Legislature(2009 - 2010)Anch LIO Rm 220
11/04/2009 09:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB167 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| HB 167 | |||
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
November 4, 2009
9:11 a.m.
9:11:03 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 9:11 a.m.
MEMBERS PRESENT
Representative Mike Hawker, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas, Jr., Vice-Chair
Representative Allan Austerman
Representative Harry Crawford
Representative Les Gara
Representative Reggie Joule
Representative Mike Kelly
Representative Woodie Salmon
MEMBERS ABSENT
Representative Anna Fairclough
ALSO PRESENT
Senator John Coghill, Sponsor; Johanna Bales, Deputy
Director, Tax Division, Department of Revenue; Susan Bell,
Special Staff Assistant, Office of the Governor; Joe
Austerman, Director of Economic Development, Department of
Commerce, Community, and Economic Development (DCCED); Ron
Peck, President and Chief Operating Officer, Alaska Travel
Industry Association, Anchorage; Brett Carlson, Chair, Board
of Directors, Alaska Travel Industry Association; Stacy
Schubert, Intergovernmental Affairs Director, Municipality
of Anchorage; Julia Saupe, Anchorage Convention and
Visitor's Bureau (ACVB); Wade Willis, Tourism Guide,
Anchorage; Al Koch, General Manager, All Alaska Tours, Eagle
River; Barry Swanberg, Phillips Glacier Cruises, Anchorage;
Kirk Hoessle, President, Alaska Wild & Adventures, Girdwood;
Glen Hemingson, Copperwhale Inn, Anchorage; Scott Reisland,
Denali Grizzly Bear, Denali; Suzanne Rust, KZ Aviation,
Talkeetna/Anchorage; Duane Epson, Marketing Representative,
Alaska Airlines Magazine, Anchorage; Debbie Reinwand,
Bradley Recreation, Anchorage; Ruth Rosewarne, Anchorage;
Dirk Whitehead, Manager, Coast International Inn, Anchorage;
Peter Schadee, Knik River Lodge, Palmer; Park Kriner,
Business Owner, Glennallen; Wayne Martin, ABC Motor Home
Rentals, Palmer; Melissa Saunders, Alaska Native Heritage
Center, Eagle River; Ethan Tyler, Alaska Wildlife
Conservation Center and Alaska Sealife Center, Girdwood;
Neil Darish, McCarthy Ventures, McCarthy; Christopher
Shutte, Executive Director, Downtown Business Association,
Anchorage; Susan Kaer, Owner, Ramada Inn Downtown,
Anchorage; Caleb Alderman, Owner, Anchorage City Trolley,
Anchorage
PRESENT VIA TELECONFERENCE
Bonnie Quill, Executive Director Mat-Su Convention and
Visitors Bureau; Deb Hickok, President, CEO, Fairbanks
Convention and Visitors Bureau; Patti Mackie, Executive
Director, Ketchikan Visitors Bureau; Shannon Hamrick, Kenai
Tourism Marketing Council; Buckwheat Donahue, Skagway
Convention and Visitors Bureau; Kathy Hedges, ATIA Member,
Fairbanks; Ann Hopper, ATIA Member and Owner, Lodge of Black
Rapids, Fairbanks; Matt Atkinson, Northern Alaska Tour
Company, Fairbanks; Ryan Binkley, President, Riverboat
Discovery, Fairbanks; Karen Lundquist, Vice President of
Marketing, Fairbanks Convention and Visitor's Bureau; Mary
Richards, Owner, All Seasons Inn and President, Fairbanks
Association of Bed and Breakfast Association; Janet
Buckingham, Executive Director, Kodiak Island Convention and
Visitors Bureau and Board Member, Alaska Travel Industry
Association, Kodiak; Richard Beneville, Nome Discovery
Tours, Nome; Patricia Shaughnessy, Experience Alaska Tours,
George Inlet Lodge, Ketchikan; Paul Jarvi, Owner, Julie's
Fine Jewelry and Gifts, Ketchikan; Alan LeMaster, Business
Owner, Glennallen; Stan Stephens, Owner, Stan Stephens
Cruises, Valdez
SUMMARY
HB 167 "An Act relating to a corporation income tax
credit for contributions by a person owning or
operating a commercial passenger vessel to a
qualified trade association that was awarded a
contract by the Department of Commerce,
Community, and Economic Development, and used for
planning and executing a destination tourism
marketing campaign."
HB 167 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 167
"An Act relating to a corporation income tax credit
for contributions by a person owning or operating a
commercial passenger vessel to a qualified trade
association that was awarded a contract by the
Department of Commerce, Community, and Economic
Development, and used for planning and executing a
destination tourism marketing campaign."
9:11:11 AM
Co-Chair Stoltze made introductory comments.
9:12:10 AM
SENATOR JOHN COGHILL, SPONSOR, related that the tourism
industry encouraged the development of HB 167. He credited
the co-sponsors with the management of the bill. The bill
attempts to find a way to get money to Alaska tourism
marketing. It will take money from the cruise ship industry
and give a tax credit back in order to create a sustainable
source of income to allow the state to partner with the
cruise ship industry and other tourism industries to market
Alaska. Title 43 creates the method by which this can
happen.
Senator Coghill related the history of HB 167. The original
bill created the tax credit and a distribution method. It
defined "commercial passenger vessel". Other iterations
tried to figure out ways to include other tourism entities.
The bill before the committee, the original bill, deals only
with commercial passenger vessel income and a creditable
passenger vessel tax. The money would go to Alaska Tourism
Industry Association (ATIA) for marketing Alaska.
Co-Chair Stoltze mentioned that a companion bill was in the
works. Today's hearing is to provide a broad picture.
9:16:05 AM
Representative Joule asked if there were new fiscal notes.
Senator Coghill said he had not done new fiscal notes, but
he thought they would change. He anticipated that the co-
sponsors would manage the bill from this point on.
Representative Kelly thanked the sponsor for coming before
the committee. He asked if there would be any constraints on
ATIA's use of the monies. He wondered if this legislation
would also be good for others not in the tourism industry.
Senator Coghill discussed whether the focus should be
broadened. He wondered how to define those who participate.
He observed that all areas of the state should be considered
even though the cruise ship industry brings in the most
tourists. He maintained that the health of hub areas is
important. He stated, "We're all in this together." The goal
is to find ways to spread the money equitably. Senator
Coghill encouraged ATIA to market Alaska as a destination.
9:22:15 AM
Senator Coghill reported that Title 44.33.125 defines how
marketing is to be done. Both private and state dollars are
used. He used Nome as an example of how the state is
involved with the industry. He concluded that he intended a
broad approach in this piece of legislation.
Representative Kelly asked what the governor's point of view
is. Co-Chair Stoltze said the administration would testify
later.
9:23:54 AM
Representative Austerman spoke of tourism marketing credits
for the Seafood Marketing Industry. He raised a concern
about taking money from one pot of money to give to another.
He used roads and docks as examples, which he did not want
to see shortchanged.
Senator Coghill acknowledged that the legislature must be
very deliberate. He agreed that there is an expectation that
roads are safe. He emphasized that visitors must be safe and
able to receive safety services, but that first they must be
interested in visiting Alaska.
Representative Austerman referred to fiscal note #1 and
spoke of the corporate income tax of 2008 which contributed
$15.8 million to marketing. He stressed the need for a
balance in how the money is spent. Co-Chair Stoltze added
that "these are ultimately general funds."
9:27:30 AM
Representative Crawford pointed out that the funds received
from the cruise ship head tax are restricted. The money
appropriated for marketing would come from the general fund,
which also has other requests. He preferred a more direct
link between the funds received and dispersed. He thought
that marketing was necessary, but should be funded by head
tax funds.
9:29:37 AM
Senator Coghill pointed out that constitutional requirements
define the funding method. This legislation creates a
formula that provides an expectation that some of the money
can be used for marketing. He thought there were times that
the cash flow potential of Alaska has to be considered. If
there are no tourists, there is no cash flow, and business
potential goes down. The concept is for the state to work
together with the tourism industry. He pointed out that
tourism has declined recently and marketing is important. He
believed that the legislature should be involved in
marketing.
9:32:00 AM
Vice-Chair Thomas suggested adding an amendment if the head
tax is repealed. Senator Coghill believed that could happen
and the legislature should be prepared to deal with it.
However, he thought the marketing of Alaska should continue.
9:34:23 AM
JOHANNA BALES, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT OF
REVENUE, introduced herself.
SUSAN BELL, SPECIAL STAFF ASSISTANT, OFFICE OF THE GOVERNOR,
introduced herself.
JOE AUSTERMAN, DIRECTOR OF ECONOMIC DEVELOPMENT, DEPARTMENT
OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT (DCCED),
related that DCCED plays a critical role in fostering the
development opportunities such as minerals, fisheries, and
many other industries, including tourism. He noted a close,
professional relationship with ATIA. He related that DCEED
administers the existing contract with ATIA for marketing.
He listed the benefits of tourism as they relate to the
state's economy. Tourism contributes about $2 billion
annually and provides critical opportunities for small
business development. He was of the opinion that tourism
remains one of the most underdeveloped industries in the
state. He described recent declines in the industry.
9:38:54 AM
Mr. Austerman described the department's relationship with
ATIA. The current marketing level is about $11.7 million a
year, with the state contributing about $9 million. The
state's contribution has remained relatively stable. The
Office of Economic Development believes that at that level
of contribution, diminishing levels of returns are expected.
He listed ways to bolster the tourism industry through
marketing and incentivizing. The administration supports
bolstering the state's contribution to about $20 million. It
also believes in the concept of incentivizing companies to
contribute to an increased marketing effort.
Co-Chair Stoltze requested clarification about the use of
the term "initiative". Mr. Austerman clarified that the
state is at a point where it needs to bolster its marketing
efforts. Both the administration and DCCED have concerns
about focusing on one single segment of taxpayers.
9:41:20 AM
Vice-Chair Thomas reported that as a commercial fisherman he
has not seen more money for the Alaska Seafood Marketing
Institute (ASMI). He reported that ASMI receives $1.5
million from the state. He wondered if there would be more
money for seafood marketing. He supported funding of broad
marketing statewide. Mr. Austerman agreed and stated DCEED's
support for ASMI. He spoke in favor of ASMI's efforts, such
as an increase in the value of the harvest.
9:43:03 AM
Representative Kelly asked how much of the $11.7 million was
for overhead costs. Mr. Austerman replied that those costs
are managed through existing program funding. He gave
examples such as the ATIA contract. The Office of Economic
Development administers a number of programs and services
geared toward tourism such as the Alaska Visitors Statistics
Report and Developing Alaska Rural Tourism. The department
works close with ATIA to make sure that its marketing
efforts meet the intent of current criteria established by
statute.
Ms. Bell shared the governor's perspective. The governor
supports an increase in funds for tourism marketing through
an initiative like the proposed legislation. She quoted a
few of the governor's comments from when he was at ATIA's
conference in Fairbanks in October. Governor Parnell stated,
"My administration has focused on taking steps to improve
our economy, and we are proactively seeking ways to position
Alaska for economic growth. I am pleased that I will put the
full support and backing of my administration behind this
type of policy with speaking to the House and Senate bills
and a concept similar to that."
Ms. Bell related the governor's support for increasing
ATIA's total annual budget up to $22 million. The governor
sees the legislation as critical as a constitutional test
and recognizes the need to incentivize companies to
contribute to tourism marketing.
9:47:06 AM
JOHANNA BALES, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT OF
REVENUE, noted that DOE is working as part of a team with
the Office of Economic Development and the Office of the
Governor to ensure that the legislation provides sustainable
funding for the qualified trades associations. She hoped to
work with the sponsors on the legislation.
Representative Austerman asked if Ms. Bales knew of any
projections on 2009 tourism corporate income taxes. Ms. Bell
reported that it is difficult to calculate corporate income
tax in Alaska. There is a current report that shows an
increase from $3 million in 2006 to $15.8 million in 2007.
The current projection is for $20 million in tourism
corporate income tax. She cautioned that the number may be
misleading. The department is looking at ways to ensure that
that number is sustainable.
Ms. Bales pointed out that cruise ships operate outside of
Alaska in the off season. Losses there also impact the
industry's corporate income tax.
9:49:53 AM
Representative Austerman asked about the recession's impact
on Alaskan tourism.
Mr. Austerman emphasized the impact that world-wide
economics and competition has on the market.
9:51:49 AM
Vice-Chair Thomas asked at which point marketing is
discontinued due to oversaturation. He listed economic
reasons why people do not travel and wondered how an
increase in marketing would target those tourists. Mr.
Austerman acknowledged that there would be challenges, but
stressed that tourism is a business and is a part of the
state's economy. He noticed that a lot of states are pulling
back on their marketing efforts, while Alaska is still
behind marketing efforts compared to other states. This
could be an opportunity for Alaska. The challenge is how to
get new visitors to come.
Vice-Chair Thomas commented that he has lost 56 percent of
his income because of competition within the fishing
industry caused by the economy. Mr. Austerman said the
Office of Economic Development (OED) - Fisheries - was aware
of the conflicting interests over Alaska's resources.
9:55:49 AM
Ms. Bell, in response to Vice-Chair Thomas's comment,
pointed out that ATIA monitors the market potential
nationally. She shared information about a trend that shows
many tourists choosing to return to Alaska for another
visit.
Representative Crawford pointed out that New Orleans dealt
with tourism losses by increasing investment in tourism
marketing.
9:57:57 AM
Representative Joule shared his experience as a tour guide.
He spoke of the changes in the demographics of the market.
He wondered about current marketing tools and international
marketing. He related concerns about declining tourism in
rural Alaska.
Mr. Austerman requested that ATIA respond to the question
about strategies to identify specific target markets. He
observed that OED and ATIA work together on marketing rural
tourism. He gave an example of a polar bear tourist venue in
Kaktovik, which brought new money to the area. He concluded
that the value of tourism is to bring new dollars to
businesses and to the state by using existing assets.
10:04:13 AM
Representative Joule related that the cruise industry is
looking at Western and Northwest Alaska as a new market. He
requested more information about how the department is
responding to that. Mr. Austerman reported on efforts by DOT
and OED to enable this new market and to prepare
infrastructure needs in the communities. A number of
workshops and programs focus on establishing rural Alaska as
a new tourist market.
10:06:56 AM
Vice-Chair Thomas questioned who was on the tourism
marketing board and suggested that they meet with the
legislature.
Representative Kelly suggested keeping the current system
used between ATIA and the legislature. He needed convincing
in order to support implementing a tax credit.
10:09:34 AM
Co-Chair Stoltze requested interaction between the cruise
ship industry and the administration.
Ms. Bell reported that the governor recognizes that the
cruise industry is a big part of the visitor industry
market, but also an integrated piece of the visitor industry
market.
10:10:48 AM
JOHN BINKLEY, PRESIDENT, ALASKA CRUISE ASSOCIATION, (via
teleconference) thanked the committee for its concern
regarding the downturn in the visitor industry. He provided
background on the Alaska Cruise Association, which brings
about 1 million passengers to Alaska who represent about
$1.35 billion of economic activity. He spoke in support of
the part of HB 167 that would allow businesses to invest in
marketing Alaska through a corporate tax credit. His
association feels it should be a broad-based approach that
would allow more Alaska tourism businesses to participate.
As written, HB 167 targets only one sector of a broad
industry.
Mr. Binkley shared his family's long involvement in the
tourism industry. He commented on the effectiveness of
tourism marketing in Alaska. From the viewpoint of a private
company, Mr. Binkley spoke in favor of allowing private
sector businesses to be involved in a tax credit method, as
well.
10:15:20 AM
Representative Austerman drew attention to the limited
season of tourism - 120 days. He asked if there was a need
to expand the season beyond that time period.
Mr. Binkley replied that the bulk of his family's tourism
revenue is gained during the 120-day time period. Sixty
percent of visitors come to Alaska on cruise ships. He
compared tourism to the pipeline industry.
10:17:52 AM
Vice-Chair Thomas asked whether the cruise ship association
would expect to have more seats on the marketing board if
they participate in the tax credit. Mr. Binkley explained
that the association currently has two representatives on
the general board. He did not know the makeup of the
marketing committee, but assumed the association would have
an interest.
10:20:14 AM
RON PECK, PRESIDENT AND CHIEF OPERATING OFFICER, ALASKA
TRAVEL INDUSTRY ASSOCIATION (ATIA), ANCHORAGE, reported that
his organization is the largest state travel industry
association. He clarified that there are 1.7 million
visitors during the peak season; there are about one-quarter
of a million visitors in the off-season. There has been
limited success in improving the winter season. He
acknowledged more funding would help.
Mr. Peck stated that the marketing committee is made up of
31 small and large businesses from throughout the state. Two
of them are with the large cruise industry and one is with a
smaller cruise industry. He pointed out that there is an
annual report available on line. He described a target group
that is focused on additional markets. Some funding has been
allocated for improving the web site.
10:24:24 AM
Representative Austerman referred to the importance of the
independent traveler and expressed concern regarding the
emphasis on the cruise ship industry. He requested the
numbers in each category.
Mr. Peck responded that ATIA wants to promote all aspects of
travel, not just the coastal industry. The association is
reaching out to the independent travelers, which he believes
brings in about $20 million. He shared that 33 percent of
all visitors are repeat visitors. He pointed out that 27
percent of return travelers came to Alaska for the first
time on a cruise ship.
10:28:13 AM
Representative Austerman did not want Kodiak to turn into a
ghost town after the 120-day tourist season. He expressed
concerns about focusing on the cruise ship industry. Mr.
Peck agreed and suggested broadening the scope of the type
of year-round visitor to Alaska. Each community should have
input.
Vice-Chair Thomas observed that visitors may not spend money
once they get off the cruise ships. He asked how to get them
to spend money. Mr. Peck related that the Alaska Visitor's
Survey Program researched how much people expend. He
acknowledged that people were more careful with their money
this year; historically, people will spend an average of
$650-$700 off the ship. The average total expenditure is
almost $1000, exclusive of getting to Alaska.
10:32:10 AM
Mr. Peck introduced a presentation "Alaska Travel Industry
Association, House Finance Tourism Report" (copy on file).
He noted that every year the state conducts an arrival
report, and ATIA also compiles a report which closely
matches the state report.
Mr. Peck shared statistics estimated for the 2009 season.
The Anchorage rental revenue tax (January-August 2009) will
be down by 21.5 percent from the previous year. The
Anchorage hotel tax (January-June 2009) will decrease by
about 19 percent.
Co-Chair Stoltze inquired if that data reflects the amount
hotels might have to discount rather than a decrease in the
number of visitors. Mr. Peck said that was correct. Co-
Chair Stoltze asked how that was apportioned. Mr. Peck
offered to provide that data.
Mr. Peck pointed out that Alaska Highway arrivals (May-June)
show an increase; however, campers during August and
September were down. He termed the trend "not a good
indicator".
Mr. Peck turned to Fairbanks and Anchorage airport arrivals
(May-August), which were down by 15 percent. He predicted
that the numbers of long haul travelers would decrease
slightly.
10:36:55 AM
Mr. Peck discussed summer visitor air arrivals, which are
predicted to have decreased. He said that non-cruise
visitors are estimated to be reduced by approximately
100,000 overall.
Mr. Peck expected a flat number of cruise visitors for 2009
and a reduction in 2010.
Vice-Chair Thomas inquired about a new ship coming to
Alaska. Mr. Peck clarified that the new vessel from Disney
Cruise line will arrive in 2011. Vice-Chair Thomas asked if
a Holland American ship was renamed. Mr. Peck did not know,
10:39:00 AM
Mr. Peck reiterated that the numbers of cruise visitors
would be down in 2010. Representative Austerman asked if
that was based on a decreased schedule. Mr. Peck said it
was.
Co-Chair Stoltze asked if fewer ships meant fewer visitors.
Mr. Peck said yes.
Mr. Peck reported that for the Inside Passage round trip
cruise, it is expected that there were 600,000 visitors in
2009 and 580,000 are expected in 2010. For Gulf cruises, the
number will change from 400,000 in 2009, to 280,000 in 2010.
10:41:48 AM
Mr. Peck summarized that the total number of summer visitors
estimated for 2009, assuming no decrease in independent and
highway travelers, will be down by 100,000 visitors. The
overall estimation by the end of 2010 is less than 1.5
million summer visitors, which is lower than it was in 2004.
Representative Austerman observed that this was a trend. He
asked what was in store for the future. Mr. Peck could not
predict and was encouraged by the 2011 new ship's planned
arrival. He thought that ATIA could generate additional
visitors with more funding.
Mr. Peck concluded by sharing national trends in the tourism
industry. Alaska tourism was down more than United States
tourism because of its long-haul destination. Hawaii
"stemmed the tide" of the downward trend by allocating more
dollars for marketing.
BRETT CARLSON, CHAIR, BOARD OF DIRECTORS, ALASKA TRAVEL
INDUSTRY ASSOCIATION, acknowledged the Alaska travel
industry has had its worst year in over fifty years. The
crisis in the industry adds urgency to come up with a long-
term solution. He termed HB 167 great public policy for
Alaskans. Mr. Carlson thought travel to be a resource
development issue, as it is one of Alaska's most important
resources. He pointed out a study performed in Hawaii to
determine preferred destinations.
10:48:08 AM
Mr. Carlson noted that in the study 62 percent of the
responders in the western United States named Alaska as
their preferred destination. He reiterated that economic
potential does not translate into money unless the correct
marketing is utilized.
Mr. Carlson described the challenges in convincing people to
make the long trip to places such as Alaska. He noted that
partnering with the cruise industry has been a successful
strategy for bringing visitors to Alaska, but it should not
be the only model. He spoke in favor of destination
marketing. The tourism marketing tax credit is a source of
funding to achieve a $20 million marketing budget.
10:52:46 AM
Mr. Carlson noted that in FY 2010 the travel industry will
contribute over $120 million to state government. This model
will send one in six of the dollars to tourism marketing to
help continue to grow the industry.
Representative Joule asked what the anticipated yield in
additional visitors and revenue would be if the travel
industry receives this money.
10:56:15 AM
Mr. Carlson replied that research has shown that marketing
works for Alaska. He noted that 45 percent of individuals
contacted through marketing come to Alaska within the next
four years. He thought more money would bring more people to
the state.
Representative Austerman asked if the 62 percent who
indicated an interest in coming to Alaska had been defined.
Mr. Peck revealed that Alaska tourism primarily targets from
several western states, the 45-65 year old, well-educated
traveler, with no children, and with preponderance for
travel.
Representative Austerman noted that the $80 million spent by
Hawaii is for a year-round economy unlike Alaska's 120 day
season.
Mr. Carlson responded that Hawaii's total year-round number
of visitors is 7 million, while Alaska's 120-day season
yields 2 million visitors. His agency has launched an
initiative to assess winter travel possibilities.
11:02:33 AM
Vice-Chair Thomas asked who the members of the Alaska
Tourism Industry Association were. Mr. Peck responded that
memberships have grown to 1,180 members.
Vice-Chair Thomas clarified that he resented the number of
tourism-related individuals and companies benefiting from
advertising dollars without making a contribution. He
requested the number of non-resident ATIA members and board
members. Vice-Chair Thomas also requested information on the
ATIA marketing structure.
Mr. Peck agreed to provide the information at a later date.
11:05:36 AM
Representative Austerman requested that the information be
sent to the entire Finance Committee. He noted that
legislators had to look at all groups across the state, not
just the travel industry, when allocating funding.
Mr. Peck shared information on how the tourism industry has
tried to work with the Alaska Seafood Marketing Institute
(ASMI).
11:08:04 AM
STACY SCHUBERT, INTERGOVERNMENTAL AFFAIRS DIRECTOR,
MUNICIPALITY OF ANCHORAGE, testified on behalf of Mayor Dan
Sullivan regarding the impact of tourism on the Anchorage
economy. She reviewed Anchorage's 2010 budget and noted a
pie graph forecasting 2010 revenues. She listed non-property
tax sources of revenue, of which the hotel room tax
contributed the greatest amount. Also related to tourism is
the motor vehicle rental tax.
11:12:05 AM
Ms. Schubert continued to detail the funds received outside
of the property tax fund in the context of tourism revenue
taxes. She noted projections for the 2010 budget,
anticipating a downturn in tourism of 17 percent from 2009.
She commented on the financial impacts of tourism.
Ms. Schubert stated that the mayor was in favor of the
concept of a corporate income tax benefiting a qualified
trade association for a tourism marketing campaign; however,
he declined to make a definitive statement in support or
opposition of HB 167. She summarized the focus of
Anchorage's budget.
Co-Chair Stoltze asked for elaboration on concerns regarding
the bed tax. Ms. Schubert responded that the municipality
realizes that fewer tourists would result in fewer bed tax
dollars collected.
Representative Austerman asked if the decline in tourism was
17 percent. Ms. Schubert clarified that the forecast for
2010 is a 17 percent decline from 2009.
Representative Austerman wondered if the decline was for
summertime only. Ms. Schubert suspected that the decline
would extend to winter.
11:16:51 AM
Vice-Chair Thomas inquired if the decline includes the loss
of the Alaska Federation of Natives Conference, which
amounts to about 5,000 people. Ms. Schubert replied that it
did. The conference is included in the bed tax total number.
Co-Chair Stoltze commented on the scheduling of an Off-
Broadway show. Ms. Schubert responded that the Lion King was
marketed well, and the economic situation played little part
in its success.
11:19:07 AM
Vice-Chair Thomas commented that marketing should be used
for the Great Alaska Shoot Out. He opined that the week of
basketball could provide a statewide benefit. Ms. Schubert
did not feel qualified to comment. Vice-Chair Thomas
suggested that the event could be watched by millions of
people.
11:21:07 AM
JULIA SAUPE, ANCHORAGE CONVENTION AND VISITOR'S BUREAU
(ACVB), testified in favor of supporting tourism marketing
funding. She reported a 17.5 percent decline in the
Anchorage bed tax, which represents a 10 percent decline in
visitors. She imagined that testimony at today's meeting
would provide an accurate sense of the challenges faced by
the industry.
Ms. Saupe related that Southcentral will host fewer summer
cruise visitors in the coming year. The 2010 ACVB budget is
30 percent lower than that spent in 2008. She stated that
outreach to new markets is in progress. A collaborative
marketing effort benefits all communities. Tourism
contributes significantly to the state's general fund.
Funding tourism has a history of proven results.
11:26:10 AM
Ms. Saupe shared a story about others experiencing the same
situation in the current economic situation. A tourism
marketing tax credit would tie funding to the tourism
industry. She spoke strongly in favor of HB 167.
Vice-Chair Thomas requested the total number of dollars
communities contribute toward tourism marketing. Ms. Saupe
did not know, but offered to find out.
Vice-Chair Thomas commented that those dollars are in
addition to ATIA's contributions. Ms. Saupe announced that
ACVB's contribution for 2010 will be $5.8 million. In the
past that figure has been about $7.2 million. The ATIA
model generates interest in the state and is split amongst
the various convention and visitors bureaus.
11:28:45 AM
BONNIE QUILL, EXECUTIVE DIRECTOR, MAT-SU CONVENTION AND
VISITORS BUREAU (MCVB), gave an overview of her vast
experience in the Alaska Visitor Industry. She spoke of a
decrease this year in the MCVB budget for the first time in
25 years. A change in the grant process allowed for
additional revenues. As of June 30, bed tax revenues were
down 22 percent from last year. Tourism is vital to the
economic health of the Valley. She understood the value of
the research-based campaigns in the ATIA marketing program.
She spoke in favor of the tourism marketing tax credit and
the benefit to small businesses worried about the continuing
decline of visitors.
11:32:47 AM
Co-Chair Stoltze mentioned fishing as important to tourism
economy.
DEB HICKOK, PRESIDENT, CEO, FAIRBANKS CONVENTION AND
VISITORS BUREAU, testified via teleconference. She thanked
the committee for holding the meeting prior to the session.
Co-Chair Stoltze requested information regarding the impact
of declining tourism on the Interior. Ms. Hickok commented
on the variables of the bed tax noting that it was down 16
percent in September.
Co-Chair Stoltze requested further information on the
reasons for that decline. Ms. Hickok could not provide
specific data regarding the loss of revenue. She pointed out
that room rates had dropped dramatically and the number and
availability of rooms had increased. She discussed the
impacts of the budget reduction.
11:35:29 AM
Ms. Hickok stated that 50 percent of visitors were from land
tours and 50 percent were independent travelers. She
mentioned that 80 percent of ATIA members are small
businesses. She discussed winter travel marketing. The
market demand is present for flights to Japan, but Japan
Airlines is facing developmental difficulties. There is an
ongoing effort to recruit more airlines for Asian travel.
11:39:11 AM
Ms. Hickock expected an expansion of tourism marketing to
include cultural aspects of Alaska's communities. More
highway research is needed, but additional funding is
necessary. She spoke of networking online to build Alaska
tourism.
11:41:16 AM
Representative Austerman commented about the global economic
crisis and how it relates to the tourism infrastructure. He
stressed the need also for the necessary infrastructure
across the state to support economic development for the
rest of the state's industry. He wrestled with the concept
of aiding only one aspect of the state's industry. He
wondered about the direction the tourism industry is headed.
Ms. Hickock referred to a marketing study to explain that
visitors with easier access to Alaska must receive marketing
efforts first. The tourism campaign must be very generic
during these hard economic times.
Co-Chair Stoltze commented on strategies for marketing the
fish industry.
11:46:12 AM
PATTI MACKIE, EXECUTIVE DIRECTOR, KETCHIKAN VISITORS BUREAU,
testified via teleconference. She provided a history of
Ketchikan's economy. She noted that tourism-related
businesses represent the largest percentage of dollars spent
in Ketchikan. Tourism provides 14 percent of local
employment. She detailed the various percentages of
contributions by the visitor market. She listed the
companies directly linked to tourism and how they contribute
to the community.
11:50:23 AM
Ms. Mackie expressed concern about tourism declines. She
expected the economy to reverse, but predicted that issues
for Alaska tourism will continue. She spoke about
unreasonable regulations and taxation which compromise
tourism in Alaska.
Ms. Mackie anticipated a loss of $17.7 million in cruise
passenger spending in 2010. She suggested ways the state
could stave off anticipated losses. She believed that state
leaders do recognize the value of tourism. She hoped for a
funding mechanism to attract new visitors and the benefits
they bring.
11:54:24 AM
Representative Austerman asked what percentage of
Ketchikan's economy is from tourism. Ms. Mackie did not have
an exact number, but stated that tourism businesses are not
tracked in the same way that other industries are.
Representative Austerman wished to know the percentage. Ms.
Mackie replied that the $162 million that tourism brings in
is a significant part of the economy. Ms. Mackie guessed
that 30 percent could be directly attributed to tourism.
Vice-Chair Thomas commented that the seafood plant in Craig
was taking some of the seafood processing business out of
Ketchikan.
11:57:10 AM
SHANNON HAMRICK, KENAI PENINSULA TOURISM MARKETING COUNCIL,
testified via teleconference. She stated that her
organization represents the Borough and over 400 businesses
on the Kenai Peninsula. She urged support of HB 167 as
tourism in the Kenai has been dire. She mentioned the
volcano's affect on the amount of visitors. Tourism sales
are down 29 percent in the Kenai region. She shared a
personal story indicating a downturn in the tourism
industry.
Ms. Hamrick requested adoption of the tax credit for the
tourism program. She mentioned a study showing the
conversion of 28 percent. She stressed the importance of
ATIA. She mentioned the various levels of aid provided by
ATIA.
12:03:37 PM
Co-Chair Stoltze requested evidentiary material. Ms. Hamrick
agreed to comply.
BUCKWHEAT DONAHUE, SKAGWAY CONVENTION AND VISITORS BUREAU
(CVB), testified via teleconference. He stated that both the
ATIA and the increase in marketing programs encourage
independent travelers to visit Alaska. The marketing efforts
lure tourists to the entire Southeast Alaskan region. He
noted that Skagway experienced an increase of 14 thousand
cruise ship travelers in 2009 due to the cruise line's
marketing efforts. He maintained that Skagway relies heavily
on tourism. He spoke in support of HB 167.
12:11:25 PM AT EASE
1:40:57 PM RECONVENED
WADE WILLIS, TOURISM GUIDE, ANCHORAGE, testified in support
of HB 176. He pointed out that the tourism industry is self-
sustaining. Long-range funding remains essential. Tourism
relies on renewable resources. He opined that the Alaska
Department of Fish and Game (ADF&G) is severely underfunded.
Co-Chair Hawker noted that ADF&G maintains that the
requested funding is ample to meet their mission.
1:43:58 PM
AL KOCH, GENERAL MANAGER, ALL ALASKA TOURS, EAGLE RIVER,
described his business in Eagle River. He testified in favor
of the legislation. He stressed that a strong marketing
program will reach potential visitors on a global scale.
Representative Austerman asked Mr. Koch about future
industry improvement. Mr. Koch responded that a strong
marketing program in 2010 will bring improvement in 2011 and
2012. Representative Austerman asked if an economic rebound
would itself encourage travelers to visit Alaska. Mr. Koch
replied that the strong momentum for tourism in 2009 was due
to the strong euro and other currencies versus the United
States dollar.
1:50:58 PM
BARRY SWANBERG, PHILLIPS GALCIER CRUISES, WHITTIER,
described his past season as disastrous. He pointed out that
Whittier is losing nine cruise ship arrivals this year,
which equates to a loss of cruise ship advertising. He
testified in favor of the legislation. He requested an
increase in the ATIA budget to a minimum of $20 million. He
spoke in favor of HB 176.
KIRK HOESSLE, PRESIDENT, ALASKA WILD & ADVENTURES, GIRDWOOD,
relayed the poor season his company experienced with sales
down 25 percent in 2009. He found it difficult to project an
optimistic viewpoint for 2010. He believed the marketing
program must improve in order to widen the pool of potential
travelers to Alaska.
1:57:03 PM
GLEN HEMINGSON, COPPERWHALE INN, ANCHORAGE, reported that
his business experienced a 15 percent loss in 2009. He noted
staff cuts due to low bookings. He stated that Alaska is a
bounty of natural beauty and a wonderful destination point
providing a growing source of income for Alaskans. He
testified in favor of HB 167.
SCOTT REISLAND, DENALI GRIZZLY BEAR, DENALI, described the
history of his fourth generation family business. The 2009
tourism season was down 44 percent. He thought that tourism
marketing dollars appropriated to ATIA would aid in recovery
for his business.
2:04:57 PM
Vice-Chair Thomas related to Mr. Reisland's situation as his
fishing business also showed a loss this summer. Mr.
Reisland shared that his father once had a fishing permit on
the Yukon River. He thought there was potential for tourism
growth with this legislation.
2:06:52 PM
SUZANNE RUST, KZ AVIATION, TALKEETNA/ANCHORAGE, spoke of the
value of marketing dollars. She spoke of concerns regarding
the sustainability of her business. She anticipated a
difficult year ahead with cruise ship decreases. She
requested that the legislature reinvest funds into the
tourism industry which affects all aspects of society. She
testified in support of the bill.
DUANE EPSON, MARKETING REPRESENTATIVE, ALASKA AIRLINES
MAGAZINE, ANCHORAGE, spoke in support of the legislation. He
relayed the downside of small businesses marketing
themselves. He believed that small businesses in Alaska
would benefit from the increase in marketing funding. He was
pleased to represent small businesses in Alaska.
2:13:26 PM
DEBBIE REINWAND, BRADLEY RECREATION, ANCHORAGE, spoke of her
involvement with ATIA and the lack of dollars available to
target tourists. She spoke about the science and strategy of
marketing programs. Of people responding to the currently
available marketing, 45 percent convert and visit Alaska
within four years of responding to the state's marketing.
Vice-Chair Thomas reported that he asked about the marketing
structure for ATIA. He asked to know exactly how the funds
are spent. He asked about future plans to contract with
community convention bureaus. Ms. Reinwand replied that she
occasionally contracts with some of the smaller companies
with ATIA's approval. She spoke in support of the qualified
structure of ATIA's marketing committee and the board
overseeing the vendors. She stated that all vendor requests
are rigorously tested prior to approval.
2:18:23 PM
Representative Austerman asked if Ms. Reinwand contracts
with ATIA. Ms. Reinwand said she has contracted with ATIA
for 20 years. Representative Austerman asked if the
contracting occurred in state or out. Ms. Reinwand replied
that the majority of the contracts were in state.
RUTH ROSEWARNE, ANCHORAGE, related that she came close to
losing her job with the Alaska Railroad. She suggested that
the state increase funding for tourism marketing to levels
comparable to other destination points across the globe. She
testified in support of HB 167. She spoke to the responsible
stewardship of ATIA. Co-Chair Stoltze suggested that Alaska
Railroad take responsibility by participating in the
discussion and arriving at a solution.
2:21:41 PM
DIRK WHITEHEAD, MANAGER, COAST INTERNATIONAL INN, ANCHORAGE,
spoke about the loss of income this summer due to the
economic recession. He testified in favor of the
legislation. He noted that many hotels earn the majority of
their money between May and September. He explained that his
hotel sales were down 25 percent this past summer, which
made it the most difficult summer on record for the Coast
International Inn.
PETER SCHADEE, KNIK RIVER LODGE, PALMER, testified in
support of ATIA and the passage of HB 167. He credited
marketing from ATIA for the growth of his business in the
past four years. He understood the dilemma facing the
legislature and opined that money spent on tourism will only
benefit the state.
KATHY HEDGES, ATIA MEMBER, FAIRBANKS, testified via
teleconference. She requested the committee support HB 167.
She stated that she is a lifelong Alaskan who supports
herself through the visitor industry. She elaborated that
smart consistent marketing benefits communities and regions.
2:31:29 PM
ANN HOPPER, ATIA MEMBER AND OWNER, LODGE OF BLACK RAPIDS,
FAIRBANKS, testified via teleconference. She spoke in
support of the legislation as a new small business owner.
She stressed the high expense of marketing. She explained
that her business opened just this summer and was supported
almost entirely by construction crews as very little
tourists were traveling in her area. She stressed the high
cost of marketing.
MATT ATKINSON, NORTHERN ALASKA TOUR COMPANY, FAIRBANKS
testified via teleconference in support of HB 167. His
company specializes in the independent traveler. He
described the difficulties of the past year in which sales
were down 30 percent. He believed that the marketing efforts
would improve his situation.
2:37:30 PM
RYAN BINKLEY, PRESIDENT, RIVERBOAT DISCOVERY, FAIRBANKS,
testified via teleconference. He expressed support for the
legislation. He noted that he was unable to hire 48
positions, which typically fill with college students who
rely on the money. He noted that he will begin this year's
season 25 percent down. He pointed out the connection
between the cruise ship industry and central Alaska, and
argued that businesses at the "end of the line" feel the
effects of the poor economy.
2:43:17 PM
KAREN LUNDQUIST, VICE PRESIDENT OF MARKETING, FAIRBANKS
CONVENTION AND VISITOR'S BUREAU, testified via
teleconference. She noted the decline of bed tax receipts.
She encouraged support of HB 167 and emphasized the critical
importance of strong marketing for the tourism industry in
Alaska.
MARY RICHARDS, OWNER, ALL SEASONS INN AND PRESIDENT,
FAIRBANKS ASSOCIATION OF BED AND BREAKFAST ASSOCIATION,
testified via teleconference. She spoke in support of HB
167. She informed about the difficulties faced by her
business in the past year.
STAN STEPHENS, OWNER, STAN STEPHENS CRUISES, VALDEZ,
testified via teleconference. He supported the legislation.
He stressed the need for marketing Alaska. He elaborated
that all the citizens of Alaska benefit from that travel
industry. He shared a story about surviving tough economic
situations in the 1980s because of a strong marketing
program. He asserted that he has experienced the connection
between increased tourism and strong marketing.
2:53:02 PM
JANET BUCKINGHAM, EXECUTIVE DIRECTOR, KODIAK ISLAND
CONVENTION AND VISITORS' BUREAU, BOARD MEMBER, ALASKA TRAVEL
INDUSTRY ASSOCIATION, KODIAK, testified via teleconference.
She voiced support for the legislation. She described
difficulties for Alaskan tourism businesses and asked for
more money spent on marketing. She expounded on the fact
that Alaska is competing with destination points around the
world. She noted that Hawaii spends $80 million each year on
marketing. She suggested the solution is the support of a
tourism tax credit.
2:55:52 PM
RICHARD BENEVILLE, NOME DISCOVERY TOURS, NOME, testified via
teleconference. He supported the legislation. He spoke of
the effect of decreased tourism in his region. He shared
that Ohio spends twice as much as Alaska does on marketing.
He opined that the late Representative Foster would have
supported the legislation as he was a forward thinking
statesman. Co-Chair Hawker agreed that the committee will
greatly miss the wisdom and guidance of Representative
Foster.
PATRICIA SHAUGHNESSY, EXPERIENCE ALASKA TOURS, GEORGE INLET
LODGE, KETCHIKAN, testified via teleconference. She
expressed support for HB 167 and described the challenges of
decreased tourism. She described the many ways that tourism
supports other Alaskan industries.
3:03:01 PM
PAUL JARVI, OWNER, JULIE'S FINE JEWELRY AND GIFTS,
KETCHIKAN, testified via teleconference. He spoke in favor
of the legislation. He explained that his business was down
20 percent in 2009. He urged the support of tourism and HB
167.
ALAN LEMASTER, BUSINESS OWNER, GLENNALLEN, testified via
teleconference. He voiced support for HB 167. He described
business difficulties due to a downturn of tourism business
and the necessity of additional state marketing dollars. He
believed the legislation would create growth in the industry
and benefit the state greatly. He expressed a direct
connection between the amount of dollars spent on marketing
and the number of visitors to Alaska. He noted that while
2009 was a disastrous year, 2010 will prove even more
difficult as less cruise ship travelers are predicted. He
urged a $30 million budget for tourism instead of the
current $12 million budget. He reminded that the budget in
the 1980s was much greater than it is today. He elucidated
that this legislation will provide a budget and an
opportunity to increase the budget to the necessary $30
million.
3:08:24 PM
PARK KRINER, BUSINESS OWNER, GLENNALLEN, urged support of
the legislation. He emphasized the importance of effective
marketing in these difficult economic times. He lamented
about the employees that he was forced to lay off this
summer and their families who were understandably affected.
He urged funding of the third largest industry in Alaska.
WAYNE MARTIN, ABC MOTOR HOME RENTALS, PALMER, supported the
legislation. He explained that his business was down
approximately 30 percent and bookings have also decreased
for the upcoming summer. He noted that promotions have not
increased business.
3:14:43 PM
MELISSA SAUNDERS, ALASKA NATIVE HERITAGE CENTER, EAGLE
RIVER, spoke in support of HB 167. She detailed the effect
of tourism on the center and stressed the importance of
marketing funds.
ETHAN TYLER, ALASKA WILDLIFE CONSERVATION CENTER AND ALASKA
SEALIFE CENTER, GIRDWOOD, voiced support of the legislation.
He noted that his employment with the tourism industry
allows him to support his family. He added that ATIA's
efforts are proven successful.
3:18:26 PM
NEIL DARISH, MCCARTHY VENTURES, MCCARTHY, urged support of
marketing in Alaska. He spoke in support of HB 167. He
explained that five percent of gross projected revenue is a
typical marketing budget for most tourism businesses. He
pointed out that ATIA promotes marketing partners that
funnel tourists allowing sustainable business.
CHRISTOPHER SCHUTTE, EXECUTIVE DIRECTOR, DOWNTOWN BUSINESS
ASOCIATION, ANCHORAGE, supported the legislation. He
commended the bill's sponsors and the committee for the
recognition of the importance of tourism marketing. He
recommended marketing Alaska's geography, beauty, and
location. He lamented that outdoor magazines lack Alaskan
advertising. He spoke in favor of the tax credit as an
important first step in capitalizing on a great asset. He
urged the finance committee to support the initiative.
3:24:29 PM
SUSAN KAER, OWNER, RAMADA INN DOWNTOWN, ANCHORAGE, spoke in
support of the legislation and stressed the need for
additional marketing dollars. She understood the trickledown
effect of tourism on other Alaskan industries. She stressed
that this year has been the most difficult of her 20 years
in business. She believed that the additional marketing
dollars for ATIA would improve the situation.
KALEB ALDERMAN, OWNER, ANCHORAGE CITY TROLLEY, ANCHORAGE,
spoke strongly in favor of HB 167. He stated that his
business affects all of the citizens of Anchorage. He opined
that ATIA does a fine job with the state funds. He urged the
committee to consider other venues as well such as the
downtown partnerships and the film industry. He elaborated
that the legislature does not adequately support the tourism
industry. He requested a sustainable amount of funding.
3:30:29 PM
Representative Austerman requested clarification regarding
the claim that the state does not contribute to the tourism
industry. Mr. Alderman clarified that he requested increased
funding for marketing. He did not believe that enough
funding was approved for tourism. Representative Austerman
replied that he did not want to leave the impression that
the state did not fund the marketing efforts of tourism. Mr.
Alderman emphasized the need for financial help in marketing
for small business owners in Alaska. He stressed the fact
that he does vote. Co-Chair Hawker noted an earlier
statement "if the committee did not provide the funds, he
would find someone who will." He requested clarification of
the statement. Mr. Alderman replied that he votes and the
success of his business depends on the funding.
Vice-Chair Thomas stated that he represents a fishing
district and he contributes seven percent of his gross
income along with a sales tax of five to six percent. He
noted that he did not like threats. Mr. Alderman apologized
and thanked the committee for their difficult work.
3:37:16 PM
Co-Chair Stoltze welcomed written commentary and apologized
to everyone who did not get to testify.
ADJOURNMENT
The meeting was adjourned at 3:39 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| 03 CSHB167 ver E Sectional Analysis.pdf |
HFIN 11/4/2009 9:00:00 AM |
HB 167 |
| HB 167 Back Up.pdf |
HFIN 11/4/2009 9:00:00 AM |
HB 167 |
| HFC Agenda Nov 09 Final.docx |
HFIN 11/4/2009 9:00:00 AM HFIN 11/5/2009 9:00:00 AM |
|
| HB 167 Support Letters.pdf |
HFIN 11/4/2009 9:00:00 AM |
HB 167 |
| Nov09HouseFinTourismReport.pdf |
HFIN 11/4/2009 9:00:00 AM |
HB 167 |