to  attract business.    Mr.                                                               
Slagle pointed  out that customers  choose the tours  through the                                                               
cruise lines,  but before  the cruise  begins.   He said  that 80                                                               
percent of cruise  passengers have searched for  tours and cruise                                                               
lines on the World Wide Web  (internet), and are aware of the 350                                                               
tours  available in  Southeast.   The internet  creates the  free                                                               
market for  consumers.  Mr.  Slagle stressed that  tour operators                                                               
realize that the  commission to the cruise lines  is cheaper than                                                               
establishing  their own  sales  staff  and advertising  programs.                                                               
The best  choice for his  company is  to use the  cruise industry                                                               
for marketing its tours.                                                                                                        
                                                                                                                                
5:44:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DOLL  asked how many  cruise ships with  which Mr.                                                               
Slagle negotiates.                                                                                                              
                                                                                                                                
5:44:48 PM                                                                                                                    
                                                                                                                                
MR. SLAGLE answered  that he works with all of  the cruise lines.                                                               
In fact,  80 to  90 percent  of his  customers are  passengers of                                                               
Norwegian  Cruise   Line,  Carnival  Cruise  Line,   and  Regency                                                               
Cruises.                                                                                                                        
                                                                                                                                
5:45:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DOLL asked whether each  contract is for a similar                                                               
price.                                                                                                                          
                                                                                                                                
5:45:31 PM                                                                                                                    
                                                                                                                                
MR. SLAGLE  responded that he  does not  have a contract  and the                                                               
commissions vary between  cruise lines.  In  answer to questions,                                                               
Mr.  Slagle explained  that he  informs the  cruise lines  of his                                                               
wholesale  price  and  they  add the  commissions.    He  further                                                               
explained that  most commissions are similar,  but not identical,                                                               
in price.                                                                                                                       
                                                                                                                                
5:45:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO observed  that cruise  passengers are  very                                                               
educated  and savvy,  and asked  Mr. Slagle  whether voters  are,                                                               
also.                                                                                                                           
                                                                                                                                
5:46:22 PM                                                                                                                    
                                                                                                                                
MR.  SLAGLE  replied no;  voters  are  uninformed and  uneducated                                                               
about the tourism industry.                                                                                                     
                                                                                                                                
5:47:20 PM                                                                                                                    
                                                                                                                                
STACEY HUNT, employee, Great Alaska  Lumberjack Show, stated that                                                               
the only  person to have  detailed information about  a company's                                                               
profit margin is  a stockholder or investor.  Ms.  Hunt said that                                                               
posting profit  margins with tour  information will  force cruise                                                               
passengers on vacation to think  about money; thereby, cheapening                                                               
their Alaskan  experience.   She said  that the  tourism consumer                                                               
has a choice of activities.                                                                                                     
                                                                                                                                
5:48:34 PM                                                                                                                    
                                                                                                                                
JANICE GARCIA, employee, Great  Alaska Lumberjack Show, expressed                                                               
her  belief  that companies  who  have  a relationship  with  the                                                               
cruise ships have  hired them as their  advertising and marketing                                                               
agents.   Ms. Garcia  stated that  the disclosure  of commissions                                                               
damages tour  companies relationships  with the cruise  lines and                                                               
makes  the   guests  uncomfortable.    She   suggested  that  the                                                               
passengers  would be  confused  by the  breakdown  of the  tour's                                                               
cost.                                                                                                                           
                                                                                                                                
5:49:52 PM                                                                                                                    
                                                                                                                                
JOHN  DUNLAP, Manager,  Allen Marine  Tours,  Allen Marine  Inc.,                                                               
informed  the  committee  that Allen  Marine  Tours  employs  200                                                               
people during  the summer.   Allen Marine  Inc., also  operates a                                                               
shipyard in Sitka, and has  earned its success following 40 years                                                               
of  business  in Southeast  Alaska.    Mr. Dunlap  expressed  his                                                               
belief that his  fellow Alaskans voted on the  head tax provision                                                               
of  the   initiative  and  did  not   understand  the  disclosure                                                               
provision.                                                                                                                      
                                                                                                                                
5:51:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO asked  whether Mr.  Dunlap agreed  with Mr.                                                               
Slagle  that the  voters were  unaware of  the provisions  of the                                                               
initiative.                                                                                                                     
                                                                                                                                
5:52:00 PM                                                                                                                    
                                                                                                                                
MR.  DUNLAP  affirmed  that  he  felt that  the  voters  did  not                                                               
understand the initiative, except for  the assessment of the head                                                               
tax.                                                                                                                            
                                                                                                                                
5:52:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO asked why Mr. Dunlap  did not take a poll in                                                               
Ketchikan to support his testimony.                                                                                             
                                                                                                                                
5:53:00 PM                                                                                                                    
                                                                                                                                
KARI  ERICKSON, Division  Manager,  Gray Line  of Alaska,  stated                                                               
that her company hires forty  employees seasonally, and four year                                                               
around.    She noted  that  her  company solicits  comments  from                                                               
guests and  there are  few complaints about  the price  of tours.                                                               
Ms. Erickson  expressed her  dissatisfaction with  the initiative                                                               
and urged the committee to support HB 217.                                                                                      
                                                                                                                                
5:54:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOHRING   indicated  that  constituents   in  his                                                               
district have contacted him, have  confirmed that they knew about                                                               
the provisions, and do not support changes to the initiative.                                                                   
                                                                                                                                
5:55:37 PM                                                                                                                    
                                                                                                                                
MS. ERICKSEN  stated that she has  polled a lot of  people on the                                                               
initiative and was  told by voters that the  smaller issues could                                                               
be easily changed.                                                                                                              
                                                                                                                                
5:56:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN asked what kind of poll was taken.                                                                          
                                                                                                                                
5:56:26 PM                                                                                                                    
                                                                                                                                
MS.  ERICKSEN responded  that she  asked friends,  neighbors, and                                                               
those who are impacted by the initiative in her community.                                                                      
                                                                                                                                
5:56:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN  asked whether  there has been  any testimony                                                               
from an independent tour operator  who does not contract with the                                                               
cruise industry.                                                                                                                
                                                                                                                                
5:57:29 PM                                                                                                                    
                                                                                                                                
DOT  WILSON, owner,  Coastal Helicopters  Inc.,  stated that  her                                                               
business does not contract with  the cruise industry.  Ms. Wilson                                                               
stressed that she supports free enterprise.                                                                                     
                                                                                                                                
5:57:51 PM                                                                                                                    
                                                                                                                                
CHIP  THOMA informed  the committee  that  he is  a supporter  of                                                               
initiative.  Mr. Thoma expressed  his belief that the sponsors of                                                               
the initiative have not reviewed Version  L, and are not aware of                                                               
the increase  of the threshold  percentage from 25 percent  to 33                                                               
percent.  He stated that he  supported the 25 percent figure.  He                                                               
said  that  he  also  agrees with  earlier  testimony  about  the                                                               
availability of tour  information on the internet,  and said that                                                               
internet  access may  be  a  solution to  the  problem.   In  the                                                               
future, he  expects that the  number of  tours sold on  the ships                                                               
will be  about 10 percent.   Mr. Thoma pointed out  that, at this                                                               
time,  $250  million in  shoreside  tours  are sold  in  northern                                                               
Southeast  per  season.    He   concluded  by  saying  that  [the                                                               
disclosure] is information that consumers need.                                                                                 
                                                                                                                                
6:00:52 PM                                                                                                                    
                                                                                                                                
CHAIR  NEUMAN observed  that negotiating  improvements to  HB 217                                                               
has  been  very  difficult  due  to  conflicting  testimony  from                                                               
interested parties.                                                                                                             
                                                                                                                                
6:02:27 PM                                                                                                                    
                                                                                                                                
MR. THOMA  stated that  the sponsors  of the  original initiative                                                               
are  speaking  for  the  passengers  on  the  ship  and  for  the                                                               
alternative tour  operators who do  not have their tours  sold by                                                               
the ships.                                                                                                                      
                                                                                                                                
6:02:55 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  asked whether there  is competition amongst  all of                                                               
the tour operators for business with the cruise ships.                                                                          
                                                                                                                                
6:03:16 PM                                                                                                                    
                                                                                                                                
MR. THOMA  said, "Very little."   He compared the situation  to a                                                               
limited entry program.                                                                                                          
                                                                                                                                
6:03:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO asked about the  percentage of tours sold on                                                               
the ships as  compared with the percentage of tours  that are not                                                               
pre-sold.   This  information,  he said,  would  indicate to  the                                                               
committee  the   scope  of  the   influence  of   the  disclosure                                                               
requirements.                                                                                                                   
                                                                                                                                
6:04:16 PM                                                                                                                    
                                                                                                                                
MS. WILSON  informed the  committee that  pre-sold tours  for her                                                               
business are by direct inquiry or through travel agents.                                                                        
                                                                                                                                
REPRESENTATIVE  JOHANSEN  asked  whether  Ms.  Wilson  knows  the                                                               
profit margins of the travel agents.                                                                                            
                                                                                                                                
MS. WILSON answered no.                                                                                                         
                                                                                                                                
6:05:19 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN announced that public testimony was closed.                                                                        
                                                                                                                                
6:05:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KOHRING  expressed   his   empathy  with   small                                                               
businesses who  are required to divulge  proprietary information.                                                               
He suggested  that initiatives must  be crafted carefully  in the                                                               
future to avoid unintended consequences.                                                                                        
                                                                                                                                
6:06:45 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN  reminded the committee that  other initiatives have                                                               
been amended  and that  the legislative  body is  responsible for                                                               
the process of discovery.                                                                                                       
                                                                                                                                
6:07:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN  stated that  the disclosure  required by                                                               
the initiative  is unfair for businesses.   He noted that  in the                                                               
marketplace,  the total  price should  dictate the  success of  a                                                               
product or  service.  He opined  that HB 217 eases  the impact on                                                               
small business and that he  will support the Committee Substitute                                                               
for HB 217.                                                                                                                     
                                                                                                                                
6:09:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO reminded  the committee  of the  failure of                                                               
the  Gas Reserves  Tax Initiative.    He said  when other  ballot                                                               
measures have failed; the legislature  never considered passing a                                                               
bill for the same purpose.  He remarked:                                                                                        
                                                                                                                                
     Even if you  feel, that this bill was  presented to the                                                                    
     public  as  an  initiative,   not  the  bill,  but  the                                                                    
     initiative,  was  incorrectly  voted  on,  my  personal                                                                    
     feelings, [the] public  has a right to be  wrong. ... I                                                                    
     don't know  that the  public is  ever wrong;  they just                                                                    
     are  allowed  to  make  votes....  It  is  the  state's                                                                    
     citizens  that voted  for the  initiative.  ... But  in                                                                    
     order to do what they asked  us to do, we have a cruise                                                                    
     ship head  tax, and  most everyone agrees  that's okay,                                                                    
     [we  have]  an  Ocean  Ranger program,  which  was  the                                                                    
     second  big thing  in the  bill, and  now it  starts to                                                                    
     deteriorate. ... I  will never say that  the public did                                                                    
     not read far enough. ...  I have trouble saying we need                                                                    
     to,  we need  to  meddle with  the  public's vote.  ...                                                                    
     These  bills are  not enforcing  what the  public asked                                                                    
     for, they are  altering ... I am not  about to overturn                                                                    
     what the public asked for.                                                                                                 
                                                                                                                                
6:13:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DOLL stated  her belief  that some  regulation is                                                               
needed in  a situation where  there is  a growing monopoly.   She                                                               
noted that the  anti-trust laws may have applied to  this type of                                                               
situation  in  the  past.    Representative  Doll  expressed  her                                                               
support for  HB 217 and  her understanding of the  profit margins                                                               
of  business.    She  concluded  that  her  support  is  for  the                                                               
compromise crafted to assist the small businesses.                                                                              
                                                                                                                                
6:15:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN said  that he  must assume  that the  voters                                                               
know what they  are voting for.  Each vote  counts whether or not                                                               
the voter has a complete  understanding of a long and complicated                                                               
issue.  He  expressed his concern about the  33 percent threshold                                                               
included  in Version  L.   Representative Lynn  said that  he can                                                               
address that issue in the House Judiciary Standing Committee.                                                                   
                                                                                                                                
6:16:46 PM                                                                                                                    
                                                                                                                                
CHAIR NEUMAN agreed that this committee  is the first stop for HB
217  and there  has been  a  lot of  work  done with  all of  the                                                               
parties  concerned.   He  pointed  out  that  this is  the  third                                                               
hearing for the bill.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GATTO  informed  the  committee that  he  had  an                                                               
amendment.                                                                                                                      
                                                                                                                                
6:18:47 PM                                                                                                                    
                                                                                                                                
CHAIR  NEUMAN suggested  that  the amendment  be  offered in  the                                                               
House Judiciary Standing Committee  since the initiative sponsors                                                               
are out of town.                                                                                                                
                                                                                                                                
REPRESENTATIVE GATTO said  that his amendment applies  to page 2,                                                               
line 14.  He then read:                                                                                                         
                                                                                                                                
     If the  value paid by  the business is a  commission of                                                                    
     more  than  ten  percent,  of   any  single  sale,  the                                                                    
     disclosure shall also state that  more than ten percent                                                                    
     commission is  being retained by  the person  or entity                                                                    
     making the sale.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GATTO  explained  that  his  amendment  has  been                                                               
accepted by the sponsor of HB 217.                                                                                              
                                                                                                                                
6:21:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN recommended  that  the sponsor  of the  bill                                                               
offer the amendment in the proper form.                                                                                         
                                                                                                                                
6:21:30 PM                                                                                                                    
                                                                                                                                
CHAIR  NEUMAN confirmed  that the  amendment was  not offered  to                                                               
this committee.                                                                                                                 
                                                                                                                                
6:21:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE Johansen  moved to report  HB 217, Version  L, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying  fiscal  notes.   There  being  no  objection,  CSHB
271(EDT)  was reported  out  of the  House  Special Committee  on                                                               
Economic Development, International Trade and Tourism.                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Economic Development, International Trade                                                                  
and Tourism meeting was adjourned at 6:23 p.m.                                                                                  

Document Name Date/Time Subjects