Legislature(2001 - 2002)

01/30/2002 01:35 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                      January 30, 2002                                                                                          
                          1:35 PM                                                                                               
                                                                                                                                
TAPE HFC 02 - 17, Side A                                                                                                        
TAPE HFC 02 - 17, Side B                                                                                                        
TAPE HFC 02 - 18, Side A                                                                                                        
TAPE HFC 02 - 18, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:35 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Bill Williams, Co-Chair                                                                                          
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Carl Moses                                                                                                       
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Fred  Dyson;   Representative  Gary  Stevens;                                                                   
Representative  Vic Kohring; Cheryl  Frasca, Municipality  of                                                                   
Anchorage, Anchorage;  Brad Pierce, Office of  Management and                                                                   
Budget, Office  of the Governor;  Dale Fox, Chairman,  Alaska                                                                   
Travel Industry  Association;  Dennis Brandon, Alaska  Travel                                                                   
Industry  Association; Paul  Cauter,  Alaska Travel  Industry                                                                   
Association; Mike  Windred, Alaska Travel  Adventure, Juneau;                                                                   
Kirk Hoessle,  Alaska Travel Industry Association,  Girdwood;                                                                   
Bruce  Bustamante,  Anchorage  Business  Convention  Business                                                                   
Bureau,  Alaska   Travel  Industry  Association,   Anchorage,                                                                   
Sharon Crisp, City  of Valdez; Sharon Crisp,  City of Valdez;                                                                   
Sharon Crisp, City of Valdez.                                                                                                   
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
There were no teleconference testifiers.                                                                                        
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 349    "An Act  relating to agency programs  and financial                                                                   
          plans."                                                                                                               
                                                                                                                                
          HB 349 was REPORTED out of Committee with a "do                                                                       
          pass" recommendation and with a zero fiscal note                                                                      
          by the Office of the Governor.                                                                                        
                                                                                                                                
HB 359    An  Act  making a  supplemental  appropriation  for                                                                   
          tourism marketing efforts; and providing for an                                                                       
          effective date.                                                                                                       
                                                                                                                                
          HB 359 was REPORTED out of Committee with a "do                                                                       
          pass" recommendation and with a House Finance                                                                         
          Committee Letter of Intent.                                                                                           
HOUSE BILL NO. 349                                                                                                            
                                                                                                                                
     An Act relating to agency programs and financial plans.                                                                    
                                                                                                                                
REPRESENTATIVE FRED  DYSON, SPONSOR, spoke in  support of the                                                                   
legislation.  He maintained  that  [results based  budgeting]                                                                   
would  provide the  Administration  with  the best  available                                                                   
information.  He  provided members  with  an  example of  the                                                                   
results based  budgeting system  used by the Municipality  of                                                                   
Anchorage:  "Facility Management"  (copy on  file). He  noted                                                                   
that  he used  the budget  system contained  in the  document                                                                   
when  he was  on the  Anchorage Assembly.  He explained  that                                                                   
municipal  departments present  their activities and  outputs                                                                   
in decreasing levels of priority.                                                                                               
                                                                                                                                
CHERYL   FRASCA,   MUNICIPALITY  OF   ANCHORAGE,   ANCHORAGE,                                                                   
provided information on the results  based system used by the                                                                   
Municipality  of  Anchorage.  She  discussed page  8  of  the                                                                   
handout.  She  explained  that  the  funding  line  would  be                                                                   
similar to  the state caps.  Everything above the  line would                                                                   
be funded; everything below the  line would not be funded. If                                                                   
the  funding  level  changes  the  funding  line  would  move                                                                   
upward,  leaving more  unfunded programs.  If a service  were                                                                   
integral to  the priority  it could be  moved up  the funding                                                                   
level.  If there  were a  funding surplus  the funding  level                                                                   
could be moved down.                                                                                                            
                                                                                                                                
Ms. Frasca explained that some  departments list debt service                                                                   
as their  first priority;  some departments prioritize  their                                                                   
commissioner's  office; others  set their  core functions  as                                                                   
their  first priority.  She explained  that  the codes  could                                                                   
identify  mandated  services.  She  emphasized  the  need  to                                                                   
identify the level of funding mandated.                                                                                         
                                                                                                                                
In  response  to  a question  by  Representative  Dyson,  Ms.                                                                   
Frasca acknowledged  that the  administration of  the funding                                                                   
process  is complicated.  Infrastructure must  exist for  the                                                                   
system to  work. She  pointed out  that information  could be                                                                   
presented    in   this   format    without   acquiring    the                                                                   
infrastructure. The information  can be used to provide clear                                                                   
guidelines to  the departments in  respect to what  a service                                                                   
level  should look  like.  She stressed  the  need to  define                                                                   
activities  and to give  definition and  division of  service                                                                   
levels. The  Anchorage Municipal Administration  and Assembly                                                                   
negotiated the use of funding level budgeting.                                                                                  
                                                                                                                                
Representative Dyson  asked if the state of  Alaska could buy                                                                   
software from  the Municipality of Anchorage.  Ms. Frasca did                                                                   
not think that  the software would be suitable.  She observed                                                                   
that they are looking at new systems.                                                                                           
                                                                                                                                
Vice-Chair  Bunde  questioned  if  there is  any  reason  the                                                                   
system could not  be adapted and moved to a  state level. Ms.                                                                   
Frasca responded  that it is a  good model to present  to the                                                                   
legislature  and  citizens  because  it shows  the  level  of                                                                   
service.  She  acknowledged  that   it  would  take  time  to                                                                   
implement  fully,  but noted  that  it  could  be used  as  a                                                                   
communication tool without actually producing the budget.                                                                       
                                                                                                                                
Vice-Chair  Bunde  asked  what would  keep  departments  from                                                                   
placing  a  core  function  as number  10  and  a  burecratic                                                                   
function  as number  one.  Ms. Frasca  responded  that it  is                                                                   
important that the ranking process  have integrity. She noted                                                                   
that the legislature  could rearrange the ranking  to reflect                                                                   
legislative priorities. The legislature  would have the units                                                                   
of information specific to the activities.                                                                                      
                                                                                                                                
Representative  Hudson noted  that budgets  are nothing  more                                                                   
than estimates of what are needed  and what will be available                                                                   
to meet the needs  of the state on an annual  basis. He asked                                                                   
if  the mayor  has  flexibility to  meet  emergencies and  in                                                                   
relationship to nonproductive items in the budget.                                                                              
                                                                                                                                
Ms.  Frasca noted  that there  is flexibility  to move  money                                                                   
within the departments.                                                                                                         
                                                                                                                                
Representative Hudson noted that  information is presented in                                                                   
a positive format and emphasized  that lawmakers need to know                                                                   
the negatives.  He asked if there  is an opportunity  for the                                                                   
departments  to  indicate  the  downside  of  not  funding  a                                                                   
function  for the  public record.  Mr.  Frasca observed  that                                                                   
there are  work sessions where  department directors  have an                                                                   
opportunity to  answer questions.  This is an  opportunity to                                                                   
focus on what is below the funding line.                                                                                        
                                                                                                                                
Representative  Croft  referred  to municipal  priorities  on                                                                   
pages 3 - 4.  He agreed that it made sense  to place services                                                                   
into components  but emphasized that it is  the legislature's                                                                   
duty to set the priorities.                                                                                                     
                                                                                                                                
Representative  Dyson acknowledged  the concern. He  stressed                                                                   
that it  makes sense  for those  that are  doing the  work to                                                                   
take the first cut at setting  the priorities. He pointed out                                                                   
that the Assembly has the opportunity  to change the position                                                                   
of items on the priority list.  He pointed out that they have                                                                   
the  information  available  to   understand  the  effect  of                                                                   
changes.                                                                                                                        
                                                                                                                                
In  response  to  a question  by  Representative  Croft,  Ms.                                                                   
Frasca noted that the most important  items are ranked on the                                                                   
front page,  but that those items  near the cut line  are the                                                                   
most vulnerable.  The department submits the  rankings in the                                                                   
mayor's  budget.  The funding  line  is  drawn based  on  the                                                                   
Assembly's approval.                                                                                                            
                                                                                                                                
Representative  Croft  questioned   how  often  the  Assembly                                                                   
changes  the rankings.  Ms. Frasca  noted  that the  Assembly                                                                   
might choose  to fund something  that is below the  line. The                                                                   
department  would  rank  the  item the  next  year  based  on                                                                   
available funds.                                                                                                                
                                                                                                                                
Representative Croft  suggested that reductions  are unlikely                                                                   
to  be  done as  cleanly  as  presented  in the  handout.  He                                                                   
pointed  out that  [if park  maintenance were  below the  cut                                                                   
line] it would  be unlikely that all the maintenance  for the                                                                   
226 parks  would be deleted.  He suggested that  items within                                                                   
the maintenance  component might  be identified for  funding.                                                                   
Ms.  Frasca agreed  and  pointed  out that  separate  service                                                                   
areas can be  created and funded. She observed  that there is                                                                   
flexibility  and emphasized that  it is  a way of  presenting                                                                   
information.                                                                                                                    
                                                                                                                                
Representative  Croft maintained that  the system  is similar                                                                   
to the current state process.                                                                                                   
                                                                                                                                
Representative  Lancaster  questioned  if the  process  saved                                                                   
time   or  money   or   if   it  provided   better   service.                                                                   
Representative Dyson  responded that he  did not know  of any                                                                   
systems that worked better.                                                                                                     
                                                                                                                                
Representative  John  Davies   asked  the  mayor's  level  of                                                                   
involvement   in  determining   prioritization.  Ms.   Frasca                                                                   
explained  that the  mayor reviews  the  service levels.  The                                                                   
mayor  has not  changed  the ranking  and  priorities of  the                                                                   
departments. The critical decision  is where the funding line                                                                   
is  drawn. If  a service  falls  below the  funding line  the                                                                   
mayor would  look at what is above  the line to see  if there                                                                   
is a service that can be reduced are eliminated.                                                                                
                                                                                                                                
Representative   John  Davies   questioned  how   departments                                                                   
distribute the funding.  Ms. Frasca noted that  it is similar                                                                   
to   the  cap   process  set   by   the  state   legislature.                                                                   
Representative Dyson  interjected that the city  of Anchorage                                                                   
has  a strong  mayor system.  He observed  that the  rankings                                                                   
could be changed.                                                                                                               
                                                                                                                                
Representative  Harris spoke in  support of the  legislation.                                                                   
He observed  that the  legislature is only  in session  for 4                                                                   
months,  while   the  administration  works  12   months.  He                                                                   
suggested that the Administration  would have a better chance                                                                   
of doing  something with  the budget,  but acknowledged  that                                                                   
the legislature would have to manipulate the final product.                                                                     
                                                                                                                                
BRAD PIERCE, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE                                                                     
GOVERNOR,  spoke against  the legislation.  He observed  that                                                                   
the Governor  opposes the  bill as  an unnecessary  burden on                                                                   
state  agencies  without  producing  meaningful  results.  He                                                                   
observed  that  the governor  proposes  and  the  legislature                                                                   
disposes.  Prioritizing  agency  activities is  a  subjective                                                                   
process. He  pointed out that  state departments have  a much                                                                   
broader function  than municipal  departments. He  questioned                                                                   
what criteria  would be used to rank governmental  functions.                                                                   
The dilemma  is that  general government  functions  could be                                                                   
placed on the  bottom, but that without  general governmental                                                                   
functions  like  personnel  and payroll  nothing  else  would                                                                   
exist. He observed  that the Legislative Research  Agency, at                                                                   
various  times,  has  been  asked  to  make  lists  of  state                                                                   
programs  that  are mandated  vs.  discretionary.  They  have                                                                   
produced a list  of new programs added between  1981 and 1989                                                                   
and lists  of unique Alaska  programs. Gordon  Harrison wrote                                                                   
an essay for the Long Range Financial  Planning Commission on                                                                   
the difficulty  of defining  basic services.  The Long  Range                                                                   
Financial Planning  Commission itself produced  a preliminary                                                                   
report that gave several different  scenarios for cutting the                                                                   
budget by $500  million dollars using different  criteria for                                                                   
what  should be  eliminated. All  of these  exercises so  far                                                                   
have  proven to  be  pointless but  they  might provide  some                                                                   
guidance  along the  lines of  what is being  proposed  in HB
349.                                                                                                                            
                                                                                                                                
Representative Hudson  observed that the intent is  to have a                                                                   
more direct  dialog with the administration.  He acknowledged                                                                   
that the administration functions  under the direction of the                                                                   
legislature.  He  stressed  the  need  for  more  information                                                                   
regarding  the  harmful affects  of  not funding  items.  Mr.                                                                   
Pierce responded  that impact  statements are created  during                                                                   
the subcommittee  process.  Representative Hudson  emphasized                                                                   
the need to work together with greater flexibility.                                                                             
                                                                                                                                
Representative   Whitaker  questioned  the   Administration's                                                                   
objection.  Mr.   Pierce  clarified  that   the  subcommittee                                                                   
process  is already  doing the  directives of  the bill.  Co-                                                                   
Chair  Williams disagreed.  Representative Harris  maintained                                                                   
that  the  subcommittees  must   dig  [for  information].  He                                                                   
pointed  out that  there is  a billion  dollar deficient  and                                                                   
that  priorities   are  needed.  Vice-Chair   Bunde  recalled                                                                   
instances where the relationship has been adversarial.                                                                          
                                                                                                                                
Representative Foster MOVED to  report HB349 out of Committee                                                                   
with the accompanying fiscal note.  There being NO OBJECTION,                                                                   
it was so ordered.                                                                                                              
                                                                                                                                
HB  349  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation and  with a zero fiscal note by  the Office of                                                                   
the Governor.                                                                                                                   
HOUSE BILL NO. 359                                                                                                            
                                                                                                                                
     "An Act making a supplemental appropriation for tourism                                                                    
     marketing efforts; and providing for an effective                                                                          
     date."                                                                                                                     
                                                                                                                                
Co-Chair  Mulder  stated that  he  was originally  a  skeptic                                                                   
regarding  the  request  [to   provide  funding  for  tourism                                                                   
marketing].  After  listening   to  comments  about  what  is                                                                   
happening  to  the  [tourism]   industry  and  analyzing  the                                                                   
numbers  he concluded  that the  state of Alaska  has a  huge                                                                   
investment in the tourism industry.  He pointed out that this                                                                   
is the first time  that the state of Alaska has  faced such a                                                                   
step  decline in  tourism. A  10 percent  decline in  tourism                                                                   
means over 140,000  fewer visitors or over $100  million less                                                                   
dollars  to the  Alaskan economy.  These are  funds that  the                                                                   
state would not have to provide.  He pointed out that tourism                                                                   
is receiving the  impact of 9/11/01, which it  did not cause.                                                                   
He  acknowledged  that the  legislation  is  not 100  percent                                                                   
supported by the majority, but  stressed that action needs to                                                                   
be prompt.                                                                                                                      
                                                                                                                                
TAPE HFC 02 - 17, Side B                                                                                                      
                                                                                                                                
DALE  FOX,  CHAIRMAN,  ALASKA   TRAVEL  INDUSTRY  ASSOCIATION                                                                   
(ATIA),  testified in  support of the  legislation.  He noted                                                                   
that small  business is  the backbone  of the Alaska  tourism                                                                   
industry. Tourism bookings in  Alaska virtually stopped after                                                                   
9/11/01.  Bookings are  currently down  30 -  46 percent.  He                                                                   
stressed that  hundreds of businesses  and thousands  of jobs                                                                   
will go away  if the downward trend continues.  He encouraged                                                                   
the state  to help  the industry  and observed  that it  is a                                                                   
onetime  problem. He  stressed  that although  the state  has                                                                   
faced recessions,  oil spills, fires and  earthquakes nothing                                                                   
has  compared  to the  problems  resulting from  the  9/11/01                                                                   
disaster.                                                                                                                       
                                                                                                                                
DENNIS BRANDON,  ALASKA TRAVEL  INDUSTRY ASSOCIATION,  gave a                                                                   
power point  presentation in support  of the legislation.  He                                                                   
noted  that, as  a  result of  9/11/01,  consumers are:  more                                                                   
reluctant to  fly, plan trips  closer to home,  are uncertain                                                                   
about  the future  and less  willing to  commit to  long-term                                                                   
travel plans. The National Forecast  from the Travel Business                                                                   
Roundtable  (10/31/01) found  that 17%  of all travelers  say                                                                   
they are traveling  less. One out of every 20  trips is being                                                                   
cancelled and  13% of leisure travelers have:  cancelled, put                                                                   
on hold, or  remain undecided about taking an  upcoming trip.                                                                   
According  to a  survey  of more  than  300 visitor  industry                                                                   
businesses:  bookings and  inquiries are  down by 23  percent                                                                   
and  businesses  directly  involved in  advanced  booking  of                                                                   
transportation,  tours & lodging  are down  30 - 46  percent.                                                                   
Research indicates  that current marketing efforts  may yield                                                                   
significantly fewer visitors.  He pointed out that a decrease                                                                   
in visitors would  mean less revenue for  municipalities that                                                                   
are  funded in  part through  bed taxes  and emphasized  that                                                                   
revenue  decreases would  trickle through  the entire  Alaska                                                                   
economy.                                                                                                                        
                                                                                                                                
Mr.  Brandon  noted  that  the   tourism  industry  is  often                                                                   
depicted as  transportation, flight  seeing, and  vessels. He                                                                   
pointed  out that  there are  many  indirect businesses  that                                                                   
depend  on the volume  of the  visitors to  Alaska. He  added                                                                   
that  taxes, user  fees, permits,  and  other state  revenues                                                                   
might suffer from a reduction in visitors.                                                                                      
                                                                                                                                
Representative  Croft observed  that  bookings after  9/11/01                                                                   
dropped to zero  and asked if the current average  of 30 - 46                                                                   
percent is the accumulative amount.  Mr. Brandon affirmed and                                                                   
clarified  that  volume  is  increasing,  but that  60  -  90                                                                   
booking days  were lost after  9/11/01. February  volumes are                                                                   
back up but they  need 120 - 130 percent to  make up for lost                                                                   
business.  He  noted  that by  December  31st,  under  normal                                                                   
circumstances,  businesses  have 35  -  40 percent  of  their                                                                   
following season booked.                                                                                                        
                                                                                                                                
Mr. Brandon reviewed  the results of a survey  of respondents                                                                   
to the State  Marketing Program (11/28/01). He  observed that                                                                   
1 in 3 people who indicated they  were definitely planning to                                                                   
visit  Alaska  prior  to  9/11 now  indicate  they  are  less                                                                   
committed  to visiting.  Only 1  in 10 of  those planning  to                                                                   
visit  have   made  reservations.   He  noted  that   10%  of                                                                   
respondents say  they are less  likely to travel  on vacation                                                                   
in   general.  He   reviewed  possible   Outcomes  of   these                                                                   
Reductions  in Alaska  and observed  that a  10% decrease  in                                                                   
visitors equals a loss of 140,000  visitors, a loss of $101.6                                                                   
million  dollars in  visitor  spending and  a  loss of  1,564                                                                   
travel-related  jobs.  If  there   were  a  20%  decrease  in                                                                   
visitors  then there  would be  a loss  of 280,000  visitors,                                                                   
$203.3  million dollars  in  economic impact  and  a loss  of                                                                   
3,127 travel-related jobs.                                                                                                      
                                                                                                                                
Mr.  Brandon  noted  that  according  to  the  Air  Transport                                                                   
Association domestic  revenue passenger  miles are  down 21.1                                                                   
percent.  International  revenue  miles  are down  37.3%  and                                                                   
current  total air  passengers are  down by  23%. Summer  air                                                                   
bookings to Alaska are down 30%.  A majority of Alaska's non-                                                                   
resident visitors arrive or depart by plane.                                                                                    
                                                                                                                                
Mr. Brandon  observed that  total cruise cancellations  could                                                                   
reach  $2  billion dollars,  according  to  industry  analyst                                                                   
Lazard Freres.  He maintained that incentive  discounts could                                                                   
translate   to    significant   reductions    in   land-based                                                                   
expenditures in  Alaska. He observed that  increased capacity                                                                   
brings decreased  pricing to stimulate activity.  One company                                                                   
coming to Alaska has discounted  their cruises by 50 percent.                                                                   
                                                                                                                                
Representative Croft  asked if someone with  a discount would                                                                   
be  more  likely to  purchase  items  off  of the  ship.  Mr.                                                                   
Brandon  stated that  they have  not found  that to be  true;                                                                   
those that are bargain hunters are bargain hunters.                                                                             
                                                                                                                                
Mr. Brandon  reviewed  impacts on travel  and concluded  that                                                                   
more  Americans  will  travel  closer  to home,  if  at  all.                                                                   
Inbound  international  travel  is expected  to  decline.  He                                                                   
noted  that   European  charters  that  were   building  have                                                                   
cancelled flights and discontinued services.                                                                                    
                                                                                                                                
Mr.  Brandon concluded  that  travel and  tourism  businesses                                                                   
would  suffer  business  declines and/or  profit  erosion  in                                                                   
2002.  He  noted  that long-term  predictions  depend  on:  a                                                                   
return  of consumer  spending,  the public's  willingness  to                                                                   
travel,   and  Alaska's   ability  to   compete  with   other                                                                   
destinations  for market  share  by spending  more  marketing                                                                   
dollars. There has  been a return to some  consumer spending.                                                                   
The public's anxiety  has started to ease, but  other markets                                                                   
have  acted to  grab the  shrinking market.  The problem  has                                                                   
been  compounded by  the  loss of  confidence  to travel  and                                                                   
increased competition.                                                                                                          
                                                                                                                                
Vice-Chair  Bunde observed  that the  national economy  is in                                                                   
trouble and that the people are  afraid to fly and questioned                                                                   
what advertising can do to change these.                                                                                        
                                                                                                                                
Mr. Brandon noted  that confidence is returning.  He recalled                                                                   
that  he felt  more  confident traveling  on  the west  coast                                                                   
after 9/11/01  than to  the east. He  felt that the  public's                                                                   
reluctance to fly would lessen.                                                                                                 
                                                                                                                                
In response  to a question  by Vice-Chair Bunde,  Mr. Brandon                                                                   
noted that  the statistics  were complied  prior to  Dec. 31,                                                                   
2001.                                                                                                                           
                                                                                                                                
Mr.  Brandon  discussed  competition  prior  to  9/11/01  and                                                                   
observed  that  Alaska's  current marketing  budget  of  $7.8                                                                   
million dollars is  far below the national average  per state                                                                   
of $13.7  million dollars for  2000-2001. Alaska  ranked 36th                                                                   
out of 50 in state funding for tourism.                                                                                         
                                                                                                                                
Representative  Hudson  questioned  how  the state  rates  in                                                                   
relation  to  all industry.  Mr.  Brandon  did not  have  the                                                                   
answer.  He  observed  that  cruise   lines  market  multiple                                                                   
destinations.  The total  amount  spent by  the cruise  lines                                                                   
industry on  marketing efforts  is approximately  $70 million                                                                   
dollars. Since 9/11/01 competition  for willing travelers has                                                                   
increased.  Many  states,  countries  and  even  cities  have                                                                   
appropriated emergency  funds to bolster tourism.  The Travel                                                                   
Association  of  America has  bolstered  their  funds by  $20                                                                   
million  dollars.  Canada  increased  their  funding  by  $15                                                                   
million  dollars two  months ago.  Puerto  Rico by  increased                                                                   
their  tourism-marketing budget  by $15  million dollars  and                                                                   
Mexico by $6 - 8 million dollars.                                                                                               
                                                                                                                                
Mr. Brandon observed  that New York City had  bolstered their                                                                   
marketing  program   by  $40   million  dollars.   Las  Vegas                                                                   
increased their tourism marketing  by $13 million dollars and                                                                   
was successful  in turning their  40 percent decrease  into a                                                                   
10 percent decrease in tourism.                                                                                                 
                                                                                                                                
Vice-Chair  Bunde observed that  Las Vegas  is giving  away a                                                                   
lot  of  free  hotel  rooms  and   questioned  what  was  the                                                                   
percentage  of  their increase  to  their total  budget.  Mr.                                                                   
Brandon  noted  that  their  total   budget  is  $22  million                                                                   
dollars.                                                                                                                        
                                                                                                                                
Representative  Harris asked how  tourism serves  to increase                                                                   
the  state's  income.  Mr.  Brandon   observed  that  funding                                                                   
reaches the  state through user  fees, permits  and corporate                                                                   
taxes. He pointed  out that fishing licenses  are not counted                                                                   
as  part of  the  tourism  user  stream. He  maintained  that                                                                   
revenue  from permits,  taxes,  and user  fees  result in  an                                                                   
excess of $100 million dollars.                                                                                                 
                                                                                                                                
Mr.  Brandon  noted that  American  consumers  with  previous                                                                   
overseas  travel  plans  might   choose  Alaska  instead.  He                                                                   
emphasized that Alaska  has a great story to tell  and is one                                                                   
of the finest destinations in  the United States, but because                                                                   
Alaska  is being  outspent  in the  market  place those  that                                                                   
would come to Alaska may be influenced  to go somewhere else.                                                                   
He noted  that West-Coast  Americans  and Canadians  might be                                                                   
more  hesitant   to  travel  to  the  East   Coast.  Targeted                                                                   
marketing  efforts in  the Lower  48  could encourage  people                                                                   
thinking of postponing their Alaska  trip to visit this year.                                                                   
                                                                                                                                
Mr.  Brandon  stressed  that marketing  efforts  need  to  be                                                                   
increased   immediately.   Everyday   the  state   loses   an                                                                   
opportunity  to   pick  up  on   the  market.  There   is  an                                                                   
opportunity in  the next 45  to 60 days  to pick up a  lot of                                                                   
the predictable  loss. The  longer the  state waits  the more                                                                   
difficult  it  will be  to  fill  in  the void.  Alaska  must                                                                   
compete for  a limited  pool of  visitors willing to  travel.                                                                   
Alaska destination marketing must  focus on domestic markets.                                                                   
They  have  isolated the  markets  they  feel can  be  turned                                                                   
quickly.                                                                                                                        
                                                                                                                                
Visitors spend  an estimated $726  per person, per  trip. The                                                                   
total  direct full-year  spending  for all  visitors is  $949                                                                   
million dollars. Visitor industry  accounts for approximately                                                                   
30,700 Alaska jobs,  or 1-in-8 private sector  jobs. The ATIA                                                                   
is  requesting   $12.5  million  dollars  for   an  emergency                                                                   
destination marketing  campaign. This  was put together  in a                                                                   
plan in  November. The  marketing campaign  will generate  an                                                                   
additional 182,850  visitors to the state this  season, which                                                                   
would spend an average of $726  dollars each. This equates to                                                                   
an overall economic impact of  $332 million dollars in direct                                                                   
and indirect  spending. This  is a return  rate of  more than                                                                   
26:1.                                                                                                                           
                                                                                                                                
Vice-Chair Bunde  pointed out  that the estimates  were based                                                                   
on a $12  million dollar plan.  The plan and  estimates would                                                                   
have to  be cut  to reflect  the proposed  $6 million  dollar                                                                   
appropriation.  Mr. Brandon  noted that  television would  be                                                                   
the primary  focus. Television  offers the quickest  stimulus                                                                   
to travel.                                                                                                                      
                                                                                                                                
Mr. Brandon observed  that the plan would  encourage previous                                                                   
inquirers  to proceed  with their travel  plans and  increase                                                                   
efforts  to convince  those "willing  to travel"  to come  to                                                                   
Alaska. The plan  would target various sectors  of trade that                                                                   
are  in  key  positions  to  affect  destination  choices  by                                                                   
reminding  consumers  that  Alaska  is  part  of  the  United                                                                   
States. He stressed that Alaska  is perceived to be [a] safer                                                                   
[destination].                                                                                                                  
                                                                                                                                
Mr.  Brandon   observed  that   ATIA  Images  2000   research                                                                   
indicates that  about half (49%)  of all visitors  decided to                                                                   
visit Alaska  within 6  months of actual  travel and  that if                                                                   
aggressive  efforts are  not  taken immediately,  the  impact                                                                   
could  be  devastating  to many  of  Alaska's  small  tourism                                                                   
businesses.  The time to act is now.                                                                                            
                                                                                                                                
Mr. Brandon discussed  the Recovery Plan, which  would launch                                                                   
an  aggressive television  campaign  to  elevate interest  in                                                                   
visiting Alaska  this year and  enhance performance  of other                                                                   
marketing.  The plan  would place  dominant Alaska  newspaper                                                                   
advertisements  in 25  national markets  and sub-markets.  He                                                                   
observed  that  2.5 million  direct  mail packages  would  be                                                                   
delivered  to  targeted independent  travel  prospects.  They                                                                   
would  schedule briefings  with  60 key  travel editors  from                                                                   
influential West Coast travel and trade publications.                                                                           
                                                                                                                                
Mr.  Brandon observed  that additional  multi-media  features                                                                   
would  be  added  to  the  official  Alaska  travel  site  at                                                                   
www.travelalaska.com.  He  observed   that  planning  on  the                                                                   
Internet is becoming  more of the norm.  Internet advertising                                                                   
and opt-in  e-mail would  be used  to complement  traditional                                                                   
programs  and   increase  reach.  They  would   implement  an                                                                   
interactive Travel Alaska TV series and Internet promotion.                                                                     
                                                                                                                                
Representative  John Davies clarified  that the target  would                                                                   
be  the independent  traveler,  not the  cruise industry.  He                                                                   
emphasized that  the cruise industry  can assist  itself. Mr.                                                                   
Brandon agreed.  He stressed that  research would be  used to                                                                   
assure  that the  money  would  be spent  right  in order  to                                                                   
motivate the targeted audience.  Research would allow ATIA to                                                                   
modify  its message  based  on  changes in  the  marketplace.                                                                   
Trends  and  attitudes  in the  travel  marketplace  will  be                                                                   
monitored by contact with travel agents.                                                                                        
                                                                                                                                
Mr. Brandon explained  that ATIA would do a  number of things                                                                   
to  enhance the  decisions  of people  coming  to Alaska.  He                                                                   
emphasized the importance of visits  by friends and relatives                                                                   
of residents.  Television spots  will encourage residents  to                                                                   
invite  their  friends  and relatives  to  visit  the  state.                                                                   
Television ads will augment current  marketing efforts with a                                                                   
"stay home - discover your own  backyard" message. A Resident                                                                   
Travel  Newspaper  Campaign  would   elevate  interest  among                                                                   
residents in Alaska.                                                                                                            
                                                                                                                                
Mr.  Brandon  discussed  the Recovery  Budget  as  originally                                                                   
proposed at $12.5 million dollars:                                                                                              
                                                                                                                                
Television campaign      $8,080,000                                                                                             
Newspaper campaign       $425,000                                                                                               
Direct mail campaign     $975,000                                                                                               
Online campaign          $650,000                                                                                               
State Vacation Planner/800#     $464,000                                                                                        
Public relations campaign$722,000                                                                                               
Website development/promo$300,000                                                                                               
TV advertising           $250,000                                                                                               
Research                 $54,000                                                                                                
Travel Trade Training    $280,000                                                                                               
Instate Travel Campaign  $300,000                                                                                               
                                                                                                                                
Mr. Brandon  summarized that  Alaska is  one of the  greatest                                                                   
destinations. Those  that are willing to travel  need to look                                                                   
at Alaska and Alaska must make  certain that Alaska is before                                                                   
them as a destination.                                                                                                          
                                                                                                                                
Representative Croft  asked for a breakdown  of the estimated                                                                   
$100 million dollars [in tourism related state revenues].                                                                       
                                                                                                                                
Co-Chair Mulder observed that  there was a focus toward media                                                                   
markets to  present Alaska's case.  He thought that  the best                                                                   
investment  Alaska could make  would be  to have their  chief                                                                   
executive  and his lieutenant  governor  fly around the  west                                                                   
coast  and   represent  Alaska  as  advocates.   Mr.  Brandon                                                                   
acknowledged  the suggestion  and  observed that  there is  a                                                                   
willingness  by the Governor  to try  to stimulate  people to                                                                   
come to Alaska and look to Alaska.                                                                                              
                                                                                                                                
Representative  Hudson  asked what  could  occur on  national                                                                   
television  for $4 million  dollars. He  observed that  there                                                                   
needs  to be  multiple spots  for  the public  to absorb  the                                                                   
message. He  questioned if more  money should be  placed into                                                                   
direct mailings.  Mr. Brandon  thought that television  would                                                                   
be the  best expenditure but  acknowledged the use  of direct                                                                   
mailings.  He  emphasized  the  need to  go  to  the  highest                                                                   
producing markets.                                                                                                              
                                                                                                                                
Representative Lancaster asked  how soon they could be in the                                                                   
market place. Mr. Brandon noted  that everything is in place.                                                                   
They could be in the market place  within hours. He felt that                                                                   
there could  be a significant impact  in a two to  three week                                                                   
period.                                                                                                                         
                                                                                                                                
Representative Lancaster asked  what would happen in the case                                                                   
of another event.  Mr. Brandon acknowledged that  there would                                                                   
be  another  problem  and  they  would  have  to  start  from                                                                   
scratch.  The  industry  is faced  with  a  different  agenda                                                                   
because  of what  happened.  He  stressed that  it  is not  a                                                                   
bailout; it is not because they  ran their business badly. He                                                                   
emphasized   that  other  business   have  rebounded   though                                                                   
increases in advertising.                                                                                                       
                                                                                                                                
Representative Whitaker clarified  that the plan would target                                                                   
independent  travelers.  The  major  portal  for  independent                                                                   
travelers  to Alaska  is  Anchorage or  Southcentral  Alaska.                                                                   
Representative Whitaker  observed that the  legislation would                                                                   
benefit  the  entire  state. He  questioned  the  affects  on                                                                   
winter tourism.  Mr. Brandon noted  that the Japanese  market                                                                   
and business travel has been dramatically  reduced. It is too                                                                   
soon to  tell if event  travel such as  the Iditarod  will be                                                                   
affected.                                                                                                                       
                                                                                                                                
In response  to a  question by  Representative Whitaker,  Mr.                                                                   
Brandon noted  that there was a  30 - 46 percent  decrease in                                                                   
actual  bookings. He  guessed  that 50  - 60  percent of  the                                                                   
winter tourism was lost.                                                                                                        
                                                                                                                                
Vice-Chair Bunde referred to the  return to the state through                                                                   
taxes. He observed that municipalities  receive bed taxes. He                                                                   
questioned  how  much municipalities  are  contributing.  Mr.                                                                   
Brandon could not respond.                                                                                                      
                                                                                                                                
Representative  John   Davies  stressed  that   the  proposed                                                                   
legislation  is not a  bailout. Bailout  implies an  industry                                                                   
that has failed  under its terms of doing business.  The term                                                                   
is  not  used  when  speaking   of  communities  impacted  by                                                                   
earthquakes of hurricanes.                                                                                                      
                                                                                                                                
                                                                                                                                
TAPE HFC 02 - 18, Side A                                                                                                      
                                                                                                                                
Co-Chair   Williams  asked   if  funding   provided  in   the                                                                   
legislation  would be used  to assist  the ferry system.  Mr.                                                                   
Brandon responded that the plan  would have to be reworked to                                                                   
incorporate the  reduction. He stressed that  the highest use                                                                   
of the money  would be sought.  He noted that a plan  has not                                                                   
been formulated.  Co-Chair Williams  observed that  the ferry                                                                   
system carries a lot of passengers to the interior.                                                                             
                                                                                                                              
Mr. Brandon presented a short  video as an example of how the                                                                   
money would be spent.                                                                                                           
                                                                                                                                
PAUL CAUTER,  ALASKA TRAVEL  INDUSTRY ASSOCIATION,  testified                                                                   
in  support  of the  legislation.  He  noted  that he  has  6                                                                   
businesses  in Alaska with  over 250  employees and  over 300                                                                   
vendors. His  business makes up to  2 percent of the  jobs in                                                                   
question. He stressed the issue  of timing. He emphasized the                                                                   
need for active support.                                                                                                        
                                                                                                                                
MIKE WINDRED,  ALASKA TRAVEL ADVENTURE, JUNEAU,  testified in                                                                   
support of the legislation. They  have over 200 employees and                                                                   
have seen  a 46 percent  decrease in  motor home  rentals. He                                                                   
expressed concern  with the long-term health  of his business                                                                   
if bookings are not increased.                                                                                                  
                                                                                                                                
Mr.  Windred  commented  that  they  would  be  hiring  fewer                                                                   
employees  this  year. He  added  that  they are  looking  at                                                                   
decreasing some  of their  seasonal employees. Without  extra                                                                   
funding  from  the  state,  they   expect  their  motor  home                                                                   
bookings to be  at 50 percent. They will not be  able to make                                                                   
up for the ground already lost  without help. Support through                                                                   
the proposed legislation would  allow them to make it through                                                                   
the next winter as well.                                                                                                        
                                                                                                                                
Mr. Windred  pointed  out that  they are a  big business  and                                                                   
noted that  many smaller  businesses are  dependent on  their                                                                   
business. He  emphasized that  the marketing plan  was worked                                                                   
on by  some of  the best people  in the  nation. All  that is                                                                   
lacking is the  funding. He stressed that the  marketing plan                                                                   
is well thought out and urged funding.                                                                                          
                                                                                                                                
Representative  Hudson asked the  percentage of  his business                                                                   
that goes into market promotion.                                                                                                
                                                                                                                                
Mr.  Windred  replied that  about  10%  of their  gross  goes                                                                   
toward marketing.  Their company is putting as  much money as                                                                   
they can  into additional  advertising.  He pointed  out that                                                                   
they need to conserve cash to  make it through next winter in                                                                   
the event that there are not more bookings.                                                                                     
                                                                                                                                
Representative  Hudson emphasized  that there  needs to  be a                                                                   
combined effort with the industry and the state.                                                                                
                                                                                                                                
Mr.  Windred  noted  that the  industry  has  contributed  an                                                                   
additional  $1.2 million  dollars. He  pointed out that  they                                                                   
cannot make it on their own.                                                                                                    
                                                                                                                                
Representative  Whitaker  understood   that  cost  reductions                                                                   
cannot get  the industry where  they need to go.  Mr. Windred                                                                   
agreed.                                                                                                                         
                                                                                                                                
KIRK   HOESSLE,  PRESIDENT,   ALASKA   WILDLIFE   ADVENTURES,                                                                   
GIRDWOOD,  testified in  support  of the  legislation.  Their                                                                   
business has grown  to $4 million dollars a  year and employs                                                                   
20  year-around and  100 seasonal  employees.  He noted  that                                                                   
sales are  down about  40% from the  last three years.  Sales                                                                   
look  like they  will  be 10-20  percent  below the  previous                                                                   
high. The  industry is doing  everything they  can. Marketing                                                                   
expenses  have been  increased  by $40  thousand dollars  and                                                                   
they plan  to add  another $20 -  $30 thousand dollars.  Full                                                                   
time employees have  been reduced and trip options  have been                                                                   
consolidated.   Seasonal    staff   will   be    reduced   by                                                                   
approximately 20%. He anticipated  that revenue would be down                                                                   
20 - 25 percent, which is the  equivalent loss of $100 - $200                                                                   
thousand dollars. He observed  that the reduction in revenues                                                                   
would  mean  that  they  would spend  $500  -  $600  thousand                                                                   
dollars less within the state.                                                                                                  
                                                                                                                                
Mr. Hoessle stated  that there is hope and  that the industry                                                                   
is "not giving up". The industry  could rebound if additional                                                                   
funding is placed into the marketplace at this time.                                                                            
                                                                                                                                
BRUCE  BUSTAMANTE,  ANCHORAGE  BUSINESS  CONVENTION  BUSINESS                                                                   
BUREAU,  ALASKA   TRAVEL  INDUSTRY  ASSOCIATION,   ANCHORAGE,                                                                   
commented  that   he  was  testifying   in  support   of  the                                                                   
legislation. There  are 1,319  business members that  rely on                                                                   
the  tourism  industry.  He  stressed   that  there  are  far                                                                   
reaching  impacts and  emphasized  that the  threat is  real.                                                                   
Emergency marketing  funds could  assist in the  next season.                                                                   
Tourism marketing  works. The infrastructure is  in place. He                                                                   
estimated  that  this  year would  be  the  most  competitive                                                                   
season the  state has seen.  Additional funding would  make a                                                                   
difference.                                                                                                                     
                                                                                                                                
Vice-Chair  Bunde   asked  how   much  the  Municipality   of                                                                   
Anchorage  contributes.  Mr. Bustamante  explained  that  the                                                                   
Municipality  contributes   half  of  the  bed   tax  to  the                                                                   
marketing  fund. He  stressed that  it is  more efficient  to                                                                   
market the entire state of Alaska, not individual cities.                                                                       
                                                                                                                                
Representative  Hudson  questioned  if  the  municipality  of                                                                   
Anchorage had  considered making a greater  contribution. Mr.                                                                   
Bustamante  stated  that  they  had not  yet  considered  and                                                                   
additional contribution  but added  that they already  make a                                                                   
large effort toward statewide marketing.                                                                                        
                                                                                                                                
SHARON  CRISP,  DIRECTOR,  VALDEZ  CONVENTION  AND  VISITOR'S                                                                   
CENTER,  testified   in  support  of  the   legislation.  She                                                                   
observed that  there are 200 members, each  employing between                                                                   
2 - 5  employees. She observed  that the city of  Valdez went                                                                   
into  the season  knowing  that  their cruise  ship  dockings                                                                   
would  be  reduced; 9/11/01  has  further  reduced  dockings.                                                                   
Their  most  popular  shore excursion  has  been  the  Valdez                                                                   
pipeline terminal,  which was  cancelled after 9/11/01.  They                                                                   
do not know when  or if the suspension will  be lifted. There                                                                   
is tightened port security in  the Port of Valdez, which will                                                                   
affect sport  fishing and charters. Independent  bookings are                                                                   
down 20  percent. She  expressed concern  that this  could be                                                                   
further reduced.                                                                                                                
                                                                                                                                
Representative   Hudson  questioned   what  element   of  the                                                                   
proposed  marketing plan  would have  the greatest affect  on                                                                   
Valdez. Ms.  Crisp noted that  the city of Valdez  focuses on                                                                   
the independent  traveler,  as does the  marketing plan.  She                                                                   
felt that once the traveler is  brought to the state that the                                                                   
city would  capture their travel.  The city spends  5 percent                                                                   
of their budget on generic marketing.                                                                                           
                                                                                                                                
Mr.  Bustamante  stated  that   the  Alaska  Travel  Industry                                                                   
Association contributed  approximately $250  thousand dollars                                                                   
on   generic   marketing.   They  also   spend   funding   on                                                                   
conventions.  Anchorage  lost  8 conventions  directly  after                                                                   
9/11/01.                                                                                                                        
                                                                                                                                
STEVE BOWHAY,  GLACIER GARDENS, JUNEAU, testified  in support                                                                   
of the  legislation.  He noted  that they are  on the  cruise                                                                   
ships' itinerary.  He maintained that the cruise  lines would                                                                   
discount  their  trips  in  order to  fill  their  spots.  He                                                                   
emphasized that  the cruise industry is already  spending $70                                                                   
million  dollars to  put  Alaska out  as  a destination.  The                                                                   
legislation  would supplement  this spending  and target  the                                                                   
independent  traveler. He stressed  the pristine  environment                                                                   
of Alaska.  Alaska has  less pollution  and people,  and more                                                                   
beauty  then other  destinations.  He  pointed  out that  the                                                                   
industry would promote  themselves if they had  the money. He                                                                   
quoted  his grandfather:  "Hearts like  doors will open  with                                                                   
ease to  those that  hold the  little keys  and don't  forget                                                                   
that two of these are thank you sir and if you please."                                                                         
                                                                                                                                
SALLY SADLER,  LEGISLATIVE LIAISON,  DEPARTMENT OF  COMMUNITY                                                                   
AND  ECONOMIC  DEVELOPMENT,  testified   in  support  of  the                                                                   
legislation.  The  Administration  believes that  the  Alaska                                                                   
Travel Industry  Association has  a good marketing  plan that                                                                   
would  attract visitors  to the  state in a  short amount  of                                                                   
time. She noted  the suggestions of the Committee  to improve                                                                   
the role of the Administration  in the marketing process. The                                                                   
legislation is  consistent with the Governor's  Task Force on                                                                   
Jobs and  the Economy's recommendation  to invest  in tourism                                                                   
and to attract  more people to the state. She  encouraged the                                                                   
Committee  to increase  the level of  funding and  emphasized                                                                   
the critical issue of timing.                                                                                                   
                                                                                                                                
Vice-Chair  Bunde stressed that  it would  be helpful  if the                                                                   
Administration would  identify $6 million dollars  that could                                                                   
be used to fund the legislation.                                                                                                
                                                                                                                                
Representative  Croft MOVED  to ADOPT  Amendment 1.  He noted                                                                   
that  the amendment  would  add $6  million  dollars for  the                                                                   
Alaska Seafood  Marketing Institute.  He spoke in  support of                                                                   
the amendment. He pointed out  that the fishing crisis is not                                                                   
the  fault of  the individual  fisherman.  He emphasized  the                                                                   
opportunity to market  Alaska's fish in light of  the Mad Cow                                                                   
Disease.                                                                                                                        
                                                                                                                                
Co-Chair  Williams  stated  that   he  supports  the  fishing                                                                   
industry,  but questioned  the  effect of  the amendment.  He                                                                   
pointed  out that  there is  a  plan to  support the  tourism                                                                   
industry and  asked what  could be done  to help  the fishing                                                                   
industry. The  fishing industry  is huge and the  legislature                                                                   
needs to make  sure that funding  to help it is in  the right                                                                   
place  at the right  amount. He  noted that  he had  received                                                                   
mixed signals  from the fishing  industry. He  suggested that                                                                   
more thought needs to be given to the amendment.                                                                                
                                                                                                                                
Co-Chair  Mulder stressed  that the emergency  nature  of the                                                                   
fishing  industry is  different  and more  systemic than  the                                                                   
affect of 9/11/01  on the tourism industry.  He observed that                                                                   
there has  been discussion  of a  task force  to look  at the                                                                   
long-term problems  of the fishing industry.  A resolution is                                                                   
being considered  to direct  the Board of  Fish to  present a                                                                   
long-term solution and map out  a course of action. He stated                                                                   
that he  was reluctant  to make a  great investment  until he                                                                   
can see light at the end of the tunnel.                                                                                         
                                                                                                                                
Representative  Harris acknowledged  problems in the  fishing                                                                   
industry.  He  observed  that  50 percent  of  the  fleet  in                                                                   
Cordova  and   Valdez  no  longer   fish.  He   thought  that                                                                   
Representative Stevens had introduced  legislation to address                                                                   
the issue.                                                                                                                      
                                                                                                                                
Representative  Croft  noted   that  Representative  Stevens'                                                                   
legislation is not identical to the proposed amendment.                                                                         
                                                                                                                                
Representative  Harris stressed  the need  for a fiscal  plan                                                                   
before additional funding is sought.                                                                                            
                                                                                                                                
REPRESENTATIVE GARY  STEVENS spoke to his  legislation, which                                                                   
addresses  problems in  the fishing industry.  He noted  that                                                                   
fisherman and  processors fund  the Alaska Seafood  Marketing                                                                   
Institute  (ASMI) through  taxes. His  legislation would  add                                                                   
state support. He noted that revenues  to ASMI are reduced as                                                                   
fewer fish are caught. He added  that ASMI is also facing the                                                                   
completion of a grant.                                                                                                          
                                                                                                                                
Representative  Harris  pointed  out that  there  is  another                                                                   
vehicle to address  the problems regarding reductions  in the                                                                   
fishing industry.                                                                                                               
                                                                                                                                
TAPE HFC 02 - 18, Side B                                                                                                      
                                                                                                                                
Representative  Hudson stressed  that  the appropriation  for                                                                   
tourism  marketing  is  time   sensitive.  He  observed  that                                                                   
9/11/01  affected a  major industry  in the  state of  Alaska                                                                   
that  by themselves  are not  prepared  to restore  a lot  of                                                                   
their business. He pointed out  that there is a potential job                                                                   
loss that  would have an  adverse economic affect  throughout                                                                   
Alaska.  He acknowledged  there  are real  systemic  problems                                                                   
within the seafood industry. He  felt that it would take more                                                                   
than  $6 million  dollars to  address health  of the  fishing                                                                   
industry. He  thought that a  major effort was  needed, which                                                                   
would  include financial  participation by  the industry.  He                                                                   
expressed  his hesitation  to  support any  increases to  the                                                                   
budget before the  fiscal needs of the state  have been dealt                                                                   
with.  He  stated  that  he  would  support  the  legislation                                                                   
because  failure to  do so  would  result in  the failure  of                                                                   
economic development, which would otherwise occur.                                                                              
                                                                                                                                
Vice-Chair  Bunde noted  that he  has worked  in the  tourism                                                                   
industry  and  stated  that  can  understand  the  legitimate                                                                   
concerns  of both  the tourism  and  fishing industries,  but                                                                   
noted that he would not support the amendment.                                                                                  
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Croft, Davies, Moses                                                                                                  
OPPOSED: Bunde, Foster, Harris,       Hudson,      Lancaster,                                                                   
          Whitaker, Williams, Mulder                                                                                            
                                                                                                                                
The MOTION FAILED (3-8).                                                                                                        
                                                                                                                                
Representative  Foster   MOVED  to  report  HB   359  out  of                                                                   
Committee with the accompanying fiscal note.                                                                                    
                                                                                                                                
Vice-Chair Bunde  OBJECTED. He stated that he  is not willing                                                                   
to  support additional  funding  because it  sends a  message                                                                   
that  the public  doesn't  need to  take  the state's  fiscal                                                                   
problems seriously.                                                                                                             
                                                                                                                                
In response to a question by Representative  Harris, Co-Chair                                                                   
Mulder  explained that  effective  dates  in the  legislation                                                                   
would allow funds to be spent into the next fiscal year.                                                                        
                                                                                                                                
Representative   Harris   stated   that   he   supports   the                                                                   
legislation  but is  concerned  with how  the state's  budget                                                                   
would be balanced.                                                                                                              
                                                                                                                                
Representative Whitaker acknowledged  the need to balance the                                                                   
budget but emphasized the need  to support the economy of the                                                                   
state. He  noted that he  has a letter  from an  Alaskan bank                                                                   
observing  that,  if the  tourism  industry  fails, the  bank                                                                   
would also fail. He spoke in support of the legislation.                                                                        
                                                                                                                                
Representative  Lancaster stated  that he  would support  the                                                                   
legislation with  mixed emotions  and emphasized  his support                                                                   
for a fiscal plan.                                                                                                              
                                                                                                                                
Representative   John  Davies   spoke  in   support  of   the                                                                   
legislation  and maintained  that  it is  not  a bailout.  He                                                                   
stressed that  action needs to  be prompt and that  it cannot                                                                   
wait for the development of a fiscal plan.                                                                                      
                                                                                                                                
Representative Carl Moses pointed  out that there are serious                                                                   
problems with  the state's  budget gap,  which are  not being                                                                   
addressed.  He   stated  that   he  could  not   support  the                                                                   
legislation  without  a  fiscal  plan.  He  acknowledged  the                                                                   
problem  but  emphasized  the importance  of  addressing  the                                                                   
state's  overall  fiscal  problems.   He  stressed  that  the                                                                   
fishing industry is as important as the [tourism industry].                                                                     
                                                                                                                                
Representative  Lancaster  stated   that  results  should  be                                                                   
evident before  the legislative session ends  and stated that                                                                   
he would like to see a shorter timeline for the report.                                                                         
                                                                                                                                
Vice-Chair Bunde stated that it  is not his hope or intent to                                                                   
inflict  pain, but  that  the budget  cannot  be balanced  if                                                                   
state "continues to spend, spend, spend".                                                                                       
                                                                                                                                
Co-Chair Mulder MOVED to ADOPT a Letter of Intent:                                                                              
                                                                                                                                
                      Letter of Intent                                                                                          
                                                                                                                                
     The Legislature  acknowledges  that tourism bookings  in                                                                   
     Alaska  are  well  below  the  forecasts  prior  to  the                                                                   
     terrorist attack on America  September 11, 2001. Surveys                                                                   
     show that actual bookings  are 30 % to 40% below normal.                                                                   
     It   is  the  intent   of  the   Legislature  that   the                                                                   
     appropriation  made  by House  Bill  359  is focused  at                                                                   
     increasing tourism in Alaska in 2002.                                                                                      
                                                                                                                                
     The   Legislature  expects   that  the  Alaska   Tourism                                                                   
     Industry   Association   will   report   back   to   the                                                                   
     Legislature  during the  FY  2004 budget  deliberations.                                                                   
     That report  should include  measures that indicate  the                                                                   
     results   of   the   advertising   supported   by   this                                                                   
     legislation.                                                                                                               
                                                                                                                                
Co-Chair Mulder  explained that  the Letter  of Intent  is in                                                                   
the  spirit of  performance  budgeting  and  would provide  a                                                                   
better sense  of the return for  the investments made  by the                                                                   
state of Alaska. He agreed with  Representative Lancaster and                                                                   
requested a summary  report about the results  before the end                                                                   
of session.                                                                                                                     
                                                                                                                                
Representative  John  Davies MOVED  to  AMEND  the Letter  of                                                                   
Intent by inserting "FY 2003 and" before FY2004".                                                                               
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
There being NO OBJECTION, the  House Finance Committee Letter                                                                   
of Intent was adopted.                                                                                                          
                                                                                                                                
HB 359 was REPORTED out of Committee with a "do pass"                                                                           
recommendation and with a House Finance Committee Letter of                                                                     
Intent.                                                                                                                         
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:15 PM                                                                                            
                                                                                                                                
                                                                                                                                

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