Legislature(2009 - 2010)Anch LIO Rm 220

11/04/2009 09:00 AM FINANCE


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

Document Name Date/Time Subjects
03 CSHB167 ver E Sectional Analysis.pdf HFIN 11/4/2009 9:00:00 AM
HB 167
HB 167 Back Up.pdf HFIN 11/4/2009 9:00:00 AM
HB 167
HFC Agenda Nov 09 Final.docx HFIN 11/4/2009 9:00:00 AM
HFIN 11/5/2009 9:00:00 AM
HB 167 Support Letters.pdf HFIN 11/4/2009 9:00:00 AM
HB 167
Nov09HouseFinTourismReport.pdf HFIN 11/4/2009 9:00:00 AM
HB 167