Legislature(2007 - 2008)HOUSE FINANCE 519

02/14/2008 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 200 WORKERS' COMP: DISEASE PRESUMPTION TELECONFERENCED
Heard & Held
+= HB 147 TOURISM CONTRACT MATCHING FUNDS TELECONFERENCED
Moved CSHB 147(FIN) Out of Committee
<Teleconference Listen Only>
+= SB 72 COMMUNITY REVENUE SHARING TELECONFERENCED
Heard & Held
<Teleconference Listen Only>
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 14, 2008                                                                                          
                         1:43 p.m.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer  called the  House Finance  Committee meeting                                                                    
to order at 1:43:38 PM.                                                                                                       
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Harry Crawford                                                                                                   
Representative John Harris                                                                                                      
Representative Les Gara                                                                                                         
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Mary Nelson                                                                                                      
Representative Bill Thomas, Jr.                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault, Co-Chair                                                                                          
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Suzanne  Armstrong, Staff,  Co-Chair  Meyer; Brett  Carlson,                                                                    
Chairman, Northern Alaska Tour  Company; Ron Peck, President                                                                    
and   Chief  Operating   Officer,  Alaska   Travel  Industry                                                                    
Association (ATIA); Chip  Toma, Juneau; Representative Nancy                                                                    
Dahlstrom;  Jennifer  Baxter,  Staff,  Representative  Nancy                                                                    
Dahlstrom;   Jeffrey   M.  Briggs,   Director,   Legislative                                                                    
Affairs, Alaska Professional Fire Fighters Association                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Matt   McSorley,    Alaska   Professional    Fire   Fighters                                                                    
Association                                                                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSSB 72(FIN)                                                                                                                    
          "An Act relating to the community revenue sharing                                                                     
          program; and providing for an effective date."                                                                        
                                                                                                                                
          CSSB 72(FIN)  was heard and HELD  in Committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 147    "An  Act  relating  to  matching  funds  in  state                                                                    
          tourism    marketing    contracts    with    trade                                                                    
          associations."                                                                                                        
                                                                                                                                
          CSHB 147(FIN)  was REPORTED out of  Committee with                                                                    
          a  "do pass"  recommendation and  with a  new zero                                                                    
          fiscal  note   by  the  Department   of  Commerce,                                                                    
          Community and Economic Development.                                                                                   
                                                                                                                                
HB 200    "An Act  relating to  the presumption  of coverage                                                                    
          for a  workers' compensation claim  for disability                                                                    
          as  a  result  of  certain  diseases  for  certain                                                                    
          occupations."                                                                                                         
                                                                                                                                
          HB  200  was  heard  and  HELD  in  Committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
1:44:37 PM                                                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 72(FIN)                                                                                                
                                                                                                                                
     "An Act relating to the community revenue sharing                                                                          
     program; and providing for an effective date."                                                                             
                                                                                                                                
1:45:22 PM                                                                                                                    
                                                                                                                                
Representative  Thomas MOVED  to  ADOPT the  work draft  for                                                                    
CSSB  72(FIN), labeled  25-LS0506\F, Cook,  2/13/08.   There                                                                    
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
1:46:04 PM                                                                                                                    
                                                                                                                                
SUZANNE  ARMSTRONG,  STAFF,  CO-CHAIR MEYER,  recalled  that                                                                    
last  year during  testimony on  SB 72  there were  elements                                                                    
that  surfaced   as  important   in  a   statutory  program:                                                                    
fairness,  stability,   affordability,  and  sustainability.                                                                    
She maintained  that the Community Revenue  Sharing proposal                                                                    
contains these elements.                                                                                                        
                                                                                                                                
Ms.  Armstrong referred  to  a  handout entitled  "Community                                                                    
Revenue  Sharing"  (copy  on   file.)    She  explained  the                                                                    
elements  of the  proposed revenue  sharing:  the fund,  the                                                                    
formula, and the mechanics.                                                                                                     
                                                                                                                                
Ms. Armstrong highlighted page  4, Community Revenue Sharing                                                                    
Fund.   The  purpose of  the  fund is  for making  community                                                                    
revenue sharing payments to local  communities.  It consists                                                                    
of  appropriations of  20 percent  of the  revenue generated                                                                    
under the  progressivity surcharge, not to  exceed the great                                                                    
of $50  million or the amount  to bring the fund  balance to                                                                    
$150  million.     Interest  earned  on  the   fund  may  be                                                                    
appropriated to  the fund.  The  money in the fund  does not                                                                    
lapse and is not a dedicated fund.                                                                                              
                                                                                                                                
Ms. Armstrong explained the formula on  page 5.  If the fund                                                                    
balance at the end of the  fiscal year, June 30, is at least                                                                    
$50  million,  there  will  be  revenue  sharing.    Without                                                                    
further   appropriation,   the   Department   of   Commerce,                                                                    
Community  and  Economic  Development  will  distribute  one                                                                    
third of the fund balance  as revenue sharing payments.  The                                                                    
amount of distribution  is very similar to  the amounts used                                                                    
during the  last two years  - $50  million as grants  in the                                                                    
capital budget.                                                                                                                 
                                                                                                                                
Ms. Armstrong turned to the chart  on page 6 to show how the                                                                    
basic payments are distributed.                                                                                                 
                                                                                                                                
1:48:23 PM                                                                                                                    
                                                                                                                                
Representative  Nelson  asked  if these  were  place  holder                                                                    
numbers  or actual  numbers.   Co-Chair  Meyer replied  that                                                                    
they  are good  place  holders and  work  similarly to  last                                                                    
year's capital budget distribution.                                                                                             
                                                                                                                                
Representative  Gara pointed  out  that in  2007 there  were                                                                    
Energy Assistance and PERS, instead  of revenue sharing.  He                                                                    
asked if  there was  a PERS reduction  this year.   Co-Chair                                                                    
Meyer said this legislation is separate from PERS/TRS.                                                                          
                                                                                                                                
Ms. Cunningham  related that this  bill is separate  from SB
125, which deals  with PERS/TRS changes.   In previous years                                                                    
revenue sharing was not done  through statutory program, but                                                                    
as  grants in  the capital  budget, and  was used  to assist                                                                    
communities  with energy  assistance  and rising  retirement                                                                    
costs.                                                                                                                          
                                                                                                                                
1:50:29 PM                                                                                                                    
                                                                                                                                
Representative  Kelly thought  it  was  important to  follow                                                                    
through with  Representative Gara's  point.  He  agreed that                                                                    
it was an addition to the PERS/TRS payment.                                                                                     
                                                                                                                                
Co-Chair  Meyer compared  it to  a  three-legged stool:  the                                                                    
PERS/TRS fix,  revenue sharing, and  education funding.   He                                                                    
added that the  $50 million figure was a place  holder.  The                                                                    
Governor is proposing $75 million.                                                                                              
                                                                                                                                
Representative  Nelson  noted   that  under  the  Governor's                                                                    
proposal  it would  be a  50  percent increase  and would  a                                                                    
matching grant program.   The revenue sharing  could then be                                                                    
used   for  operating   costs  as   well   as  for   capital                                                                    
expenditures,  which  she  thought  was  good  because  some                                                                    
communities ran into  red tape in the past.   Co-Chair Meyer                                                                    
said  there were  no strings  attached.   Anchorage will  be                                                                    
using it for property tax relief.                                                                                               
                                                                                                                                
Representative  Nelson  recalled   the  heroes  list,  those                                                                    
communities  that paid  retirement  costs  into the  future.                                                                    
She wondered if the hero  communities would be accounted for                                                                    
in other areas  of the budget.  Co-Chair  Meyer thought that                                                                    
would happen in the PERS/TRS fix.                                                                                               
                                                                                                                                
Ms. Armstrong agreed that would be addressed in SB 125.                                                                         
                                                                                                                                
1:54:18 PM                                                                                                                    
                                                                                                                                
Representative Gara  pointed out that the  minimum amount an                                                                    
unincorporated city  would get is $20,000  to $25,000, which                                                                    
he thought  was low.   He recalled that last  year's minimum                                                                    
was closer  to $40,000.  He  shared a history of  the amount                                                                    
allotted for  revenue sharing.   He expressed  concern about                                                                    
cutting  the amount.   Co-Chair  Meyer noted  different ways                                                                    
revenue sharing has been implemented throughout the years.                                                                      
                                                                                                                                
Ms.  Armstrong explained  that the  basic  payments in  this                                                                    
bill are  similar to the  basic payments allowed for  in the                                                                    
capital budget grant last year.   There is also a per capita                                                                    
distribution on  top of the  basic payment.   Representative                                                                    
Gara repeated  that $20,000 was  too small.   Co-Chair Meyer                                                                    
agreed,  but  thought the  amount  would  go to  very  small                                                                    
communities that didn't need as much money.                                                                                     
                                                                                                                                
1:56:18 PM                                                                                                                    
                                                                                                                                
Ms.   Armstrong   turned  to   page   7,   the  Per   Capita                                                                    
Distribution.   She explained that the  remaining balance of                                                                    
the $50 million  is distributed per capita.   Communities in                                                                    
an  unorganized borough  cannot  have a  total payment  that                                                                    
exceeds the city  basic payment.  The excess  amount is then                                                                    
distributed to  the remaining qualifying communities  in the                                                                    
unorganized  borough.  The  population  of each  city  in  a                                                                    
borough is deducted from the total borough population.                                                                          
                                                                                                                                
Ms.  Armstrong  addressed  what   happens  when  the  amount                                                                    
available is larger  than $50 million, page 8.   The formula                                                                    
has a "floating" basic payment structure.                                                                                       
                                                                                                                                
Ms.  Armstrong described  what happens  when  there is  less                                                                    
than $50  million available, page  9.  The  floating payment                                                                    
kicks  in, but  in reverse.    The basic  rationale is  that                                                                    
every community would retain their slice of the pie.                                                                            
                                                                                                                                
1:58:26 PM                                                                                                                    
                                                                                                                                
Representative Nelson  asked if it was  a 50/50 distribution                                                                    
regarding base and  per capita.  Ms.  Armstrong replied that                                                                    
it was actually 40 percent  basic payment and 60 percent per                                                                    
capita.   Representative Nelson asked if  that was flexible.                                                                    
Co-Chair Meyer said it was.                                                                                                     
                                                                                                                                
Representative  Crawford  asked  who does  the  counting  of                                                                    
population.   Ms. Armstrong reported that  the Department of                                                                    
Commerce does  it.  There  is language in the  bill defining                                                                    
how population  is considered.   She recalled it was  by PFD                                                                    
qualification or by an allowable  method that the department                                                                    
determines appropriate.                                                                                                         
                                                                                                                                
1:59:49 PM                                                                                                                    
                                                                                                                                
Representative  Gara  said  he  understands  there  are  two                                                                    
methods  of   revenue  sharing,   an  appropriation   or  an                                                                    
endowment.  He related that  he does not understand creating                                                                    
a $150 million endowment to  spin off $50 million.  Co-Chair                                                                    
Meyer  reported the  Senate's concept  of the  progressivity                                                                    
rate for three years so municipalities could adjust.                                                                            
                                                                                                                                
Ms.  Armstrong added  that it  was to  provide stability  to                                                                    
communities.                                                                                                                    
                                                                                                                                
Ms. Armstrong continued with page  10.  She explained that a                                                                    
minimum base has  been inserted in order  to protect smaller                                                                    
communities when  there is less  than $50  million available                                                                    
for a  program.   The minimum borough  basic payment  in the                                                                    
draft proposal is $220,000.                                                                                                     
                                                                                                                                
Ms. Armstrong showed page 11  to explained the minimum basic                                                                    
payments when the program is at $36 million                                                                                     
                                                                                                                                
Ms.  Armstrong  turned  to  page  12  to  explain  the  fund                                                                    
mechanics.  Each  of the three years there would  have to be                                                                    
a payment of  $50 in order to keep the  fund balance at $150                                                                    
million.                                                                                                                        
                                                                                                                                
Ms. Armstrong  explained page 13, a  hypothetical example of                                                                    
what happens when  oil prices fall below $60  per barrel and                                                                    
remain there through FY 2013.                                                                                                   
                                                                                                                                
2:03:56 PM                                                                                                                    
                                                                                                                                
Ms. Armstrong reported  on page 14 that the  fund has bounce                                                                    
back potential.   Interest may  be appropriated to  the fund                                                                    
by the  legislature.   Other revenue  such as  general funds                                                                    
may be  appropriated to  the fund.   Most  importantly, when                                                                    
higher  oil  prices  trigger the  surcharge,  the  fund  can                                                                    
immediately recover  to the $150 million  level and payments                                                                    
the following year would be $50 million.                                                                                        
                                                                                                                                
Ms.  Armstrong summarized  the  revenue  sharing program  on                                                                    
page 15.   She reviewed the four elements need  to decide if                                                                    
it meets  the test: fairness, stability,  affordability, and                                                                    
sustainability.   The  fund has  basic payments  that adjust                                                                    
with the  funds available  for the  program, coupled  with a                                                                    
per-capita  payment.    The communities  will  know  payment                                                                    
levels  well in  advance.   The program  is funded  when the                                                                    
surcharge  is triggered  or other  appropriations are  made.                                                                    
The fund has  quick "bounce back" potential, as  long as the                                                                    
total  cost of  the program  is a  sustainable cost  for the                                                                    
state.                                                                                                                          
                                                                                                                                
Co-Chair  Meyer commented  that  public  testimony would  be                                                                    
held at  another time.   He noted  that there is  an on-line                                                                    
revenue sharing model  available to look at.   He emphasized                                                                    
that there was  an attempt to keep  the distribution similar                                                                    
to the last two year's distributions.                                                                                           
                                                                                                                                
2:06:50 PM                                                                                                                    
                                                                                                                                
Representative Thomas  asked if  the overhead could  be made                                                                    
available.     Ms.  Armstrong  said   she  would   make  the                                                                    
information available.                                                                                                          
                                                                                                                                
Representative  Gara requested  more  information about  the                                                                    
progressivity surcharge  formula on page  5, lines 4  and 5,                                                                    
"20 percent  of the money  received by the state  during the                                                                    
previous calendar  year under AS 43.55.011".   Ms. Armstrong                                                                    
said that was the  statutory reference.  Representative Gara                                                                    
asked  for  a  projection  of  20  percent  at  various  oil                                                                    
projections.     Ms.  Armstrong   agreed  to   provide  that                                                                    
information to  the committee.   She referred  to subsection                                                                    
(b) on page 5 as a work in  progress.  The intent is that it                                                                    
would  be  20  percent  of  the  money  received  under  the                                                                    
surcharge in an amount not to  exceed $50 million or what it                                                                    
would  take   to  capitalize  the  fund   at  $150  million.                                                                    
Representative Gara  inquired if  the intention is  that the                                                                    
fund  never exceeds  $150 million.    Ms. Armstrong  replied                                                                    
that subject  to legislative appropriation, it  could.  This                                                                    
draft bill idealizes a $50  million revenue sharing program.                                                                    
Representative Gara commented that it  makes it a maximum of                                                                    
$50 million,  which will decrease  with inflation.   He said                                                                    
he liked the progressivity element.                                                                                             
                                                                                                                                
2:10:25 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer commented  on what  happens when  oil prices                                                                    
are higher.                                                                                                                     
                                                                                                                                
Representative  Kelly noted  that there  are at  least three                                                                    
competing schemes for the same oil dollars.                                                                                     
                                                                                                                                
Representative Crawford  thought that  this bill might  be a                                                                    
direct conflict  with the progressivity  piece.   He thought                                                                    
the concepts should be combined.                                                                                                
                                                                                                                                
Ms. Armstrong  pointed out  that a  constitutional amendment                                                                    
would trump statute.                                                                                                            
                                                                                                                                
2:13:06 PM                                                                                                                    
                                                                                                                                
Representative  Joule  said  that   there  is  nothing  that                                                                    
prohibits the legislature from  earmarking funds for revenue                                                                    
sharing down the line.  The  challenge could be in the first                                                                    
five years.                                                                                                                     
                                                                                                                                
Ms. Armstrong  referred to documents that  portrayed how the                                                                    
payments would look under several scenarios.                                                                                    
                                                                                                                                
Representative Gara  wished to hear from  the Administration                                                                    
on the bill.                                                                                                                    
                                                                                                                                
CSSB 72(FIN)  was heard  and HELD  in Committee  for further                                                                    
consideration.                                                                                                                  
                                                                                                                                
2:16:09 PM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 147                                                                                                            
                                                                                                                                
     "An Act relating to matching funds in state tourism                                                                        
     marketing contracts with trade associations."                                                                              
                                                                                                                                
Vice-Chair Stoltze MOVED to ADOPT  the work draft to HB 147,                                                                    
labeled  25-LS0560\E, Bannister,  2/11/08.   There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
2:17:27 PM                                                                                                                    
                                                                                                                                
SUZANNE  ARMSTRONG, STAFF,  CO-CHAIR  MEYER, explained  that                                                                    
the  CS proposes  to change  the tourism  marketing campaign                                                                    
contract  between   the  state   and  the   qualified  trade                                                                    
association, Alaska Travel Industry  Association (ATIA).  In                                                                    
current  statute it  is  a  50/50 matching  grant.   The  CS                                                                    
proposes to  change the  distribution to  30 percent  of the                                                                    
state funds that are used  to pay for the marketing campaign                                                                    
described  in  the contract.    It  becomes a  70/30  ratio;                                                                    
however, the percentage  is on the funds  the state provides                                                                    
and not  on the total cost  of the contract.   The intent is                                                                    
to limit  the amount of  state money used for  the marketing                                                                    
campaign  to $8  million; however,  the appropriation  power                                                                    
cannot be limited in statute.                                                                                                   
                                                                                                                                
Ms. Armstrong  related that the  second section  sunsets the                                                                    
70/30 program and puts the 50/50 program back into place.                                                                       
                                                                                                                                
2:19:00 PM                                                                                                                    
                                                                                                                                
Representative  Harris recalled  that  the  ratio was  90/10                                                                    
when  the bill  was first  introduced.   That bill  said for                                                                    
ATIA to  qualify for whatever money  the state appropriated,                                                                    
it would only have to  contribute 10 percent.  Ms. Armstrong                                                                    
replied it was  10 percent of the  total marketing campaign.                                                                    
The CS proposes to change that  to 30 percent of the state's                                                                    
contribution  to  the  marketing campaign.    Representative                                                                    
Harris asked if that is  acceptable to ATIA.  Co-Chair Meyer                                                                    
remarked that public testimony would be opened up later on.                                                                     
                                                                                                                                
Vice-Chair  Stoltze   asked  what  ecotourism  means.     He                                                                    
wondered  about  competition  with  other  state  management                                                                    
policies if ecotourism is promoted.   Speaker Harris defined                                                                    
ecotourism  as  people  who  come  to  Alaska  to  view  and                                                                    
experience nature.                                                                                                              
                                                                                                                                
2:21:57 PM                                                                                                                    
                                                                                                                                
Representative  Gara pointed  out that  the non-cruise  ship                                                                    
tourism industry  paid $2.5  million in FY  07.   Under this                                                                    
bill they  would pay even  less because of the  new formula:                                                                    
30 percent of  the amount the state pays, not  30 percent of                                                                    
the marketing campaign  which is $10 million.   He explained                                                                    
he had a  problem with that, as well as  with not accounting                                                                    
for  the  burden  companies face  for  their  own  marketing                                                                    
campaigns.   He requested to know  if there is a  need, that                                                                    
the program  is effective, and  that it  is a priority.   He                                                                    
maintained  that  it lessens  the  payments  even from  last                                                                    
year.                                                                                                                           
                                                                                                                                
Co-Chair  Meyer  noted  the  intent  to  limit  the  state's                                                                    
contribution, and not have this  item in the capital budget,                                                                    
but in  the operating  budget.   In the  past the  match was                                                                    
50/50 and companies were not able to meet the match.                                                                            
                                                                                                                                
Representative  Gara  clarified  that  the  non-cruise  ship                                                                    
industry would pay less than two years ago.                                                                                     
                                                                                                                                
2:25:15 PM                                                                                                                    
                                                                                                                                
BRETT  CARLSON,  CHAIRMAN,  NORTHERN  ALASKA  TOUR  COMPANY,                                                                    
related  that the  state can  support  tourism marketing  in                                                                    
order to help Alaska  travel businesses help themselves grow                                                                    
the  private  sector economy  and  contribute  to local  and                                                                    
state  governments.    The challenge  is  that  the  tourism                                                                    
marketing funding model  is broken.  The first  phase of the                                                                    
plan to  fix it  is the  survival plan,  which is  to ensure                                                                    
that Alaska's tourism marketing  program continues to exist.                                                                    
He maintained that a $10  million funding level for the core                                                                    
program  represents survival-level  funding.   Two  elements                                                                    
make  survival  a reality:  in  FY  09, reinvestment  of  $8                                                                    
million  into the  core tourism  marketing program,  and the                                                                    
industry must be able to access  those funds.  The CS for HB
147 does represent a workable comprise for ATIA.                                                                                
                                                                                                                                
Mr.  Carlson  agreed  with Representative  Harris's  comment                                                                    
that ATIA's  original request  was for 90/10  based on  a $2                                                                    
million contribution from private industry.                                                                                     
                                                                                                                                
Mr. Carlson  addressed Representative Gara's  question about                                                                    
money from the  private sector.  The $2.5  million came from                                                                    
cruise  contributions,  $2   million  came  from  non-cruise                                                                    
businesses,   and   an   additional   $500,000   came   from                                                                    
destination marketing.   He spoke of  the comprise requiring                                                                    
the  small   businesses  to   contribute  $2.4   million,  a                                                                    
substantial contribution.                                                                                                       
                                                                                                                                
2:28:57 PM                                                                                                                    
                                                                                                                                
Mr. Carlson pointed  out that only 16 states  make a private                                                                    
sector contribution.   Only in  California and  Florida does                                                                    
the private  sector contribute more  than $2.4 million.   He                                                                    
pointed out that  the model of sustainability  is focused on                                                                    
matching dollars generated by the vehicle rental tax.                                                                           
                                                                                                                                
Co-Chair Meyer  pointed out  that most  states have  a state                                                                    
sales tax or bed tax that contributes to tourism marketing.                                                                     
                                                                                                                                
RON  PECK, PRESIDENT  AND  CHIEF  OPERATING OFFICER,  ALASKA                                                                    
TRAVEL INDUSTRY ASSOCIATION (ATIA),  agreed that some states                                                                    
have those  taxes, but only  16 have  voluntary contribution                                                                    
programs.                                                                                                                       
                                                                                                                                
Mr.  Carlson noted  that 34  states do  not require  private                                                                    
sector matching.                                                                                                                
                                                                                                                                
Co-Chair  Meyer pointed  out the  three-year  sunset in  the                                                                    
bill.   The state's  contribution would  be $8  million over                                                                    
the  next  three  years, which  would  allow  for  gradually                                                                    
matching on small business's part.                                                                                              
                                                                                                                                
2:32:13 PM                                                                                                                    
                                                                                                                                
In  response  to  a question  by  Representative  Gara,  Mr.                                                                    
Carlson reported  that the $2  million comes  primarily from                                                                    
small  Alaskan companies.   The  other  $550,000 comes  from                                                                    
DMO's,  which  are  essentially  chambers  of  commerce  and                                                                    
convention  and  visitors   bureaus.    Representative  Gara                                                                    
inquired  if, under  the new  match,  they would  contribute                                                                    
again.   Mr.  Carlson  clarified that  they  would be  asked                                                                    
again.  Representative Gara asked  if that would be included                                                                    
in  the  new  formula.    Mr. Carlson  said  that  is  under                                                                    
discussion.   He  noted  that the  $2  million from  private                                                                    
companies  are  non-voluntary  contributions.    A  portion,                                                                    
$350,000,  comes from  cooperative marketing  contributions.                                                                    
Over  and   above  that   they  are   contributing  $500,000                                                                    
voluntarily.                                                                                                                    
                                                                                                                                
Representative Gara  summarized the math.   He asked  if the                                                                    
$2 million, plus  the $500,000 counts toward  the 30 percent                                                                    
match.  Mr.  Carlson said that was  correct.  Representative                                                                    
Gara maintained that the companies would contribute less.                                                                       
                                                                                                                                
Mr.  Peck  replied  that  those   same  companies  would  be                                                                    
contributing at  the $2 million level.   Representative Gara                                                                    
thought that  the contribution would  be $100,000  less than                                                                    
the  amount   two  years  ago.     Co-Chair   Meyer  thought                                                                    
Representative  Gara  was  counting  contributions  made  by                                                                    
DMO's,  which the  industry is  not  certain of  collecting.                                                                    
Mr. Peck agreed.                                                                                                                
                                                                                                                                
2:35:50 PM                                                                                                                    
                                                                                                                                
Representative  Harris asked  what kind  of revenue  tourism                                                                    
marketing brings to  the state of Alaska.   Mr. Peck replied                                                                    
that a traveler in Alaska spends  $934.  That nets more than                                                                    
$1.5 billion dollars each summer to the state.                                                                                  
                                                                                                                                
Representative Harris  asked how much  stays in state.   Mr.                                                                    
Peck said  all of it.   Representative Harris  inquired what                                                                    
happens to  Alaska's economy  if small  tourism folds.   Mr.                                                                    
Carlson  replied  that  global capital  plays  an  important                                                                    
role.  He  encouraged a seat at the table  for small Alaskan                                                                    
businesses  in   attempting  to  make  a   more  diversified                                                                    
product.   He hoped to  see the  entire package sold  with a                                                                    
balanced opportunity.                                                                                                           
                                                                                                                                
Representative  Harris  asked  how much  Alaska  donated  15                                                                    
years ago for marketing.   Mr. Carlson replied that in 1990,                                                                    
it was  $23 million.   He stated  that it has  declined over                                                                    
the years.                                                                                                                      
                                                                                                                                
Representative Harris asked about  tourism's affect on rural                                                                    
Alaska.  Mr.  Carlson replied it injects  new private sector                                                                    
dollars into the economy.   Representative Harris noted that                                                                    
all  parts   of  Alaska  are   affected  by  tourism.     He                                                                    
acknowledged that rural Alaska is  one of the more difficult                                                                    
places to  do business.   He questioned if  advertising were                                                                    
to be removed for rural  destinations, if that would have an                                                                    
effect on rural economy.  Mr. Carlson said it would.                                                                            
                                                                                                                                
Representative  Harris   stated  that  if   the  legislature                                                                    
contributes more  effort toward tourism marketing,  it would                                                                    
help the entire state economy.  Mr. Carlson agreed.                                                                             
                                                                                                                                
2:40:55 PM                                                                                                                    
                                                                                                                                
Representative  Gara agreed  that  the state's  contribution                                                                    
was  useful; however,  the question  is how  much should  be                                                                    
contributed.     He  asked  if   there  had  been   a  study                                                                    
determining how  effective tourism  marketing has been.   He                                                                    
inquired how  much the  state could  make without  the state                                                                    
match.    Mr.  Peck  stated  that  ATIA  reaches  out  to  a                                                                    
substantial  number of  people, impacting  560,000 tourists.                                                                    
Of the 1.7  million visitors that come to  Alaska, 1 million                                                                    
take a  cruise and  55 percent do  things on  an independent                                                                    
basis.  About  30-40 percent of the people  that are reached                                                                    
by ATIA come to Alaska.                                                                                                         
                                                                                                                                
Representative  Gara wanted  to  know the  type of  campaign                                                                    
ATIA  funds.   He disliked  the "before  you die  campaign.                                                                     
Mr. Peck stated  that was their campaign, it  cost less than                                                                    
$200,000, and  was not being  continued, even though  it was                                                                    
successful.                                                                                                                     
                                                                                                                                
2:44:03 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Stoltze commented  on  the  contribution to  the                                                                    
small scale businesses statewide.                                                                                               
                                                                                                                                
Representative Joule noted he had  been a tour guide when he                                                                    
was young.   He  believed that the  face on  Alaska Airlines                                                                    
has a  lot to  do with tourism  investment.   He appreciated                                                                    
the effort to  get tourists to the rural village  areas.  He                                                                    
pointed  out that  that effort  no  longer exists.   If  the                                                                    
investment is not made, the effort  to build it back up will                                                                    
be  extensive.     He   stated  that   Alaska  is   a  great                                                                    
destination, but it must be marketed.                                                                                           
                                                                                                                                
2:48:00 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  explained  the intent  was  to  extend  the                                                                    
state's contribution for  three years and to  list the total                                                                    
amount, maximizing the contribution.                                                                                            
                                                                                                                                
CHIP TOMA,  JUNEAU, pointed out  that the draft  proposed by                                                                    
the committee is a drastic  change from the current package.                                                                    
There  is not  a  crisis  at this  time;  the visitors  keep                                                                    
increasing.   There has been  no diminishment in  the number                                                                    
of tourists  coming to the  state.  Each year,  the forecast                                                                    
is  "rosey"  for  coming  to  Alaska.    He  noted  the  ads                                                                    
occurring in all magazines throughout  the United State.  He                                                                    
emphasized  that ATIA  is becoming  less effective  with the                                                                    
amount of dollars placed into advertising Alaska.                                                                               
                                                                                                                                
Mr. Toma stated  that the request is a subsidy  and that the                                                                    
state should  no longer request  the subsidy.   He supported                                                                    
the efforts  of ATIA  in the rural  areas and  in Fairbanks.                                                                    
He encouraged a redirection of the focus of the industry.                                                                       
                                                                                                                                
Co-Chair Meyer closed public testimony.                                                                                         
                                                                                                                                
2:53:03 PM                                                                                                                    
                                                                                                                                
Representative Kelly commented that Alaska  is in a state of                                                                    
flux  for  the  tourism  program.   He  remarked  about  the                                                                    
progress  in  addressing  the confusing  split  between  the                                                                    
capital and  operating budget.   He stated that  the program                                                                    
has diminished over the years.   The fear of going under the                                                                    
"critical  mass" should  be  addressed.   He  said that  the                                                                    
proposal  is  accountable  and   that  the  industry  should                                                                    
stabilize  within the  timeframe.   He encouraged  the 70/30                                                                    
match and urged passage of the bill.                                                                                            
                                                                                                                                
2:55:14 PM                                                                                                                    
                                                                                                                                
Representative  Gara  asked how  the  formula  works for  an                                                                    
individual company's  contribution.   Mr. Peck  replied that                                                                    
there  is  a   membership  program  based  on   size.    The                                                                    
participant,  depending  on  the level  of  advertising  and                                                                    
marketing level, also purchases  ads in the vacation planner                                                                    
and  access to  the  web  site.   Each  business makes  that                                                                    
determination individually.                                                                                                     
                                                                                                                                
Representative Gara  asked if there  is any plan  to address                                                                    
the concern  that rural communities  are not  getting enough                                                                    
marketing attention.  Mr. Peck  responded that the marketing                                                                    
plan is  reported to the  Department of  Commerce, Community                                                                    
and  Economic Development  annually.    ATIA recognizes  the                                                                    
concern about  tourism in  rural areas  and has  taken extra                                                                    
effort to  promote long-haul  highway travel.   He  hoped to                                                                    
identify  areas  to  grow small  businesses  in  tourism  in                                                                    
communities that are interested in promoting tourism.                                                                           
                                                                                                                                
Representative  Thomas asked  how  many  jewelry stores  are                                                                    
members  of ATIA.   Mr.  Peck did  not know  the number  but                                                                    
thought it was very small.                                                                                                      
                                                                                                                                
Representative Thomas recommended getting them to join.                                                                         
                                                                                                                                
2:58:56 PM                                                                                                                    
                                                                                                                                
Representative  Kelly asked  Mr. Carlson  for a  response to                                                                    
previous testimony.   Mr.  Carlson replied  that he  had not                                                                    
had a conversation  with Mr. Toma.  He  reiterated that ATIA                                                                    
is effective.   Mr. Peck added  that ATIA does not  focus on                                                                    
one  area or  destination.    He thought  it  was unfair  to                                                                    
portray it as focusing only on one area.                                                                                        
                                                                                                                                
Representative  Gara  wondered  if an  inflation  adjustment                                                                    
contribution should  be added.   He  thought that  the match                                                                    
should  be  closer to  a  35  percent  match.   Mr.  Carlson                                                                    
thought such a  match would be $2.8 million.   He added that                                                                    
$2 million would  work for ATIA.  The program  is focused on                                                                    
bringing the independent traveler  to Alaska.  The marketing                                                                    
budget has declined and has  hurt the independent segment of                                                                    
the market.                                                                                                                     
                                                                                                                                
Representative Gara  did not accept  that the  private match                                                                    
should be  less than it  was two years  ago.  He  asked what                                                                    
was  going  to change  from  last  year  to this  year  with                                                                    
emphasis on rural  Alaska.  Mr. Peck stated that  there is a                                                                    
committee of  35 marketing persons  who ultimately  make the                                                                    
recommendation to the Department  of Commerce, Community and                                                                    
Economic Development  and it  does change  every year.   Mr.                                                                    
Carlson added that  the program can focus  on bringing those                                                                    
independent  travelers to  rural  Alaska; that  is what  the                                                                    
dollars  do at  this time.   The  program does  not need  to                                                                    
change focus.                                                                                                                   
                                                                                                                                
Representative Gara  asked if the  program does not  need to                                                                    
change  the focus  and  it  was not  good  enough for  rural                                                                    
Alaska  last year,  how would  it be  good enough  this year                                                                    
with the same amount of  money.  Mr. Carlson emphasized that                                                                    
it  was   good  enough  for   rural  Alaska;  it   was  just                                                                    
underfunded.                                                                                                                    
                                                                                                                                
Vice-Chair    Stoltze    referenced   previous    passionate                                                                    
testimony.    He  noted that  his  community  wants  private                                                                    
sector  funding, seasonably.   He  commented that  it is  an                                                                    
opportunity to promote tourism into interior Alaska.                                                                            
                                                                                                                                
Co-Chair Meyer pointed out that  it is a three-year program.                                                                    
He thought  of the  $8 million  as ATIA's  share of  the car                                                                    
rental tax which is to be used to market tourism.                                                                               
                                                                                                                                
3:07:16 PM                                                                                                                    
                                                                                                                                
Representative  Thomas said  the Alaska  Marine Highway  has                                                                    
dropped travel  to Bellingham.   He  wondered if  that would                                                                    
impact tourism.  Mr. Peck  responded that the focus could be                                                                    
to drive to  Prince Rupert.  Representative  Thomas asked if                                                                    
Mr. Peck had  ever driven the road.  He  commented that many                                                                    
had never  driven the  road.   The ferry is  the way  to go.                                                                    
Mr. Peck voiced concern about the ferry schedule.                                                                               
                                                                                                                                
Representative  Kelly   emphasized  that  you   can't  force                                                                    
business.  He thanked ATIA  for the high energy presentation                                                                    
and spoke in support of the bill.                                                                                               
                                                                                                                                
Representative  Crawford  commented  on driving  the  Alaska                                                                    
Highway.                                                                                                                        
                                                                                                                                
3:11:09 PM                                                                                                                    
                                                                                                                                
Speaker Harris MOVED to REPORT  CSHB 147(FIN) from committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
Representative Gara  OBJECTED.   He commented that  he still                                                                    
has  a problem  with  private industry's  contribution.   He                                                                    
suggested  moving private  industry's match  to 33  percent,                                                                    
which would  bring their contribution  from $2.5  million to                                                                    
$2.64 million,  an amount equal  to past  contributions with                                                                    
an inflation  factor included.   He thought there  should be                                                                    
an amendment to that effect.                                                                                                    
                                                                                                                                
Co-Chair Meyer thought that was  only a $200,000 difference.                                                                    
He recalled testimony that DMO's could not be counted on.                                                                       
                                                                                                                                
Representative  Gara   reported  that   he  has   not  heard                                                                    
testimony    that   the    DMO's    would   not    continue.                                                                    
Representative  Kelly  agreed  that  is the  struggle.    He                                                                    
pointed out  that last year  the expectation was  about 10.9                                                                    
and  they  ended  up  with  1.6.   He  maintained  that  the                                                                    
industry took a hit last year.                                                                                                  
                                                                                                                                
3:15:23 PM                                                                                                                    
                                                                                                                                
Representative Gara WITHDREW his OBJECTION.                                                                                     
                                                                                                                                
CSHB  147(FIN) was  REPORTED  out of  Committee  with a  "do                                                                    
pass" recommendation and with a  new zero fiscal note by the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
3:16:23 PM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 200                                                                                                            
                                                                                                                                
     "An Act relating to the presumption of coverage for a                                                                      
     workers' compensation claim for disability as a result                                                                     
     of certain diseases for certain occupations."                                                                              
                                                                                                                                
REPRESENTATIVE NANCY  DAHLSTROM, Sponsor, explained  that SB
200 establishes  a presumption in the  workers' compensation                                                                    
program  for  professional  and volunteer  firefighters  who                                                                    
have had a qualifying medical exam  and who have been on the                                                                    
job for  at least seven  years.   There is inherent  risk of                                                                    
exposure  to  toxic  chemicals for  firefighters  and  first                                                                    
responders.   HB 200 identifies certain  illnesses that have                                                                    
been directly related to their jobs.   She said a great deal                                                                    
of  thought has  gone into  the  bill and  into the  defined                                                                    
parameters as to  who qualifies.  It comes down  to a policy                                                                    
call  whether  legislators  believe  that  first  responders                                                                    
deserve this coverage.  She requested support for SB 200.                                                                       
                                                                                                                                
3:19:28 PM                                                                                                                    
                                                                                                                                
Representative  Harris  noted  the letter  from  the  Alaska                                                                    
Municipal League (AML) which is  not supportive of the bill.                                                                    
He asked Representative  Dahlstrom if she has  talked to AML                                                                    
about  their concerns.   Representative  Dahlstrom responded                                                                    
that in  previous committees AML testified  against the bill                                                                    
and it was difficult to  come to agreement about statistics.                                                                    
Other  states  that have  implemented  this  law have  added                                                                    
other illnesses  to the list  at a later date  because costs                                                                    
were not  what they  were projected to  be.   Speaker Harris                                                                    
asked if the  maximum amount of time involved is  5 years or                                                                    
60 months.  Representative Dahlstrom said it was.                                                                               
                                                                                                                                
3:21:04 PM                                                                                                                    
                                                                                                                                
Representative Gara reported that  these cases are very hard                                                                    
to prove.   He did  not think the bill  would cost a  lot of                                                                    
money because  it changes the law  very little.  To  prove a                                                                    
case, it  has to be  proven that  something is more  than 50                                                                    
percent  likely.   The bill  states that  an employer  would                                                                    
have to bear the burden of proof  51 percent.                                                                                   
                                                                                                                                
3:22:49 PM                                                                                                                    
                                                                                                                                
JEFFREY  M. BRIGGS,  DIRECTOR,  LEGISLATIVE AFFAIRS,  ALASKA                                                                    
PROFESSIONAL FIRE FIGHTERS ASSOCIATION,  pointed out that 40                                                                    
other states  have similar  legislation.   Testimony against                                                                    
the bill has been tied to the Alaska Municipal League.                                                                          
                                                                                                                                
Mr.  Briggs gave  a personal  example  of a  response to  an                                                                    
accident.   He spoke of  vast support for  this legislation.                                                                    
He  reported   that  the  bill   would  cover   about  1,000                                                                    
firefighters statewide.                                                                                                         
                                                                                                                                
Vice-Chair Stoltze  wondered about  AML's resistance  to the                                                                    
bill.   Mr. Briggs responded  that their testimony  would be                                                                    
at a future meeting.                                                                                                            
                                                                                                                                
3:27:01 PM                                                                                                                    
                                                                                                                                
MATT   MCSORLEY,    ALASKA   PROFESSIONAL    FIRE   FIGHTERS                                                                    
ASSOCIATION,  said  the  bill   would  grant  fire  fighters                                                                    
protection.   He  shared two  personal stories  as a  hazard                                                                    
materials responder.   He described  how the  fire fighters                                                                     
job has changed.  He urged support for the bill.                                                                                
                                                                                                                                
HB  200  was  heard  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:32 PM.                                                                                           
                                                                                                                                
                                                                                                                                

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