Legislature(2011 - 2012)BARNES 124

03/01/2011 10:15 AM ECON. DEV., TRADE & TOURISM


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10:21:47 AM Start
10:22:02 AM HB160
11:10:51 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 160 VISITOR INDUSTRY INVESTM'T FUND/MARKETING TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
 HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL                                                               
                       TRADE AND TOURISM                                                                                      
                         March 1, 2011                                                                                          
                           10:21 a.m.                                                                                           
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bob Herron, Chair                                                                                                
Representative Neal Foster                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Wes Keller                                                                                                       
Representative Cathy Engstrom Munoz                                                                                             
Representative Steve Thompson                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Kurt Olson, Vice Chair                                                                                           
Representative Berta Gardner                                                                                                    
Representative Chris Tuck                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 160                                                                                                              
"An Act establishing and relating  to the Alaska visitor industry                                                               
investment  fund; relating  to matching  funds for  state tourism                                                               
marketing  contracts  with   qualified  trade  associations;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 160                                                                                                                  
SHORT TITLE: TOURISM MARKETING CONTRACTS/CAMPAIGNS                                                                              
SPONSOR(s): ECON. DEV., TRADE & TOURISM                                                                                         
                                                                                                                                
02/16/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/11       (H)       EDT, FIN                                                                                               
03/01/11       (H)       EDT AT 10:15 AM BARNES 124                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
TERRY HARVEY, Staff                                                                                                             
Representative Cathy Munoz                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Introduced the committee substitute (CS)                                                                 
for HB 160 on behalf of the House Special Committee on Economic                                                                 
Development, International Trade and Tourism, sponsor.                                                                          
                                                                                                                                
SUSAN BELL, Commissioner                                                                                                        
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  On behalf of the administration, testified                                                               
in support of HB 160.                                                                                                           
                                                                                                                                
PATTI MACKAY, President/CEO                                                                                                     
Ketchikan Visitors Bureau; Board Member                                                                                         
Alaska Travel Industry Association (ATIA)                                                                                       
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 160.                                                                          
                                                                                                                                
RICHARD BENEVILLE, Owner/Operator                                                                                               
Nome Discovery Tours                                                                                                            
Nome, Alaska                                                                                                                    
POSITION STATEMENT:  Testified in support of HB 160.                                                                          
                                                                                                                                
TERRY WANZER, Executive Board Member                                                                                            
Alaska Hotel & Lodging Association (AkH&LA); Owner                                                                              
Best Western Landing                                                                                                            
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 160.                                                                          
                                                                                                                                
JOHN MCCONNOCHIE, Co-owner                                                                                                      
Cycle Alaska                                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 160.                                                                          
                                                                                                                                
SHANON HAMRICK, Executive Director                                                                                              
Kenai Peninsula Tourism Marketing Council, Inc. (KPTMC)                                                                         
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HB 160.                                                                          
                                                                                                                                
FRED REEDER, Board Member                                                                                                       
Alaska Travel Industry Association (ATIA)                                                                                       
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HB 160.                                                                          
                                                                                                                                
PAUL LANDIS, Chief Operating Officer                                                                                            
CIRI Alaska Tourism Corporation (CATC); Steering Committee                                                                      
Member                                                                                                                          
AlaskaACT; Board Member                                                                                                         
Alaska Travel Industry Association (ATIA)                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 160.                                                                          
                                                                                                                                
CHIP THOMA, President                                                                                                           
Responsible Cruising in Alaska                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in opposition to HB 160.                                                                       
                                                                                                                                
BRUCE BUSTAMANTE, Vice-President                                                                                                
Community and Public Affairs                                                                                                    
Princess Cruises and HAP Alaska-Yukon                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 160.                                                                          
                                                                                                                                
DALE FOX, President/CEO                                                                                                         
Alaska Cabaret, Hotel, Restaurant & Retailer's (Alaska CHARR)                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 160.                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:21:47 AM                                                                                                                   
                                                                                                                                
CHAIR BOB HERRON  called the House Special  Committee on Economic                                                             
Development, International Trade and  Tourism meeting to order at                                                               
10:21 a.m.   Representatives Herron, Thompson,  Munoz, and Keller                                                               
were present  at the  call to order.   Representatives  Joule and                                                               
Foster arrived as the meeting was in progress.                                                                                  
                                                                                                                                
          HB 160-TOURISM MARKETING CONTRACTS/CAMPAIGNS                                                                      
                                                                                                                                
10:22:02 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON announced  that the only order of  business would be                                                               
HOUSE  BILL NO.  160, "An  Act establishing  and relating  to the                                                               
Alaska  visitor industry  investment fund;  relating to  matching                                                               
funds for state tourism marketing  contracts with qualified trade                                                               
associations; and providing for an effective date."                                                                             
                                                                                                                                
10:22:33 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  MUNOZ  moved  to  adopt  the  proposed  committee                                                               
substitute  (CS)  for  HB 160,  Version  27-LS0509\I,  Bannister,                                                               
2/28/11,  as the  working document.   There  being no  objection,                                                               
Version I was before the committee.                                                                                             
                                                                                                                                
10:23:07 AM                                                                                                                   
                                                                                                                                
TERRY  HARVEY, staff,  Representative Cathy  Munoz, Alaska  State                                                               
Legislature,  reminded  the   committee  of  compelling  economic                                                               
testimony  by  the visitor  industry  earlier  this session  that                                                               
tourism-related  spending  in  Alaska  is estimated  to  be  $3.4                                                               
billion  per   year.    However,   the  industry   statewide  and                                                               
nationwide  is  now  struggling,  and  today's  discussion  would                                                               
address what  the legislature can  do to turn this  trend around.                                                               
At  this  time,  the  visitor   industry's  top  priority  is  to                                                               
establish the  visitor industry investment  fund, and  Mr. Harvey                                                               
advised that  HB 160  is about  a sustainable  marketing approach                                                               
for Alaska that  offers much needed stability for  the future, in                                                               
contrast to the varied plans in  use during the recent past.  The                                                               
bill  is  also a  top  priority  of  the administration,  and  an                                                               
opportunity to  embrace a sustainable  reinvestment plan  for the                                                               
visitor industry.                                                                                                               
                                                                                                                                
10:25:34 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON  asked whether this  legislation not  only addresses                                                               
the overarching  theme of marketing  Alaska in terms of  fish and                                                               
tourism, but  also for  other aspects  such as  national security                                                               
and responsible resource development.                                                                                           
                                                                                                                                
10:26:20 AM                                                                                                                   
                                                                                                                                
MR.  HARVEY agreed  that all  of the  aforementioned aspects  are                                                               
important  to  Alaska as  a  whole.   However,  this  legislation                                                               
attempts to focus  on one of the primary industries  in the state                                                               
- the  visitor industry.   In  a manner  similar to  the approach                                                               
taken by the Alaska Seafood  Marketing Institute (ASMI), the bill                                                               
develops  a  long-range marketing  plan  that  will lift  up  the                                                               
industry,  promote  Alaska  globally,  and  allow  the  state  to                                                               
compete in the global market.                                                                                                   
                                                                                                                                
10:27:13 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON  pointed out that it  is important for all  to think                                                               
about Alaska as a whole.                                                                                                        
                                                                                                                                
10:27:53 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  MUNOZ  asked Mr.  Harvey  to  explain the  timing                                                               
issue of the industry's contributions.                                                                                          
                                                                                                                                
10:28:12 AM                                                                                                                   
                                                                                                                                
MR.  HARVEY explained  that the  industry is  currently operating                                                               
with a percentage match of 70  percent state funds and 30 percent                                                               
industry  funds for  visitor industry  marketing purposes.   This                                                               
arrangement will  sunset at the  end of  this year and  the match                                                               
will return  to 50  percent state funds  and 50  percent industry                                                               
funds.   He said  an important  aspect of  the legislation  is to                                                               
move away  from either a  50/50 or  70/30 split, and  establish a                                                               
rate  for  the contribution  from  the  visitor industry  -  $2.7                                                               
million - that would not change for years to come.                                                                              
                                                                                                                                
10:29:38 AM                                                                                                                   
                                                                                                                                
MR.  HARVEY,   in  further  response  to   Representative  Munoz,                                                               
explained  that  the  state  receives a  number  of  tax  revenue                                                               
streams from the  visitor industry such as bed  taxes, car rental                                                               
taxes, corporate  income taxes,  and local sales  taxes, although                                                               
he  could not  provide  information on  the  specific amounts  of                                                               
increases since the initial legislation was established.                                                                        
                                                                                                                                
10:30:16 AM                                                                                                                   
                                                                                                                                
CHAIR  HERRON requested  a written  response from  Representative                                                               
Munoz  and Commissioner  Bell's staffs  to all  of the  committee                                                               
members answering Representative Munoz's question.                                                                              
                                                                                                                                
10:31:00 AM                                                                                                                   
                                                                                                                                
SUSAN  BELL, Commissioner,  Department of  Commerce, Community  &                                                               
Economic  Development (DCCED),  advised that  HB 160  provides an                                                               
important and  much needed solution for  funding Alaska's tourism                                                               
marketing  program.    She provided  her  background  in  tourism                                                               
business management  and marketing in the  Interior and Southeast                                                               
during the '70s and '80s, and  disclosed she served on the Alaska                                                               
Tourism  Marketing  Council.     Commissioner  Bell  relayed  her                                                               
business  experience helps  her understand  how small  businesses                                                               
and communities  leverage state programs because  they are unable                                                               
to  reach national  and international  markets.    Recent  market                                                               
research  reveals  that there  has  been  a significant  drop  in                                                               
visits  to  the state;  for  example,  125,000 fewer  independent                                                               
visitors  came  to  Alaska  in 2009,  and  140,000  fewer  cruise                                                               
passengers came in  2010.  Analysis by DCCED  blamed this decline                                                               
for a loss of  5,000 jobs in the state.   She stated the priority                                                               
of her  department and the  administration is to work  toward the                                                               
restoration of  these jobs and economic  activity, by maintaining                                                               
a strong presence in the  tourism marketplace.  Commissioner Bell                                                               
credited marketing and  changes by the legislature  with the fact                                                               
that independent  visitors are beginning  to come back  and there                                                               
are increases in  cruise deployments.  She also  pointed out that                                                               
the  contract  with  the  qualified   trade  organizations  is  a                                                               
marketing arrangement that is 11  years old; in fact, the state's                                                               
collection of taxes and fees  has changed considerably, and after                                                               
changes made to  the recreational vehicle rental tax  in 2003 and                                                               
to  the  ballot  initiative  in  2006 and  2010,  the  state  now                                                               
collects approximately $100 million  in visitor-related taxes and                                                               
fees.   Furthermore, she  stressed that  the tourism  climate has                                                               
changed  since  the  terrorist attacks  of  September  2001,  the                                                               
economic decline  beginning in 2008, and  the increased marketing                                                               
of other  destinations.   The commissioner  summarized, restating                                                               
the  administration's support  for  finding  a long-term  funding                                                               
source that stabilizes tourism  marketing, ensures a high-quality                                                               
stable   program,  protects   the   legislature's  authority   to                                                               
appropriate funds,  and recognizes the changes  in the collection                                                               
of taxes and fees from the industry.                                                                                            
                                                                                                                                
10:36:12 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE THOMPSON  recalled one  of the  funding mechanisms                                                               
for the visitor marketing plan is  the vehicle rental tax, and he                                                               
observed there is a potential  conflict with proposed legislation                                                               
to establish a transportation highway  fund, using vehicle rental                                                               
tax revenue.                                                                                                                    
                                                                                                                                
10:36:44 AM                                                                                                                   
                                                                                                                                
COMMISSIONER BELL said she was not  aware of this conflict as the                                                               
vast majority of  the rental tax now goes to  the qualified trade                                                               
organization.  She said she would research this issue.                                                                          
                                                                                                                                
10:37:24 AM                                                                                                                   
                                                                                                                                
PATTI  MACKAY, President/CEO,  Ketchikan  Visitors Bureau;  Board                                                               
Member, Alaska  Travel Industry Association (ATIA),  provided her                                                               
experience of 15 years in the  tourism industry in Southeast.  On                                                               
behalf  of  ATIA, Ms.  Mackay  spoke  of  the recent  impacts  to                                                               
tourism  businesses across  the state  such as  homeland security                                                               
issues,  federal   land  ownership,  the   recession,  regulatory                                                               
issues, and  a competitive  marketplace.   She stressed  that the                                                               
tourism  industry works  twelve months  of the  year to  generate                                                               
sufficient  business  during  the  four-  or  five-month  tourism                                                               
season;  in  fact,  were  marketing  for  winter  excursions  and                                                               
conventions available,  many businesses would like  to extend the                                                               
season  through  the winter  months.    Ms. Mackay  reminded  the                                                               
committee that tourism  businesses have been trying  for years to                                                               
work with the state to grow  the investment in an economic sector                                                               
of  the state  that creates  jobs, and  generates revenue  at all                                                               
levels of government,  and that sends people who  visit home with                                                               
an appreciation of the state.   The visitor industry's message to                                                               
legislators is  that the existing  program for  marketing tourism                                                               
in Alaska falls  short of funding that is  sufficient to maximize                                                               
returns.  She said the  benefits of funding the marketing program                                                               
at  a minimum  of $20  million  are: a  substantive impact;  more                                                               
visitors  to the  state;  strengthen the  tourism  sector of  the                                                               
economy;  improve Alaska's  destination standing  as demonstrated                                                               
by the $18.7  million appropriation last year;  a good investment                                                               
that  will create  additional jobs,  municipal  revenue, and  tax                                                               
revenue for the state.                                                                                                          
                                                                                                                                
10:41:09 AM                                                                                                                   
                                                                                                                                
RICHARD   BENEVILLE,   Owner/Operator,  Nome   Discovery   Tours,                                                               
informed the  committee he  has owned and  operated a  small tour                                                               
company  in  Nome, primarily  for  independent  tourists, for  18                                                               
years.    Cruise ships  visit  Nome  also.   His  company  relies                                                               
heavily  on the  ATIA marketing  program  as rural  parts of  the                                                               
state only have  the Internet and ATIA and  its marketing program                                                               
available  to  them.    In fact,  the  national  television  (TV)                                                               
campaign has been very effective in  a short period of time.  Mr.                                                               
Beneville  also participates  in the  Alaska Media  Road Show  in                                                               
California and New  York.  His business is very  small, but these                                                               
opportunities  match his  business  with  corporate entities  and                                                               
allow him to  compete in the world market.   Tourism in Nome also                                                               
has a positive impact on  local Native corporations, for example,                                                               
Bering Straits  Native Corporation (BSNC)  has lodging and  a car                                                               
rental agency  on the  Seward Peninsula,  and day  excursions; in                                                               
fact,  benefits  from the  tourism  industry  range statewide  in                                                               
depth.    Mr.  Beneville  urged  for  the  committee's  continued                                                               
support for the bill.                                                                                                           
                                                                                                                                
10:44:45 AM                                                                                                                   
                                                                                                                                
TERRY  WANZER, Executive  Board  Member, Alaska  Hotel &  Lodging                                                               
Association (AkH&LA); Owner, Best  Western Landing, stated he has                                                               
been in  business in  Ketchikan for 39  years, and  stressed that                                                               
his  hotel and  businesses  are  open year  around.  The Hotel  &                                                               
Lodging Association is extremely  appreciative of the legislation                                                               
to  establish a  sustainable  funding plan  for Alaska's  tourism                                                               
marketing  campaign with  a minimum  annual appropriation  of $20                                                               
million.    He pointed out that the state  benefits from revenues                                                               
generated by the tourism industry that  have been as high as $140                                                               
million, and the  reinvestment of a percentage  of those revenues                                                               
will sustain a healthy economy  for the industry, and will result                                                               
in jobs  for Alaskans and  further revenues.   Hotel and  bed tax                                                               
revenues paid  to local governments  have declined as much  as 22                                                               
percent and,  without this revenue,  local governments  will turn                                                               
to  the  state  for  increased  aid.   Mr.  Wanzer  relayed  that                                                               
research funded by $7 million  in additional marketing funds last                                                               
year has  generated an  expected 4  percent increase  in visitors                                                               
coming to  Alaska this summer.   In fact, the  additional funding                                                               
in  FY11  has  given  the  industry  an  opportunity  to  improve                                                               
awareness  and generate  business;  however, it  is important  to                                                               
ensure that Alaska's tourism marketing  campaign does not "take a                                                               
step backwards."   Mr. Wanzer urged quick passage of  HB 160, and                                                               
noted  that   the  Ketchikan  Borough   Assembly  has   passed  a                                                               
resolution in support of tourism marketing on a state level.                                                                    
                                                                                                                                
10:48:34 AM                                                                                                                   
                                                                                                                                
JOHN MCCONNOCHIE, Co-owner, Cycle Alaska,  stated he and his wife                                                               
are co-owners  of a  small bike tour  company located  in Juneau.                                                               
Last season, Cycle Alaska employed  26 people compared to a staff                                                               
of 32 in  2009.  The market value of  his business decreased last                                                               
year as a result of 140,000  fewer visitors to Juneau, and all of                                                               
his vendors  and suppliers were  affected, along with  the amount                                                               
of  tax revenue  collected for  the  City and  Borough of  Juneau                                                               
(CBJ).  Mr.  McConnochie asked for the committee's  support of HB                                                               
160, and  pointed out that  his company  depends on ATIA  for its                                                               
marketing program.   He has learned from  his business experience                                                               
over  30 years  that  during a  down  economy, cutting  marketing                                                               
dollars is  a mistake.   Mr. McConnochie  concluded that  a long-                                                               
term, sustained, marketing program  is an opportunity to maintain                                                               
and grow the industry.                                                                                                          
                                                                                                                                
10:51:07 AM                                                                                                                   
                                                                                                                                
SHANON  HAMRICK,  Executive  Director,  Kenai  Peninsula  Tourism                                                               
Marketing  Council,  Inc.  (KPTMC),  said  she  was  a  life-long                                                               
resident  of Soldotna.   The  Kenai  Peninsula Tourism  Marketing                                                               
Council  is  a  destination  marketing  organization  working  on                                                               
behalf of  the Kenai Peninsula  Borough, which is composed  of 13                                                               
communities  and  over  1,000 tourism  businesses.    Its  modest                                                               
budget is  invested heavily in  ATIA's marketing  program because                                                               
without ATIA's research and  broad-scale image advertising, KPTCM                                                               
would not  be as  effective; in  fact, ATIA  is KPTCM's  tool for                                                               
finding visitors.   Ms. Hamrick  relayed that the economy  on the                                                               
Kenai Peninsula  has suffered  during the  past three  years, and                                                               
tourism  is its  biggest potential  for growth;  however, tourism                                                               
businesses rely  on marketing, but  they cannot afford  image and                                                               
TV advertising.   She advised  that HB  160 is an  opportunity to                                                               
make a direct, positive, impact  on thousands of small businesses                                                               
in Alaska that  have worked towards establishing a  budget of $20                                                               
million for  tourism marketing to  ensure a diverse  and thriving                                                               
economy.                                                                                                                        
                                                                                                                                
10:53:36 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON turned the gavel over to Representative Munoz.                                                                     
                                                                                                                                
10:54:22 AM                                                                                                                   
                                                                                                                                
FRED  REEDER, Board  Member, Alaska  Travel Industry  Association                                                               
(ATIA),  stated he  was a  life-long Sitkan  and appreciated  the                                                               
opportunity to finally  address the need for  a sustained visitor                                                               
industry marketing  plan for  the state.   As  a former  mayor of                                                               
Sitka,  he  relayed  the  importance   of  tax  revenues  to  the                                                               
community and spoke  of the decrease in visitors  to Sitka, since                                                               
2008, that  has resulted in  a loss of  over $1 million  in sales                                                               
tax revenue from  the visitor sector.  Because of  this loss, the                                                               
City and Borough of Sitka will  look to the state for an increase                                                               
in  municipal revenue  sharing.   Mr. Reeder  opined that  if the                                                               
state   has  a   long-term  plan   to  fund   visitor  marketing,                                                               
communities  like Sitka  will increase  their  sales tax  revenue                                                               
from outside sources, and lessen  the demand for revenue sharing.                                                               
In  addition,  private  industry will  expand,  supporting  local                                                               
government and  providing jobs.   He advised that Sitka  has lost                                                               
over 100 jobs related to the  decline in the visitor sector.  The                                                               
passage of  HB 160 will  bring more visitors to  Alaska, increase                                                               
direct  sales tax  revenue, car  rental taxes,  and hotel  taxes.                                                               
Mr. Reeder  concluded that improving  this sector of  the economy                                                               
is good for all Alaskans.                                                                                                       
                                                                                                                                
10:56:42 AM                                                                                                                   
                                                                                                                                
PAUL  LANDIS,  Chief  Operating   Officer,  CIRI  Alaska  Tourism                                                               
Corporation (CATC);  Steering Committee Member,  AlaskaACT; Board                                                               
Member, Alaska  Travel Industry  Association (ATIA),  stated that                                                               
all  of the  organizations  he is  representing expressed  common                                                               
support for  HB 160.   CIRI Alaska  Tourism Corporation  owns and                                                               
operates  hotel  properties in  Talkeetna  and  Seward and  holds                                                               
interests in marine  day tours; these businesses  create over 460                                                               
jobs during  the tourist season.    He advised that  although his                                                               
businesses  and others  rely on  independent  travelers from  the                                                               
U.S.  and  abroad,  they cannot  reach  the  highly-targeted  and                                                               
clearly  defined   consumer  groups  within   ATIA's  cooperative                                                               
marketing  plan.   Surveys indicate  that  Alaska's main  visitor                                                               
attraction is its  natural beauty, along with  interest in Native                                                               
culture.   As  CATC is  one of  several Native  corporations that                                                               
have  invested   in  tourism,  it   believes  in   the  continued                                                               
reinvestment in  marketing Alaska  at the  $20 million  level, in                                                               
order to open  tourism frontiers beyond the  Railbelt, create new                                                               
jobs,  and  increase  Native  shareholder   value.    Mr.  Landis                                                               
observed,  "One must  spend to  keep the  numbers up,  especially                                                               
when  the competition  is  working  towards the  same  end."   He                                                               
concluded that HB 160 positions the state for success.                                                                          
                                                                                                                                
10:59:15 AM                                                                                                                   
                                                                                                                                
CHIP  THOMA, President,  Responsible Cruising  in Alaska,  stated                                                               
that his  organization is based in  Juneau and is the  group that                                                               
collected signatures for the 2006  Alaska Shipping Tax Initiative                                                               
- Ballot  Measure 2,  and for  the 1999  Juneau initiative  for a                                                               
local head tax.   He opined HB 160 is  premature and unnecessary,                                                               
in addition  to being a  dedicated earmark  set up to  move funds                                                               
into an allocation position.   Mr. Thoma expressed his preference                                                               
for  a  50/50  share  of  state  and  industry,  similar  to  the                                                               
arrangement for  the ASMI, although  its share is  20-25 percent.                                                               
He referred to  a copy of his letter -  included in the committee                                                               
packet -  urging the governor to  return to Miami and  request $7                                                               
million  in  support for  ATIA  from  the  cruise industry.    He                                                               
reasoned that this  support is due because the  state rolled back                                                               
taxes in  the amount  of $25 million,  and cruise  ship passenger                                                               
rates  have increased  35 percent  in the  last two  years; as  a                                                               
matter of  fact, the cruise  industry is booming worldwide.   The                                                               
state would be well advised to  match $10 million from the travel                                                               
industry for  a total marketing  budget of $20 million  towards a                                                               
sustainable, yearly  program.  He  restated that ASMI is  a model                                                               
program at  20-25 percent, and ATIA's  contribution should return                                                               
to 50 percent.    Each year, the Alaska  Cruise Association (ACA)                                                               
spends $70 million - $70 per head  - to get visitors on its ships                                                               
to Alaska, and  he estimated that ATIA spends $160  per person to                                                               
attract  100,000 independent  air  travelers.   He stressed  that                                                               
independent  air  travelers  are  a  very  important  segment  of                                                               
Alaska's visitors.   Mr. Thoma  opined ATIA does not  fill ships,                                                               
but has a very important  responsibility, and opportunity, to get                                                               
independent air  travelers to Alaska.    He  provided information                                                               
on how  many independent  air travelers visit  and how  much they                                                               
spend;  in fact,  ATIA should  focus  on them  instead of  cruise                                                               
passengers.   He urged ATIA to  follow the example of  the Hawaii                                                               
Tourism  Association  and   put  all  of  its   effort  into  air                                                               
travelers.                                                                                                                      
                                                                                                                                
11:05:15 AM                                                                                                                   
                                                                                                                                
BRUCE BUSTAMANTE,  Vice-President, Community and  Public Affairs,                                                               
Princess Cruises  and HAP  Alaska-Yukon, stated  he is  a 19-year                                                               
resident of Anchorage,  making his living by  working in tourism.                                                               
On behalf of his companies  and the Alaska Cruise Association, he                                                               
expressed  his  support for  HB  160.   Princess  Cruises  brings                                                               
visitors to Alaska on cruise  ships, owns and operates hotels and                                                               
lodges  and,  along  with  its rail  and  motor  coach  division,                                                               
employs over 3,300 people in the  summer and 450 year around.  He                                                               
said  HB   160  is  critical  to   creating  sustainable  tourism                                                               
marketing  funds for  Alaska.   Mr. Bustamante  pointed out  that                                                               
Alaska  enjoys TV  reality show  exposure, and  can capture  this                                                               
attention  by marketing  ways  for a  potential  visitor to  take                                                               
action and  make plans.    He cautioned that every  year there is                                                               
more competition from other destinations  in states and countries                                                               
with mountains,  wildlife, and glaciers.   Alaska needs  a strong                                                               
marketing program, and ATIA  has provided compelling advertising;                                                               
however,  the  level  of  funding  has  limited  its  reach,  and                                                               
Alaska's ability  to compete effectively.   Mr. Bustamante warned                                                               
that  competitors  are using  larger  budgets  to create  greater                                                               
market  awareness.   The  committee's  passage  of HB  160  would                                                               
establish a  funding program  to generate  $20 million  per year,                                                               
which  is  critically  important   to  support  and  build  local                                                               
economies  and  create jobs.    He  encouraged the  committee  to                                                               
continue with the governor's foresight  and commitment to a level                                                               
of support for marketing.                                                                                                       
                                                                                                                                
11:08:36 AM                                                                                                                   
                                                                                                                                
DALE  FOX, President/CEO,  Alaska  Cabaret,  Hotel, Restaurant  &                                                               
Retailer's (Alaska CHARR),  expressed his support of HB  160.  He                                                               
said  Alaska  CHARR  represents restaurants,  bars,  and  package                                                               
stores  statewide that  employ  25,000 Alaskans.     The  visitor                                                               
industry  is  very important  to  his  organization, as  visitors                                                               
spend $245 million  on food and beverages - a  critical amount to                                                               
these establishments.   Although  tourism is important  to Alaska                                                               
CHARR  members, none  have money  for  national advertising,  and                                                               
they count  on the  public private  partnership between  ATIA and                                                               
the state  to send  their message  to the  traveling public.   He                                                               
opined ATIA invests marketing money  wisely, and gets results for                                                               
the entire state.  Mr.  Fox encouraged the committee's support of                                                               
HB 160, because the bill is a marketing solution long overdue.                                                                  
                                                                                                                                
11:10:28 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE MUNOZ announced HB 160 was held over for further                                                                 
public testimony.                                                                                                               
                                                                                                                                
11:10:51 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Economic Development, International Trade                                                                  
and Tourism meeting was adjourned at 11:10 a.m.                                                                                 

Document Name Date/Time Subjects
HB 160 - ATIA and ASMI Comparison.pdf HEDT 3/1/2011 10:15:00 AM
HEDT 3/8/2011 10:15:00 AM
HB 160
HB 160 - Corporate Income Tax Collection Table.pdf HEDT 3/1/2011 10:15:00 AM
HEDT 3/8/2011 10:15:00 AM
HB 160
HB 160 - Travel Industry Marketing FAQs.doc HEDT 3/1/2011 10:15:00 AM
HEDT 3/8/2011 10:15:00 AM
HB 160
HB 160 -Sectional Analysis.pdf HEDT 3/1/2011 10:15:00 AM
HEDT 3/8/2011 10:15:00 AM
HB 160 -- Letters of Support 3.1.11.pdf HEDT 3/1/2011 10:15:00 AM
HEDT 3/8/2011 10:15:00 AM
HB 160