Legislature(2011 - 2012)

04/08/2011 03:35 PM FIN

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03:35:33 PM Start
03:35:41 PM HB160
04:11:15 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 8, 2011                                                                                            
                         3:35 p.m.                                                                                              
3:35:33 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stoltze called the House Finance Committee meeting                                                                     
to order at 3:35 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Co-Chair                                                                                        
Representative Anna Fairclough, Vice-Chair                                                                                      
Representative Mia Costello                                                                                                     
Representative Mike Doogan                                                                                                      
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Reggie Joule                                                                                                     
Representative Mark Neuman                                                                                                      
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Peter  Ecklund, Staff,  Co-Chair  Thomas; Representative  Bob                                                                   
Heron;  Patty Mackey,  ATIA  Board;  Richard Cole,  Wings  of                                                                   
Alaska;   Susan    Bell,   the   Department    of   Commerce,                                                                   
Commissioner, Community and Economic Development.                                                                               
PRESENT VIA TELECONFERENCE                                                                                                    
Julie Saupe, ATIA; Alan Lemaster, VTS; Deb Hickok, Travel                                                                       
Industry Association.                                                                                                           
HB 160    VISITOR INDUSTRY INVESTM'T FUND/MARKETING                                                                             
          CSHB 160 was REPORTED out of Committee with a "do                                                                     
          pass" recommendation and with one new fiscal note                                                                     
          from the Department of Commerce, Community and                                                                        
          Economic Development and one new zero impact note                                                                     
          from the Department of Revenue.                                                                                       
HOUSE BILL NO. 160                                                                                                            
     "An  Act   establishing  and  relating  to   the  Alaska                                                                   
     visitor industry  investment fund; relating  to matching                                                                   
     funds  for   state  tourism  marketing   contracts  with                                                                   
     qualified  trade  associations;  and  providing  for  an                                                                   
     effective date."                                                                                                           
3:35:41 PM                                                                                                                    
Vice-chair  Fairclough  proposed committee  substitute,  work                                                                   
draft  #27-LS0509/S.   Co-Chair  Stoltze  OBJECTED   for  the                                                                   
purpose of discussion.                                                                                                          
PETER ECKLUND,  STAFF, REPRESENTATVIE  THOMAS, discussed  the                                                                   
Committee   Substitute  (CS).   He   presented  a   sectional                                                                   
analysis.  Mr. Ecklund  explained  that  Section  1 would  be                                                                   
addressed later  in the presentation.  Section 2  changes the                                                                   
date required to  enter an initial contract  with a Qualified                                                                   
Trade  Association  (QTA) from  April  1st  to June  1st.  On                                                                   
April 1st, the  legislature is typically in  session. By June                                                                   
1st,  the   legislature  is   typically  adjourned   and  the                                                                   
appropriation for  the QTA will be known. If  the current law                                                                   
remained the same,  the QTA reverts back to a  50/50 match on                                                                   
July  1,   2011.  The   legislation  proposes   a  $2   state                                                                   
contribution for every $1 industry match.                                                                                       
3:38:39 PM                                                                                                                    
Mr. Ecklund  stated that Section  3 condenses the  board from                                                                   
32  to 9  members. Three  members  would be  selected by  the                                                                   
governor  from the  cruise lines  for service  of three  year                                                                   
terms. Six  members would  be selected  by the Alaska  Travel                                                                   
Industry Association  (ATIA) membership.  Two of  the members                                                                   
are required  from tourism  entities that  employ fewer  than                                                                   
50  people. One  member must  come from  an entity  employing                                                                   
between 51  and 250 people. One  board member must  come from                                                                   
an  entity employing  greater  than 250  people. Two  members                                                                   
are  "at large,"  and all  six  members are  selected by  the                                                                   
membership of the QTA.                                                                                                          
3:39:54 PM                                                                                                                    
Mr.  Ecklund continued  that  Section  4 adds  a  restriction                                                                   
stating  that an  entity receiving  state  funds through  the                                                                   
contract  cannot employ  a person  to  lobby the  legislature                                                                   
regarding the funding of the contract.                                                                                          
Mr.  Ecklund  stated  that  Section  5  repeals  44.33.125(d)                                                                   
which states  that an  appropriation of  section (d)  is left                                                                   
up  to  the  Commissioner  of  the  Department  of  Commerce,                                                                   
Community  and  Economic  Development  (DCCED)  to  determine                                                                   
whether  a  match  is  required   or  not.  Section  6  is  a                                                                   
transition  section   for  the   members  appointed   by  the                                                                   
governor.  Section 7  states  an effective  date  of July  1,                                                                   
3:41:05 PM                                                                                                                    
REPRESENTATIVE  BOB HERON stated  that the version  presented                                                                   
by  the   Economic  Development   Trade  and  Tourism   (EDT)                                                                   
committee contained  a task force  provision. Since  then the                                                                   
house majority  leader introduced  HB 222, which  will become                                                                   
an interim  project for the  committee. He believed  that the                                                                   
formula had good merit.                                                                                                         
Co-Chair   Stoltze  appreciated   the   work   done  on   the                                                                   
legislation. He applauded the solution and the process.                                                                         
3:42:31 PM                                                                                                                    
Representative  Doogan  provided an  example  with the  state                                                                   
contributing  $12 million  and the  industry contributing  $6                                                                   
million. Mr. Ecklund concurred that the example was valid.                                                                      
Representative  Doogan asked about  a provision in  the event                                                                   
that  the industry  does  not pay  their  share. Mr.  Ecklund                                                                   
replied  that if  the  industry  contributes $4  million,  it                                                                   
would  receive $8  million  of the  $12  appropriated by  the                                                                   
3:43:17 PM                                                                                                                    
Representative  Gara asked  about  the history  of state  and                                                                   
industry  contributions.  He recalled  that  the cruise  ship                                                                   
industry  contributed  $5  million  last  year.  Mr.  Ecklund                                                                   
directed the question to the commissioner of DCCED.                                                                             
3:44:21 PM                                                                                                                    
Representative  Gara  asked about  a  task force  created  to                                                                   
devise  a  plan for  more  stable  financing.  Representative                                                                   
Herron  replied  that  Representative  Austerman's  promotion                                                                   
and marketing  commission discussed  the potential of  a task                                                                   
force  over  the  interim  to  devise a  long  term  plan  to                                                                   
address  tourism   marketing  appropriations.   The  proposed                                                                   
legislation  contained  the  perfect   vehicle  for  the  EDT                                                                   
committee to employ  during the interim. The plan  is for the                                                                   
committee to visit  different regions of the  state to invite                                                                   
stakeholders    to    review    Representative    Austerman's                                                                   
legislation,  suggest  changes,  and  revisit  the  issue  in                                                                   
January. The committee would act in lieu of a task force.                                                                       
3:46:33 PM                                                                                                                    
Representative Gara  pointed out that the bill  had no sunset                                                                   
date. Representative  Herron  replied that  if the bill  does                                                                   
not pass,  the match would revert  back to 50/50  despite the                                                                   
contribution on July 1, 2011.                                                                                                   
Representative  Gara  asked  if  the reversion  back  to  the                                                                   
50/50 match is  written in the bill. Mr. Ecklund  stated that                                                                   
the bill is intended to provide a long term solution.                                                                           
Representative  Costello  thanked Representative  Herron  for                                                                   
the recognition  of the importance of tourism  marketing. She                                                                   
stated  that  the  money  spent   on  tourism  market  is  an                                                                   
investment  and an  important  part of  the state's  economy.                                                                   
She stated that  her constituents appreciate  the opportunity                                                                   
to continue their tourism marketing.                                                                                            
Co-Chair  Stoltze  WITHDREW  his OBJECTION.  There  being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
3:49:03 PM                                                                                                                    
JULIE SAUPE, ATIA  (via teleconference), stated  that she was                                                                   
available for questions.                                                                                                        
ALAN  LEMASTER,   VTS  (via  teleconference),   testified  in                                                                   
opposition  to  the  CS.  He   spoke  about  his  many  times                                                                   
testifying  on  this  issue.  He  discussed  the  variety  of                                                                   
proposals  made to  build long  term  marketing programs  and                                                                   
grow  sustained  visitation  to  Alaska.  Many  efforts  were                                                                   
denied.  He commented  on  the CS  before  the committee,  in                                                                   
particular  the  condensation  of  the  30  member  marketing                                                                   
council. He  mentioned that  the current  council is  made up                                                                   
of   dedicated  volunteers   from  across   the  state.   The                                                                   
dedicated  volunteers  meet  often to  develop  programs.  He                                                                   
requested approval  of the  original legislation  as proposed                                                                   
by Governor  Parnell, which would  allow the legislature  and                                                                   
the industry  to develop  a permanent  perennial solution  to                                                                   
serve all of Alaskans.                                                                                                          
3:52:44 PM                                                                                                                    
PATTY   MACKEY,  ATIA   BOARD   wished  to   work  with   the                                                                   
legislature  and  the  administration  to  earn  support  for                                                                   
sustained  funding to  market Alaska.  The tangible  benefits                                                                   
of  the  tourism  industry  include  jobs  for  Alaskans  and                                                                   
opportunities   for  independent   business  ownership.   She                                                                   
highlighted  the increased understanding  of Alaska  provided                                                                   
by tourism  efforts. She  spoke about  the value of  magazine                                                                   
and internet advertising.                                                                                                       
3:56:20 PM                                                                                                                    
Representative  Gara  asked  about  declining  state  revenue                                                                   
from tourism taxes.  He understood that most  ATIA members do                                                                   
not pay state  taxes. Ms. Mackey clarified that  some tourism                                                                   
entities  pay  corporate  tax,  but  not  local  municipality                                                                   
Representative  Gara asked  about  the history  of the  state                                                                   
and  industry match.  Ms.  Mackey  stated that  the  spending                                                                   
history was  erratic. She stated  that the most  recent match                                                                   
is 70/30.  She mentioned  a 50/50  and a  60/40 match  in the                                                                   
past. Representative  Gara asked  about the 70/30  match. Ms.                                                                   
Mackey  responded  that  the  30  percent  was  the  industry                                                                   
3:57:56 PM                                                                                                                    
RICHARD COLE,  WINGS OF ALASKA,  testified in support  of any                                                                   
sustained investment  in marketing for tourism  in Alaska. He                                                                   
spoke about his  business. He believed that  an investment in                                                                   
Alaskan tourism  is an investment  in all Alaskan  businesses                                                                   
as  well  as  infrastructure.  He  added  that  his  business                                                                   
offers flight service to many small communities.                                                                                
4:00:25 PM                                                                                                                    
SUSAN  BELL,   THE  DEPARTMENT  OF  COMMERCE,   COMMISSIONER,                                                                   
COMMUNITY  AND  ECONOMIC  DEVELOPMENT,   commented  that  the                                                                   
department  and   governor  are  committed  to   the  tourism                                                                   
industry.  She provided  a  brief  history of  the  marketing                                                                   
efforts   and  state   support.  The   governor  would   like                                                                   
maintenance of  the $16 million  investment in an  effort for                                                                   
further economic recovery.                                                                                                      
4:02:40 PM                                                                                                                    
Commissioner   Bell   responded  to   Representative   Gara's                                                                   
questions.  She  pointed  out that  the  industry  previously                                                                   
contributed  via  voluntary  contributions  from  the  cruise                                                                   
lines,   destination   marketing   organizations,   and   the                                                                   
businesses  that participate  in  the state's  programs.  She                                                                   
noted significant  changes  on the visitor  industry  such as                                                                   
the vehicle  rental tax and  the ballot initiative  passed in                                                                   
2006.  Over  the  last  decade,  the  former  $5  million  in                                                                   
industry contributions was reduced to $2.7 million.                                                                             
4:04:19 PM                                                                                                                    
Representative Gara  asked if last year's  state contribution                                                                   
was  50  percent.   Commissioner  Bell  responded   that  the                                                                   
legislature  made a  change after  the  ballot initiative  in                                                                   
2006  to  reinstate a  70/30  match  with  the 30  being  the                                                                   
industry contributions.  That provision would expire  July 1,                                                                   
Representative Gara  asked when the  last time the  match was                                                                   
50/50. Commissioner  Bell  responded that  the last time  was                                                                   
in 2004. He  added that the industry paid increased  fees and                                                                   
taxes during that time.                                                                                                         
4:05:48 PM                                                                                                                    
Representative  Gara asked  for a historical  state share  of                                                                   
the  contribution.  He understood  that  the state  share  is                                                                   
estimated  to be  approximately  $12  million this  year.  He                                                                   
asked about  the state share  in dollar contribution  for the                                                                   
past  two  years.   Commissioner  Bell  responded   that  the                                                                   
state's  contribution for  the  current fiscal  year was  $16                                                                   
million.  The   prior  fiscal  year's  contribution   was  $9                                                                   
million.  She offered  to  follow up  with  the committee  to                                                                   
confirm the numbers.                                                                                                            
Co-Chair  Thomas asked  if HB  160 was  the governor's  bill.                                                                   
Commissioner  Bell responded  that the  bill was a  committee                                                                   
bill.  The appreciation  is  more appropriately  directed  to                                                                   
Representative Heron and the EDT committee.                                                                                     
Co-Chair Thomas pointed  out that if the bill  does not pass,                                                                   
the marketing  plan for  the industry  would be $5.4  million                                                                   
versus the requested $2.7 million.                                                                                              
4:07:42 PM                                                                                                                    
Co-Chair  Thomas commented  on the  creation of  a plan  that                                                                   
eliminates the 50/50  match. Co-Chair Stoltze added  that the                                                                   
alternative approach  was agreed  upon. He believed  that the                                                                   
compromise  allowed for  improvement  of cooperation  between                                                                   
the state and the industry in this legislative body.                                                                            
Representative  Costello  noted  that  the  tourism  industry                                                                   
contributed  $138  million  to  the state  budget  and  $69.8                                                                   
million  in   municipal  revenues.   She  viewed   the  state                                                                   
contribution as an investment.                                                                                                  
Representative   Doogan  understood   that  the  bill   would                                                                   
contribute  $12  million  to the  industry  if  the  industry                                                                   
comes up  with $6 million.  If the industry contributes  less                                                                   
money, then  the state will pay  the two to one ratio  of the                                                                   
contributed   amount.    Commissioner   Bell    agreed   that                                                                   
Representative Doogan understood the mechanism.                                                                                 
Representative Doogan  asked if the amount that  the industry                                                                   
agrees  to  contribute  is  $2.7   million,  then  the  state                                                                   
contributes  twice the  amount.  Commissioner Bell  concurred                                                                   
and cited a  total contribution of $8.1 million  in the event                                                                   
of an industry contribution of $2.7 million.                                                                                    
4:11:15 PM                                                                                                                    
Mr.  Ecklund discussed  the  fiscal  note. He  mentioned  one                                                                   
minor technical  improvement needed  for the fiscal  note. He                                                                   
commented  that the  department  affected was  DCCED but  the                                                                   
appropriation should  state "qualified trade  association" as                                                                   
opposed to "economic development."                                                                                              
Vice-chair  Fairclough  MOVED  to  report  CSHB  160  out  of                                                                   
committee   with    individual   recommendations    and   the                                                                   
accompanying  fiscal note(s).  There being  NO OBJECTION,  it                                                                   
was so ordered.                                                                                                                 
CSHB  160 was  REPORTED out  of  Committee with  a "do  pass"                                                                   
recommendation  and  with  one   new  fiscal  note  from  the                                                                   
Department  of Commerce, Community  and Economic  Development                                                                   
and one new zero impact note from  the Department of Revenue.                                                                   
The meeting was adjourned at 4:13 PM                                                                                            

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