Legislature(2009 - 2010)BARNES 124

04/06/2009 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 167 TAX CREDIT FOR STATE TOURISM PROGRAM TELECONFERENCED
Moved CSHB 167(L&C) Out of Committee
*+ HB 177 MARINE & MOTORIZED RECREATIONAL PRODUCTS TELECONFERENCED
Moved CSHB 177(L&C) Out of Committee
*+ HB 185 LABOR NEUTRALITY FOR STATE CONTRACTS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         April 6, 2009                                                                                          
                           3:20 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Mark Neuman, Vice Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative John Coghill                                                                                                     
Representative Bob Lynn                                                                                                         
Representative Robert L. "Bob" Buch                                                                                             
Representative Lindsey Holmes                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
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."                                                                                        
                                                                                                                                
     - MOVED CSHB 167(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 177                                                                                                              
"An Act  relating to marine  products and  motorized recreational                                                               
products; and providing for an effective date."                                                                                 
                                                                                                                                
     - MOVED CSHB 177(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 185                                                                                                              
"An  Act relating  to the  labor organization  position of  state                                                               
agencies and  others with regard  to construction  contracts paid                                                               
for by state money."                                                                                                            
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 167                                                                                                                  
SHORT TITLE: TAX CREDIT FOR STATE TOURISM PROGRAM                                                                               
SPONSOR(s): REPRESENTATIVE(s) COGHILL                                                                                           
                                                                                                                                
03/09/09       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/09/09       (H)       L&C, FIN                                                                                               
04/06/09       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 177                                                                                                                  
SHORT TITLE: MARINE & MOTORIZED RECREATIONAL PRODUCTS                                                                           
SPONSOR(s): REPRESENTATIVE(s) COGHILL                                                                                           
                                                                                                                                
03/12/09       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/12/09       (H)       L&C                                                                                                    
03/30/09       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/30/09       (H)       Scheduled But Not Heard                                                                                
04/06/09       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 185                                                                                                                  
SHORT TITLE: LABOR NEUTRALITY FOR STATE CONTRACTS                                                                               
SPONSOR(s): REPRESENTATIVE(s) KELLY                                                                                             
                                                                                                                                
03/12/09       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/12/09       (H)       STA, L&C, FIN                                                                                          
03/12/09       (H)       STA REFERRAL REMOVED                                                                                   
03/27/09       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/27/09       (H)       Scheduled But Not Heard                                                                                
04/06/09       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KAREN LIDSTER, Staff                                                                                                            
Representative John Coghill                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on behalf of a joint prime                                                                     
sponsor of HB 167.                                                                                                              
                                                                                                                                
JOHANNA BALES, Excise Audit Manager                                                                                             
Anchorage Office, Tax Division                                                                                                  
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions during the discussion of                                                              
HB 167.                                                                                                                         
                                                                                                                                
ROURKE BROWN                                                                                                                    
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified during the discussion of HB 167.                                                               
                                                                                                                                
JERRY SCHOLAND, Operator                                                                                                        
Kiana Bed and Breakfast                                                                                                         
Homer, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of HB 167.                                                                          
                                                                                                                                
BONNIE QUILL, Executive Director                                                                                                
Matanuska-Susitna Convention & Visitor's Bureau (MSCVB)                                                                         
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in support of HB 167.                                                                          
                                                                                                                                
SHANNON HAMRICK                                                                                                                 
Kenai Peninsula Tourism Marketing Council (KPTMC)                                                                               
Kenai, Alaska                                                                                                                   
POSITION STATEMENT:  Testified during the discussion of HB 167.                                                               
                                                                                                                                
DEB HICHCOCK, President, and CEO                                                                                                
Fairbanks Convention & Visitor Bureau (FCVB)                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 167.                                                               
                                                                                                                                
SUZANNE RUST                                                                                                                    
RUSTS FLYING SERVICE                                                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 167.                                                                          
                                                                                                                                
JULIE SAUPE, President                                                                                                          
Anchorage Convention and Visitor Bureau                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 167.                                                               
                                                                                                                                
RYNNIEVA MOSS, Staff                                                                                                            
Representative John Coghill                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on HB 177, on behalf of a joint                                                                
prime sponsor, Representative John Coghill.                                                                                     
                                                                                                                                
CURTIS SPENCER                                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 177.                                                               
                                                                                                                                
DUDLEY BENESCH, Owner                                                                                                           
Alaska Mining and Diving Supply                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 177.                                                                          
                                                                                                                                
WAYNE HULS, Co-owner                                                                                                            
Marita Sea & Ski, Alaska Power Sports                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 177.                                                               
                                                                                                                                
LARRY INNIS, Director                                                                                                           
Marine Retailers Association of America (MRAA)                                                                                  
Annapolis, Maryland                                                                                                             
POSITION STATEMENT:  Testified in support HB 177.                                                                             
                                                                                                                                
RALPH SEEKINS, Owner                                                                                                            
Seekins Ford Mercury                                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 177.                                                               
                                                                                                                                
CLINT KIRRY, Representative                                                                                                     
Hewes Marine Company                                                                                                            
Reno, Nevada                                                                                                                    
POSITION STATEMENT:  Testified in opposition of HB 177.                                                                       
                                                                                                                                
DAVID DICKERSON, Representative                                                                                                 
National Marine Manufacturers Association (NMMA)                                                                                
Chicago, Illinois                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 177.                                                               
                                                                                                                                
DAVID MCCORMICK                                                                                                                 
Bethel, Alaska                                                                                                                  
POSITION STATEMENT:  Testified during the discussion of HB 177.                                                               
                                                                                                                                
CRAIG COMPEAU, Vice President                                                                                                   
Compeau Marine                                                                                                                  
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 177.                                                               
                                                                                                                                
PETER THOMPSON, President                                                                                                       
River and Sea Marine                                                                                                            
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HB 177.                                                                          
                                                                                                                                
MARK HORDEMANN                                                                                                                  
Soldotna, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HB 177.                                                                          
                                                                                                                                
CLYDE (ED) SNIFFEN, JR., Senior Assistant Attorney General                                                                      
Commercial/Fair Business Section, Civil Division (Anchorage)                                                                    
Department of Law (DOL)                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Provided comments  and answered  questions                                                             
during the discussion of HB 177.                                                                                                
                                                                                                                                
REPRESENTATIVE MIKE KELLY                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as prime sponsor of HB 185.                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:20:19 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting  to order at  3:20 p.m.   Representatives Buch,                                                               
Chenault, Neuman,  and Olson were  present at the call  to order.                                                               
Representatives Coghill, Holmes, and  Lynn arrived as the meeting                                                               
was in progress.                                                                                                                
                                                                                                                                
HB 167-TAX CREDIT FOR STATE TOURISM PROGRAM                                                                                   
                                                                                                                              
3:20:32 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
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."                                                                            
                                                                                                                                
KAREN LIDSTER,  Staff, Representative John Coghill,  Alaska State                                                               
Legislature,  introduced  herself  as  staff  to  a  joint  prime                                                               
sponsor of HB 167.                                                                                                              
                                                                                                                                
3:21:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  made  a  motion  to  adopt  the  proposed                                                               
committee  substitute  (CS)  for  HB  167,  labeled  26-LS0695\E,                                                               
Bullock, 4/1/09.[Version E was before the committee.]                                                                           
                                                                                                                                
CHAIR OLSON objected for purposes of discussion.                                                                                
                                                                                                                                
MS. LIDSTER  explained the changes.   She stated that on  page 2,                                                               
line 2, a new paragraph was added, as follows:                                                                                  
                                                                                                                                
   (3) not used to provide the person making the contribution                                                                   
        with a direct or tangible benefit.                                                                                      
                                                                                                                                
MS. LIDSTER  explained paragraph (3)  was added to ensure  that a                                                               
person  making  a contribution  would  not  receive a  direct  or                                                               
tangible  benefit  from  the contribution  and  also  receive  an                                                               
income tax credit.   She explained that the  bill would establish                                                               
a  tourism marketing  tax  credit to  help  create a  sustainable                                                               
funding source for Alaska's tourism  marketing program.  The bill                                                               
would allow a  tax credit for contributions to  a qualified trade                                                               
association that  has been awarded  a contract by  the Department                                                               
of Commerce,  Community, & Economic Development  for planning and                                                               
executing  a destination  tourism  marketing campaign.   The  tax                                                               
credit   would  be   equal  to   the  value   of  the   qualified                                                               
contributions and could  be applied to a tax  liability under the                                                               
Alaska Corporate  Net Income Tax.   The credit could not  be used                                                               
to reduce  corporate income  tax below zero,  and the  tax credit                                                               
could not be  carried forward or transferred.   Additionally, the                                                               
definition  of "commercial  passenger  vessel" is  defined in  AS                                                               
43.52.295.  This bill was  created when the legislature asked the                                                               
tourism  industry  for  ideas for  funding  sources  for  tourism                                                               
marketing in Alaska.                                                                                                            
                                                                                                                                
3:23:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  referred to the sectional  analysis for HB                                                               
167.    He  related  his understanding  the  bill  would  provide                                                               
commercial passenger vessels  a credit against the tax  due for a                                                               
cash contribution to  a marketing program.  He  asked for further                                                               
clarification.                                                                                                                  
                                                                                                                                
MS.  LIDSTER  explained  the  contribution would  be  made  to  a                                                               
qualified  trade   association  that  was  awarded   the  tourism                                                               
marketing contract administered by the DCCED.                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN  asked if a  business such as  a fictitious                                                               
"Karen's Whitewater  Riverboat Extravaganza" made  a contribution                                                               
to the Alaska  Tourism and Marketing Association if  it would get                                                               
a credit.                                                                                                                       
                                                                                                                                
MS. LIDSTER agreed it would be  eligible for a tax credit so long                                                               
as the  business fell under  the definition in AS  43.52.295 with                                                               
respect  to "commercial  passenger vessel."   She  explained that                                                               
the tax credit is limited to vessels with 250 berths or more.                                                                   
                                                                                                                                
3:25:47 PM                                                                                                                    
                                                                                                                                
MS.  LIDSTER, in  response  to  Representative Neuman,  explained                                                               
that no  limit has  been established  at this  time.   In further                                                               
response  to Representative  Neuman, Ms.  LIDSTER explained  that                                                               
the company could make a $10  million contribution so long as the                                                               
company's income tax did not fall below zero.                                                                                   
                                                                                                                                
3:27:44 PM                                                                                                                    
                                                                                                                                
JOHANNA  BALES,  Excise  Audit  Manager,  Anchorage  Office,  Tax                                                               
Division,  Department of  Revenue (DOR),  stated this  particular                                                               
tax  credit  is  limited  to   those  corporations  that  operate                                                               
commercial passenger vessels  of 250 berths or  more, which would                                                               
apply basically  to cruise  ships.  Under  the bill,  the company                                                               
could  reduce  its  tax  liability  to zero.    She  referred  to                                                               
Representative Neuman's earlier question  and answered that a tax                                                               
credit would apply so long as  the industry had a $10 million tax                                                               
liability, the  company could reduce  its liability to zero.   In                                                               
further response  to Representative Neuman, Ms.  Bales stated the                                                               
companies could  estimate the  tax credit  since payments  can be                                                               
made any time during the year.   Thus, the company could take the                                                               
credit  at the  end of  the year  when the  company would  have a                                                               
better idea of the amount of corporate income taxes owed.                                                                       
                                                                                                                                
3:32:02 PM                                                                                                                    
                                                                                                                                
MS.  BALES, in  response to  Representative Buch,  explained that                                                               
the fiscal note is for $30 thousand  to cover a one time cost for                                                               
startup expenses  to enhance the tax  examination system, produce                                                               
tax forms, and educate the  stakeholders.  She explained that the                                                               
revenues are  considered indeterminate  since the  department can                                                               
not  estimate  the  amount  of  the  income  tax.    She  further                                                               
explained  that currently  the department  only has  one year  of                                                               
data available  and taxpayers that  pay the corporate  income tax                                                               
are  also commercial  passenger vessels.   She  offered that  the                                                               
department  previously "lumped"  the  corporation taxes  together                                                               
with other  tourism industry corporation  taxes.  In  2007, prior                                                               
to commercial passenger vessels  paying corporate income tax, the                                                               
department received  $3.5 million from other  corporations in the                                                               
tourism  industry.     She   highlighted  the   amount  collected                                                               
increased to  $15.8 million.  She  pointed out that a  large part                                                               
of  the  tax  collected  was  due  to  large  passenger  vessels.                                                               
However,  taxpayers  were  not  allowed  to  disclose  the  exact                                                               
amount, she noted.  Thus,  the department indicated in its fiscal                                                               
note  that  had the  tax  credit  been  in  effect in  2008,  the                                                               
potential  could have  resulted in  a $15.8  million decrease  in                                                               
revenue.  In  further response to Representative  Buch, Ms. Bales                                                               
explained that the $30,000 is the  specific cost of the impact of                                                               
this bill.   She  explained that  the one time  cost is  to cover                                                               
contract costs for information technology assistance.                                                                           
                                                                                                                                
3:34:44 PM                                                                                                                    
                                                                                                                                
ROURK BROWN  explained that he  is a  small business owner  and a                                                               
volunteer  government  relations  chair  for  the  Alaska  Travel                                                               
Industry  Association  (ATIA).     He  stated  that  the  tourism                                                               
industry is an  important part of Alaska's economy.   He provided                                                               
statistics  such  as that  tourism  brings  $1.8 billion  in  new                                                               
dollars  to  Alaska's  economy and  provides  the  equivalent  of                                                               
40,000 fulltime  jobs, $70 million  in local taxes and  fees, and                                                               
$122  million in  state  taxes  and fees.    He  referred to  his                                                               
handout,   titled    "Tourism   Tax   Credit    Premiere   Travel                                                               
Destination",  and  to  page  4,  titled  "Tourism  Marketing  in                                                               
Alaska".    He  explained  that since  1999,  the  public  sector                                                               
funding for  tourism marketing has  declined from $24  million to                                                               
$5 million  in FY 08.   During  that time independent  travel has                                                               
also declined.   The  industry believed  that the  only effective                                                               
proven tool is destination marketing  and a minimum budget of $20                                                               
million is needed to effectively  market Alaska as a destination.                                                               
Last  year  the legislature  reinvested  the  $9 million  vehicle                                                               
rental tax it  collected.  The bill that  implemented the vehicle                                                               
rental tax also  allowed funds to be spent  on tourism marketing.                                                               
He further stated that the  private sector matched the $9 million                                                               
with  an additional  $2.7 million,  which was  the third  highest                                                               
public/private  match.    Only  Hawaii  and  California  exceeded                                                               
Alaska, he  mentioned.  He said,  "We are very grateful  for this                                                               
first  step  that   was  taken  last  year."     Last  year,  the                                                               
legislature placed a three-year sunset  on the vehicle rental tax                                                               
bill,  asking  the  industry  to  work  to  provide  a  long-term                                                               
sustainable  solution  to  use  visitor  industry  generated  tax                                                               
dollars to fund tourism marketing.   He related that the industry                                                               
has worked to find a solution which is embodied in HB 167.                                                                      
                                                                                                                                
3:37:30 PM                                                                                                                    
                                                                                                                                
MR. BROWN explained  that HB 167 would allow the  cruise lines to                                                               
make contributions directly to the  state's marketing program and                                                               
receive  a   tax  credit  against  their   corporate  income  tax                                                               
liability.   He related that  the cruise industry  pays corporate                                                               
income  tax as  a  result  of a  cruise  ballot  initiative.   He                                                               
referred  to  page 5  of  his  handout, titled  "Estimated  State                                                               
Tourism  Revenues"  and to  the  $12,300,000  collected from  the                                                               
Cruise Corporate Income Tax.   He clarified that this amount does                                                               
not include the head tax, gambling  tax, or ocean ranger tax also                                                               
collected.   He compared  the concept for  cruise tax  credits is                                                               
similar to  the concept  of oil  tax credits  such that  when the                                                               
industry drills  more wells,  it will  produce more  wells, which                                                               
will increase  state revenues.   He opined  that this  bill would                                                               
increase  state  revenues,  which  is  also  one  of  the  travel                                                               
industry's goals.                                                                                                               
                                                                                                                                
MR. BROWN asked  if travel marketing works.  He  then answered by                                                               
stating that  in FY  05, the marketing  program resulted  in over                                                               
500,000 responses for people interested  in coming to Alaska.  He                                                               
referred  to page  3 of  his handout,  titled "Research  Reveals:                                                               
Marketing =  Visitors," stating that the  travel industry tracked                                                               
the  results of  visitors who  traveled to  Alaska.   He provided                                                               
statistics on those who requested  information in 2005.  Of those                                                               
requesting information  in 2005, 14.7 percent  traveled to Alaska                                                               
in 2006,  13.7 percent  traveled to Alaska  in 2006,  7.7 percent                                                               
traveled to Alaska  in 2007, and 9 percent traveled  to Alaska in                                                               
2008.   He opined that 45.1  percent of the people  who indicated                                                               
they  were interested  in 2005  in traveling  to Alaska  actually                                                               
traveled to  Alaska.   He explained that  the average  group size                                                               
was 2.6  persons, and the  average spending per person  was $971,                                                               
not  counting  any transportation  costs  to  Alaska.   He  said,                                                               
"Tourism   marketing  is   the  only   proven  way   to  increase                                                               
visitation."                                                                                                                    
                                                                                                                                
3:39:32 PM                                                                                                                    
                                                                                                                                
MR. BROWN  referred to page 6  of his handout, titled  "Season is                                                               
in Jeopardy",  and stated the  outlook is  grim.  He  opined that                                                               
bookings are  down anywhere  from 20  to 60  percent.   He stated                                                               
that cruise  prices are at  historic lows, many  small businesses                                                               
may not survive, and local  governments will also have diminished                                                               
bed tax  revenue projections.   He  said that it  is too  late to                                                               
affect the  2009 travel season,  but the industry could  begin to                                                               
turn  the tide  in 2010  with  passage of  this bill.   He  urged                                                               
members to pass HB 167 this session.                                                                                            
                                                                                                                                
3:40:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BUCH  opined  he  would  have  a  difficult  time                                                               
justifying  the  bill  to  his  constituents.    He  related  his                                                               
understanding that  many industries  such as  commercial fishing,                                                               
timber, and mining do not  benefit from similar state funding for                                                               
their industries.                                                                                                               
                                                                                                                                
MR. BROWN related  that he appreciated the concern.   However, he                                                               
mentioned that the travel industry  generates $122 million to the                                                               
state in  taxes and  fees, and contributes  $70 million  to local                                                               
governments.  He  highlighted that his community of  Homer pays a                                                               
sales tax and  a large part of the tax  collected is derived from                                                               
nonresident tourists.  He said, "I  believe it's fair to say that                                                               
this industry does support the state and all residents thereof."                                                                
                                                                                                                                
3:43:40 PM                                                                                                                    
                                                                                                                                
JERRY SCHOLAND, Operator, Kiana Bed  and Breakfast, stated he and                                                               
his wife  operate the Kiana Bed  and Breakfast.  He  related that                                                               
he  is also  a  member  of ATIA.    He  highlighted that  tourism                                                               
provides about  $122 million in  state taxes.  He  indicated that                                                               
throughout the 1990s, more money  was spent to market Alaska than                                                               
in this  decade.  He  opined that HB 167  seems to be  a painless                                                               
way to  take about  10 percent  or less of  the $122  million and                                                               
return it  to the industry to  market Alaska.  He  further opined                                                               
that  tourism  is truly  a  renewable  resource.   Tourists  take                                                               
pictures out  of the state  and basically come, spend  money, and                                                               
leave.   He stressed that Alaska  is not losing any  resources by                                                               
funding tourism.  He emphasized that  it will be a tough year for                                                               
tourism.   He projected a  reduction in Alaska's  tourism ranging                                                               
from 30 to  60 percent, which he related he  has confirmed in his                                                               
own business.  He urged members to pass the bill.                                                                               
                                                                                                                                
3:45:58 PM                                                                                                                    
                                                                                                                                
BONNIE QUILL, Executive  Director, Matanuska-Susitna Convention &                                                               
Visitor's Bureau  (MSCVB), stated  that the MSCVB  represents 300                                                               
tourism  businesses  in  the Matanuska-Susitna  valley,  most  of                                                               
which  are small  businesses.   She asked  members to  support HB                                                               
167.   She announced that  she is  pleased that ATIA  has created                                                               
the   proposal  to   make   Alaska   tourism  marketing   efforts                                                               
competitive.  She  opined that it is urgent to  pass this bill to                                                               
provide  the cruise  lines that  are  paying taxes  in Alaska  an                                                               
opportunity  to invest  in the  tourism marketing  program.   She                                                               
urged members to pass HB 167.                                                                                                   
                                                                                                                                
3:47:16 PM                                                                                                                    
                                                                                                                                
SHANNON  HAMRICK,  Kenai   Peninsula  Tourism  Marketing  Council                                                               
(KPTMC),  stated  that   the  Kenai-Peninsula  Tourism  Marketing                                                               
Council  represents  over 400  tourism  businesses  on the  Kenai                                                               
Peninsula.   She  encouraged  members  to move  HB  167 from  the                                                               
committee.  She related that  tourism is economic development for                                                               
Alaska and the  Kenai Peninsula.  She stressed  that the industry                                                               
is  in crisis.    She emphasized  that ATIA  is  critical to  the                                                               
efforts of the  KPTMC for outreach to prospective  visitors.  She                                                               
opined  that  this  bill  is  an  excellent  step  to  provide  a                                                               
sustainable solution to marketing  using dollars that the visitor                                                               
industry  generates.   She  concluded  by  stating that  over  25                                                               
percent of all businesses licensed  in the Kenai area are tourism                                                               
based,  and  30  percent  of   overall  sales  tax  revenues  are                                                               
generated  by tourism  businesses.   She  said,  "This bill  will                                                               
support small  businesses.   Please help them  by passing  HB 167                                                               
this year."                                                                                                                     
                                                                                                                                
3:48:44 PM                                                                                                                    
                                                                                                                                
DEB HICHCOCK, President, and CEO,  Fairbanks Convention & Visitor                                                               
Bureau (FCVB), stated that she also  serves as a volunteer on the                                                               
ATIA Board.  She thanked members  who have supported HB 167.  She                                                               
stated  supporting funding  for marketing  for ATIA  also assists                                                               
business  owners  in  Fairbanks,   the  Interior  and  throughout                                                               
Alaska.  She related that  entrepreneurs are the hallmarks of the                                                               
visitor industry.   She  also related  local business  owners and                                                               
their  employees are  Alaskan  neighbors,  friends, and  members'                                                               
constituents.   She  offered her  belief that  tourism creates  a                                                               
ripple effect  through the communities,  generating construction,                                                               
transportation, and countless other  services.  She stressed that                                                               
tourism  contributes to  the quality  of life  in her  community.                                                               
She related  that the community  has better airline  schedules, a                                                               
beautiful  airport, and  many attractions.    She indicated  that                                                               
tourism also  provides about  half of the  operating cost  of the                                                               
University  of  Alaska  Fairbanks,  Museum of  the  North.    She                                                               
highlighted that facilities like  the Carlson Center benefit from                                                               
tourism dollars.   She  also offered  her belief  that additional                                                               
marketing funds could help Fairbanks  develop its winter tourism.                                                               
She opined that Fairbanks has  concentrated its efforts on winter                                                               
tourism, but  cannot reach that  goal solely by its  own efforts.                                                               
She referred  to a recent  itinerary that was coordinated  by the                                                               
ATIA  for tour  operators.   She noted  that tour  operators from                                                               
countries  such as  Australia, Germany,  Switzerland, and  the UK                                                               
visited  multiple points  throughout  the state.   She  explained                                                               
that in  Fairbanks, the  operators were  exposed to  many locally                                                               
owned  businesses.    She  listed  a  long  list  of  businesses,                                                               
including  Brewster's   Restaurant,  the   Pumphouse  Restaurant,                                                               
Aurora  Borealis Lodge,  and the  Farthest North  Harley Davidson                                                               
Outpost.   She  mentioned  the tour  operators  also visited  the                                                               
Arctic Circle and Chena Hot Springs.   She emphasized that HB 167                                                               
creates a  sustainable funding mechanism for  ATIA marketing that                                                               
could benefit  businesses in the  summer and winter.   She opined                                                               
that this  marketing reaches the  depth and breadth  of potential                                                               
customers that is far beyond  the reach of most small businesses.                                                               
She urged members to support HB 167.                                                                                            
                                                                                                                                
3:52:29 PM                                                                                                                    
                                                                                                                                
SUZANNE RUST explained that her  family owns Rusts Flying Service                                                               
in Alaska and  K2 Aviation in Talkeetna.  She  explained that she                                                               
also volunteers on the ATIA board.   She asked members to support                                                               
HB  167.   She stated  that  her family's  business has  employed                                                               
about  75 people  in Anchorage  and Talkeetna.   She  also stated                                                               
that   her  family   anticipates   reducing   its  workforce   by                                                               
approximately 20 to  30 percent this year.   She highlighted that                                                               
the  reduction   in  work  force   affects  grocery   stores  and                                                               
restaurants,  creating  a  strong  ripple  effect  in  the  local                                                               
economies.  She stressed that the  situation is real.  She opined                                                               
that tourism is the economic engine  in Alaska.  She related that                                                               
some  of the  major tour  companies  have cut  their programs  in                                                               
half.  She noted that there is  a limited pool of visitors in the                                                               
U.S.  probably   consisting  of   more  domestic   visitors  than                                                               
international  visitors.   She opined  that Alaska  will need  to                                                               
compete for  its visitors  from the overall  pool.   She stressed                                                               
the importance of  marketing dollars to Alaska.   She stated that                                                               
tourism  is a  renewable  resource that  affects  everyone.   She                                                               
asked member to support for HB 167.                                                                                             
                                                                                                                                
3:55:19 PM                                                                                                                    
                                                                                                                                
JULIE SAUPE, President, Anchorage  Convention and Visitor Bureau,                                                               
offered her appreciation as well as  that of the 1,100 members of                                                               
the ACVB for members' anticipated support  of HB 167.  She stated                                                               
by supporting the  marketing funding for the ATIA  that the state                                                               
will  assist small  and large  businesses  throughout the  state.                                                               
She related  that a healthy  tourism industry is a  key component                                                               
of Anchorage's growth.  She  pointed out that tourism contributes                                                               
significantly to  the state's general fund  and local government.                                                               
She  further  related  that  the   tourism  industry  makes  many                                                               
contributions  that help  create  a robust  and lively  community                                                               
that  residents enjoy  year round.   She  said, "Your  support of                                                               
this legislation  will expand this  win-win cycle  to everybody's                                                               
benefit."  She  indicated she has observed first  hand the number                                                               
of  families that  tourism supports.   She  emphasized that  ACVB                                                               
relies on  statewide marketing.   She  opined that  by partnering                                                               
with ATIA, ACVB  can focus its energy on  booking conventions and                                                               
groups.  She related that  booking meetings and conventions keeps                                                               
the economy  vibrant during  winter months.   She  mentioned that                                                               
ATIA is a  model of private/public partnership.   She highlighted                                                               
that she serves on the Board of  Directors of the ATIA and on its                                                               
marketing committee,  so she  can attest to  the debates  and the                                                               
efforts   that  are   put  forth   to  ensure   the  program   is                                                               
representative  of the  entire state.   She  commended the  ATIA.                                                               
She further  opined that it  is time  to take this  model program                                                               
and provide  a stable  funding mechanism.   She asked  members to                                                               
support HB 167.                                                                                                                 
                                                                                                                                
3:58:05 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify,  closed public  testimony on  HB  167.   He removed  his                                                               
objection.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  BUCH  expressed  reticence to  second  guess  the                                                               
voters who passed the cruise ship  initiative.  He inquired as to                                                               
whether the sponsor has considered a sunset clause.                                                                             
                                                                                                                                
3:59:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COGHILL  said he was  open to that  suggestion but                                                               
had not previously  considered it.  He related that  a minimum of                                                               
three seasons is needed for  planning purposes.  He recalled that                                                               
several  tax  credits  are  targeted  for  profit  and  nonprofit                                                               
industries,  as  well  as   for  public/private  partnerships  in                                                               
tourism.   He related  that due  to the  downturn in  the economy                                                               
that this bill  could help boost Alaska's economy.   He projected                                                               
that the  corporate tax  will also  diminish and  the legislature                                                               
would likely need to revisit the matter very soon.                                                                              
                                                                                                                                
4:00:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH  suggested that the sunset  clause would need                                                               
to  be a  minimum of  five  years.   He  made a  motion to  adopt                                                               
Conceptual  Amendment 1,  to add  a sunset  date ending  June 30,                                                               
2014.                                                                                                                           
                                                                                                                                
CHAIR  OLSON asked  if  there was  any  opposition to  Conceptual                                                               
Amendment 1.                                                                                                                    
                                                                                                                                
REPRESENTATIVE   NEUMAN  suggested   the   sponsor  consider   an                                                               
amendment to Conceptual  Amendment 1, and change  the sunset date                                                               
from June 30, 2014 to January 1,  2015, to extend the date so the                                                               
legislature could review the matter.                                                                                            
                                                                                                                                
REPRESENTATIVE BUCH offered an  amendment to Conceptual Amendment                                                               
1, to extend the sunset date to January 1, 2015.                                                                                
                                                                                                                                
REPRESENTATIVE  COGHILL   stated  that   he  did  not   have  any                                                               
objections  to the  amendment.   There  being  no objection,  the                                                               
amendment to Conceptual Amendment 1 was adopted.                                                                                
                                                                                                                                
There  being   no  objection  to  the   Conceptual  Amendment  1,                                                               
Conceptual Amendment 1, as amended, was adopted.                                                                                
                                                                                                                                
4:01:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN   offered  his  belief  that   tourism  is                                                               
important to  Alaska.   He opined  that the  state can  cover its                                                               
mandated  costs  such as  for  public  safety and  education  for                                                               
several  years.   He recalled  prior committee  work to  consider                                                               
directing  marketing funds  to the  ATIA or  other organizations.                                                               
He  acknowledged  that  the marketing  amounts  fluctuate,  which                                                               
makes it  difficult for the  tourism organizations since  they do                                                               
not have  any certainty of funding  from year to year.   However,                                                               
he expressed concern  with this bill since state  funding is also                                                               
uncertain.   However, he noted that  he did not wish  to stop the                                                               
bill.   He opined  the tourism  industry will  be "hit  hard this                                                               
year."   He  also  offered  his belief  that  it's important  for                                                               
Alaskans to have jobs, too.                                                                                                     
                                                                                                                                
4:04:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  moved to  report  HB  [167], labeled  26-                                                               
LS0695\E,  Bullock, 4/1/09,  as  amended, out  of committee  with                                                               
individual  recommendations  and  the accompanying  fiscal  note.                                                               
There being  no objection,  the CSHB  167(L&C) was  reported from                                                               
the House Labor and Commerce Standing Committee.                                                                                
                                                                                                                                
CHAIR OLSON  announced that HB  167, Version E, as  amended, will                                                               
move  on to  the next  committee of  referral, the  House Finance                                                               
Committee.                                                                                                                      
                                                                                                                                
4:04:58 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:04 p.m. to 4:07 p.m.                                                                       
                                                                                                                                
HB 177-MARINE & MOTORIZED RECREATIONAL PRODUCTS                                                                               
                                                                                                                              
4:07:34 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
HOUSE  BILL NO.  177, "An  Act  relating to  marine products  and                                                               
motorized recreational  products; and providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
4:07:41 PM                                                                                                                    
                                                                                                                                
RYNNIEVA MOSS,  Staff, Representative John Coghill,  Alaska State                                                               
Legislature, introduced herself.                                                                                                
                                                                                                                                
REPRESENTATIVE  NEUMAN  made  a  motion to  adopt  the  committee                                                               
substitute  (CS)  for  HB  177  labeled  26-LS0477\P,  Bannister,                                                               
4/2/09[Version P was before the committee.]                                                                                     
                                                                                                                                
CHAIR OLSON objected for purposes of discussion.                                                                                
                                                                                                                                
4:08:16 PM                                                                                                                    
                                                                                                                                
MS. MOSS explained that Version  P represents three years of work                                                               
to  implement  consumer  protection provisions  with  respect  to                                                               
marine  products and  motorized recreational  products, including                                                               
four wheelers,  three wheelers, and  snowmachines.   She reviewed                                                               
the  bill  section-by-section.   Section  1  amends AS  45.25  to                                                               
eliminate  all-terrain   vehicles,  recreational   vehicles,  and                                                               
snowmachines from the  "lemon laws" since those  vehicles will be                                                               
addressed under new provisions in the bill.                                                                                     
                                                                                                                                
4:10:56 PM                                                                                                                    
                                                                                                                                
MS.  MOSS  referred to  Section  2,  titled "Chapter  27.  Marine                                                               
Products and  Motorized Recreational  Products" and  related that                                                               
AS 45.27 states that a  manufacturer cannot withhold consent to a                                                               
sale or transfer of a dealership  so long as the transferee meets                                                               
the criteria applied by the  manufacturer and agrees to the terms                                                               
and conditions  of the existing  dealership agreement.   Proposed                                                               
AS  45.27.020  would prevent  a  manufacturer  from canceling  or                                                               
declining   renewal  of   a  dealership   agreement  unless   the                                                               
manufacturer has  satisfied the notice requirements  and has good                                                               
cause to  cancel or fail  to renew  an agreement.   She explained                                                               
that  requirements for  noticing are  included such  as a  60-day                                                               
notice to the  dealership, with some exceptions such  as a 15-day                                                               
requirement  if the  authorized  dealer engages  in  fraud.   The                                                               
manufacturer cannot decline  to renew in the event of  a death of                                                               
a  partner/owner as  long  as  the owner  is  not  listed in  the                                                               
agreement as  one whose expertise  and abilities were  the reason                                                               
for the agreement.                                                                                                              
                                                                                                                                
MS. MOSS  referred to page  3, to  a definition for  "good cause"                                                               
which  includes infractions  on  material  provisions.   However,                                                               
material  provisions  may  be  a   change  that  is  not  in  the                                                               
agreement.    In those  instances,  the  item  would need  to  be                                                               
noticed to the  dealership or owner in writing not  less than six                                                               
months prior to the effective date of the cancellation.                                                                         
                                                                                                                                
4:12:14 PM                                                                                                                    
                                                                                                                                
MS.  MOSS referred  to page  3, of  proposed AS  45.27.030, which                                                               
outlines  the notice  of cancellation  or nonrenewal  provisions.                                                               
She reviewed the  requirements include a 90  day notice provision                                                               
must be  given to a  dealer for violations,  and a 15  day notice                                                               
must  be given  for bankruptcy,  insolvency, or  conviction of  a                                                               
felony  involving moral  turpitude, fraud,  or a  violation of  a                                                               
dealership agreement contractual agreement.                                                                                     
                                                                                                                                
MS.  MOSS  referred  to  page  4, of  proposed  AS  45.27,  which                                                               
establishes  that  a  manufacturer cannot  coerce  an  authorized                                                               
dealer  to   enter  into  a  dealership   agreement  with  unfair                                                               
stipulations  such  as  requirements   of  dealers  to  overstock                                                               
inventory.    This  proposed section  creates  a  definition  for                                                               
"manufacturer's representative"  that can include an  employee or                                                               
an agent who engages in the business, including distributors.                                                                   
                                                                                                                                
4:13:34 PM                                                                                                                    
                                                                                                                                
MS. MOSS referred  to proposed AS 45.27.050, which  is similar to                                                               
motor  vehicle  statutes, she  stated.    She opined  that  these                                                               
statutes help ensure a dealer  is treated fairly.  This provision                                                               
requires  that   a  manufacturer   must  repurchase   a  two-year                                                               
inventory, including those products  listed in the manufacturer's                                                               
parts  price books  in the  prior two  years if  the manufacturer                                                               
cancels or  fails to renew  a contract  without good cause.   She                                                               
recalled that  in the motor  vehicle provisions either  party can                                                               
cancel  a  dealership agreement  and  the  manufacturer would  be                                                               
required to purchase the inventory.   She related that the dealer                                                               
has  90 days  to return  the  property for  compensation and  the                                                               
manufacturer  has 60  days  to reimburse  the  dealership or  the                                                               
financial institution that holds the security interest.                                                                         
                                                                                                                                
4:14:54 PM                                                                                                                    
                                                                                                                                
MS. MOSS  referred to  page 5,  to Article  2 titled  "Article 2.                                                               
Product  Warranties."   She explained  that  this article  covers                                                               
what happens with  respect to defects in products or  parts.  She                                                               
further explained that  during a warranty period  the dealer will                                                               
be  paid to  repair defective  products.   She related  that this                                                               
provision  establishes a  requirement to  provide a  schedule for                                                               
reimbursement  of defective  products and  the customary  charges                                                               
for warranty  work, which may be  a printed flat rate,  or it may                                                               
be  a   rate  fee   reviewed  and  agreed   to  by   dealers  and                                                               
manufacturers.  She referred to  page 7 of proposed AS 45.27.160,                                                               
which  establishes a  timely reimbursement  of  claims within  30                                                               
days.   She  noted that  the  manufacturer's failure  to pay  the                                                               
claim or  to provide  notice is considered  a default.   However,                                                               
manufacturers have  30 days to provide  notice that manufacturers                                                               
do not intend to pay the claim.                                                                                                 
                                                                                                                                
4:16:57 PM                                                                                                                    
                                                                                                                                
MS. MOSS  referred to page  7, to  Article 3, titled  "Article 3.                                                               
Miscellaneous  Business  Practices"  which  she  related  as  the                                                               
consumer  protection   provisions.    She  explained   that  this                                                               
requires  authorized dealers  to  post notices  for retail  labor                                                               
rates,  for  notification  that  their  technicians  are  factory                                                               
certified.   This provision requires  dealers to post  notice for                                                               
customers  who are  having work  done  that does  not fall  under                                                               
warranty  provisions to  provide  written  estimates to  include,                                                               
parts,  labor, and  costs,  and any  additional  charges such  as                                                               
diagnostic or storage  charges.  She related a  scenario in which                                                               
a constituent took  a car to a local shop  for repair, discovered                                                               
the charges were more than she  could afford, and when she picked                                                               
up  her car  she was  assessed a  $100 diagnostic  charge.   This                                                               
provision would  require authorized  dealers to post  notices for                                                               
hidden charges.   She  referred to  proposed AS  45.27.220, which                                                               
requires  a  manufacturer to  provide  the  date when  parts  and                                                               
equipment will be available for factory recall notices.                                                                         
                                                                                                                                
4:18:23 PM                                                                                                                    
                                                                                                                                
MS.   MOSS  referred   to  proposed   AS  45.27.230,   which  she                                                               
characterized as the "lemon law."   She stated that if a purchase                                                               
is under  warranty, but the product  is less than a  year old and                                                               
at  least  one  or  two problems  arise,  the  manufacturer  must                                                               
replace the product or refund the  purchase price.  First, if the                                                               
dealer cannot fix  a serious defect, after attempting  to fix the                                                               
defect four times, or if the  defect prevents the user from using                                                               
the  product  for  30  days  or longer.    She  highlighted  this                                                               
provision in the bill is clearly  a policy call.  She related her                                                               
understanding that  the motor  vehicle lemon  law would  apply to                                                               
vehicles  that have  been taken  into  the shop  three times  for                                                               
repairs, with the  vehicle in the shop for up  to 30 days without                                                               
the defective vehicle being repaired.                                                                                           
                                                                                                                                
4:19:32 PM                                                                                                                    
                                                                                                                                
MS. MOSS  referred to page  8, titled "Article 4.   Miscellaneous                                                               
Provisions."    She  explained  any  provision  in  a  dealership                                                               
agreement   that   violates   this  chapter   is   unenforceable.                                                               
Additionally,  contract law  and  common law  continue to  apply.                                                               
She  referred to  Article 6,  titled  "General Provisions"  which                                                               
provides  definitions   including  definitions   for  "authorized                                                               
dealers",  "dealership  agreements",  and  "landed  cost."    She                                                               
related that this legislation is  named the Alaska Marine Product                                                               
and  Motorized  Recreational Product  Act.    She explained  that                                                               
proposed  AS 45.50.471(b)  exempts these  products from  existing                                                               
law,  AS  47.67,  under  the  trade  practices  sections  of  the                                                               
statutes.   She highlighted that  the bill applies  to dealership                                                               
agreements  entered into  after the  effective date  of the  act.                                                               
The bill has an immediate effective date.                                                                                       
                                                                                                                                
4:20:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES stated  that she  greatly appreciates  the                                                               
time sponsor has put into HB 177.                                                                                               
                                                                                                                                
REPRESENTATIVE NEUMAN  pointed out  he previously worked  on this                                                               
issue.  He  related his understanding that this  bill would cover                                                               
marine and  motorized recreational products such  as ATVs similar                                                               
to the  automobile consumer  protection.   He offered  his belief                                                               
that the bill is to help  Alaskans.  He highlighted that ATVs and                                                               
snowmachines  are  primary  modes   of  transportation  for  many                                                               
Alaskans.                                                                                                                       
                                                                                                                                
MS. MOSS brought up section  she previously missed.  She referred                                                               
to page  5, of proposed  AS 45.27.110, with respect  to defective                                                               
parts.   She  offered  that  language was  added  to require  the                                                               
manufacturers  to  deliver  the  part to  the  authorized  dealer                                                               
nearest to the  purchaser or to the dealer that  sold the product                                                               
to the  consumer.  She described  a scenario in which  a consumer                                                               
purchases a  snowmachine or ATV  in Delta Junction, but  lives in                                                               
Fairbanks.    Thus, in  the  instances  of defects,  the  nearest                                                               
dealer would be a dealer that  the consumer had not purchased the                                                               
product from  or had  not conducted business  with.   She related                                                               
this  bill provides  an option  for  the consumer  to select  the                                                               
dealer.    She recalled  early  dealers  operating out  of  their                                                               
garages and  compared that to  opening a new dealership  with the                                                               
costs of inventory  and specialized tools.  She  opined that this                                                               
bill could  well be  an example of  cutting edge  legislation for                                                               
this industry.                                                                                                                  
                                                                                                                                
4:24:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COGHILL thanked  Ms. Moss for her staff  work.  He                                                               
explained that he  worked to strike a balance  between the unique                                                               
needs of dealers and consumers  in Alaska, and manufacturers.  He                                                               
said, "I think we've found what  I would consider a clean pathway                                                               
for all three to have good rules  to work by and still have it so                                                               
the manufacturers just  don't rule the distributors  or refuse to                                                               
get good service to the consumers,   So it is consumer protection                                                               
in that  regard."  He  opined that the  bill does not  enter into                                                               
the contract  agreements but can  assist dealers in  working with                                                               
manufacturers on  issues.  He  further opined that the  bill will                                                               
assist all three groups.                                                                                                        
                                                                                                                                
4:26:31 PM                                                                                                                    
                                                                                                                                
CURTIS  SPENCER stated  he  is a  consumer who  has  had lots  of                                                               
experiences  with items.   He  related  an incident  in which  he                                                               
purchased a  jet boat  for $125,000.   He stated  that he  had to                                                               
replace 18  fuel pumps  over four months,  without any  help from                                                               
the manufacturer.   He  opined this  is a bill  that needs  to be                                                               
passed.  He  highlighted that he has worked with  dealers on ATVs                                                               
and snowmachines  so he  has experienced  the agony  dealers have                                                               
when assisting consumers.   He recalled that one  time the dealer                                                               
purchased his snowmachine since he could  not fix it.  He offered                                                               
his belief  that this bill  will be good for  everyone, including                                                               
the manufacturer.                                                                                                               
                                                                                                                                
4:28:41 PM                                                                                                                    
                                                                                                                                
DUDLEY BENESCH,  Owner, Alaska Mining  and Diving  Supply (AMDS),                                                               
stated  his business  has  been  in operation  for  33 years  and                                                               
employs  44 Alaskans.   He  related that  he has  worked on  this                                                               
issue  for many  years.    He offered  his  belief  that this  is                                                               
legislation that  is being  enacted throughout  the country.   He                                                               
pointed  out   numerous  states   such  as  Montana,   New  York,                                                               
Louisiana,  and Texas  have all  passed similar  legislation with                                                               
the same goal  which is to create  balance between manufacturers,                                                               
dealers, and  consumers.   He opined HB  177 focuses  on problems                                                               
that have  been experienced in  the industry.  He  indicated that                                                               
the  bill  will   help  produce  a  more   reliable  product  for                                                               
consumers.   He said, "Our whole  goal is to see  warranty issues                                                               
go away  or go  down."   He offered that  approximately 30  to 40                                                               
percent of  his shop's time  is spent fixing warranty  issues and                                                               
safety recall  issues that  the manufacturers  have created.   He                                                               
said he did not know if  it is due to rapidly changing technology                                                               
and manufacturers can't  keep up or if products  are being rushed                                                               
to market without adequate testing.                                                                                             
                                                                                                                                
4:31:02 PM                                                                                                                    
                                                                                                                                
MR.  BENESCH provided  a  sense  of the  expenses  involved.   He                                                               
related  that on  one occasion  the  dealership had  an issue  in                                                               
which 300  snowmachine units  affected by  a drive  shaft recall.                                                               
He applauded the manufacturers for  their efforts.  He said, "But                                                               
the devil  is in the  details."   Due to availability  issues his                                                               
dealership had to  order and pay in advance for  300 drive shafts                                                               
and  kits  with seals  and  gaskets  for  a  total cost  of  over                                                               
$60,000.   Additionally, his shop  provided labor for  20 percent                                                               
reduction in  the allowable  time from last  year, and  this year                                                               
the gap was higher.  Furthermore,  he was given 21 days to return                                                               
the defective  drive shaft  to the  factory at  his expense.   He                                                               
pointed out that  to return items to the East  Coast on that type                                                               
of timeframe required  sending it by United  Parcel Service (UPS)                                                               
or by  U.S. Post Office  priority airmail.   He related  that his                                                               
business  has lost  over $3,000  returning their  defective drive                                                               
shaft  without any  reimbursement.   He  opined  that the  safety                                                               
recall  cost   his  dealership  over   $35,000  in   lost  labor,                                                               
administration costs, and  freight costs.  He  offered his belief                                                               
that  the dealerships  have been  one  sided with  manufacturers,                                                               
making  decisions on  cost and  paperwork  issues.   He said,  "I                                                               
strongly  support  HB   177.    I  think  it's   a  great,  great                                                               
opportunity for this state to  get some consumer protection there                                                               
for businesses and consumers."                                                                                                  
                                                                                                                                
4:34:17 PM                                                                                                                    
                                                                                                                                
WAYNE  HULS, Co-owner,  Marita Sea  & Ski,  Alaska Power  Sports,                                                               
stated that  he is a  board member  of the Alaska  Marine Dealers                                                               
Association.   He stated that  he has battled  with manufacturers                                                               
for over  18 years on  behalf of consumers.   He opined  that the                                                               
one-sided  warranty policies  make  it difficult  for dealers  to                                                               
take care  of their  customers.  He  related his  experiences are                                                               
similar to Mr. Benesch's experiences  in terms of costs incurred.                                                               
He highlighted that  many customers have missed out  on an entire                                                               
season of  outdoor sports due  to warranty issues.   Furthermore,                                                               
many of  these people are  dependent upon their ATVs  or outboard                                                               
motor for living  and income.  He said,  "I've seen manufacturers                                                               
grossly  mismanage  product  recalls  resulting  in  promises  of                                                               
replacement parts, but continually pushing  the ship date out for                                                               
the  parts  leaving the  affected  customer  without use  of  the                                                               
product for extended periods of time."                                                                                          
                                                                                                                                
4:36:07 PM                                                                                                                    
                                                                                                                                
MR. HULS offered  his belief that his product  really is customer                                                               
service,  but  that  he  has   been  in  a  stranglehold  by  the                                                               
manufacturers which  has made it  very difficult to  provide good                                                               
service to  Alaskans who want to  enjoy the outdoors.   He stated                                                               
that the  manufacturers dictate labor  charges based on  Lower 48                                                               
prices.   Furthermore,  the manufacturers  discount parts,  delay                                                               
the  arrival  of  parts,  and  require the  broken  parts  to  be                                                               
returned to them which force  the dealer to pay freight expenses.                                                               
He related  his understanding that providing  warranty service to                                                               
his customers  costs Alaska's small  businesses.  He  opined that                                                               
the dealer  either makes  little profit, or  loses money  to care                                                               
for  customers.   He  pointed out  the  uniqueness of  Anchorage,                                                               
Alaska as a hub for sales  in Western Alaska and elsewhere.  Many                                                               
small "bush" dealers  must perform warranty work  on products the                                                               
business did  not even sell.   He mentioned  that he is  a dealer                                                               
for a major  brand and recognizes that many  rural dealers "clean                                                               
up"  problems that  a manufacturer  has caused,  even though  the                                                               
machines  were  purchased at  his  dealership.   He  offered  his                                                               
belief that  these dealers  must take a  loss to  accommodate the                                                               
customer or  the consumer must return  the unit to him,  at great                                                               
expense.   In  short,  the manufacturer  sent defective  products                                                               
that were  purchased by  consumers.   Meanwhile, the  dealer must                                                               
fix  the problem  that was  the manufacturer's  problem, but  the                                                               
dealer is not breaking even.   This bill is a consumer protection                                                               
measure,  and if  passed all  dealers,  including rural  dealers,                                                               
will be in  a better situation to provide  good customer service.                                                               
He said,  "I see this for  all constituents will benefit  if this                                                               
bill is  passed.  It  will be a  win-win situation and  will make                                                               
the  ground effort  equal amongst  the manufacturer,  the dealer,                                                               
and the  consumer.  Thank you  for the opportunity to  express my                                                               
opinions."                                                                                                                      
                                                                                                                                
LARRY INNIS,  Director, Marine  Retailers Association  of America                                                               
(MRAA),  stated that  the MRAA  strongly supports  the bill.   He                                                               
also asked  committee members  to support HB  177.   He explained                                                               
that   MRAA  is   a  national   trade  association   representing                                                               
businesses  in  the retail  side  of  recreational boating.    He                                                               
offered  that  MRAA  consists  of 3,000  members  that  sell  and                                                               
service  boats  and  operate  marinas  and  retail  stores.    He                                                               
explained  that since  the early  1970s, the  MRAA has  worked to                                                               
protect  investments and  promote small  businesses.   He related                                                               
that boat  dealers work  hard to  enhance the  boating experience                                                               
and  make  it safe  and  enjoyable.    During this  time  boating                                                               
consumers expect far better quality  than they currently receive.                                                               
As a result  of increased expectations, boat  dealers have worked                                                               
to improve their relationships with  manufacturers.  Dealers have                                                               
found that  the informal practices of  30 to 40 years  ago do not                                                               
work  in  today's environment.    He  said, "Consumers  want  and                                                               
expect  more.   Dealers  want more  safeguards  to protect  their                                                               
business.   Many  of these  safeguards  can only  be provided  by                                                               
their  product  manufacturers.   Dealers  would  like to  enhance                                                               
warranty  payment  and claims  procedures,  and  would like  more                                                               
assurances on  future business  relationships to  correspond with                                                               
the  increased financial  commitment  that many  are required  to                                                               
make  in order  to keep  a certain  product line.   Additionally,                                                               
dealers  want to  build  a business  that has  value  to sell  or                                                               
transfer.   He  opined  that  due to  the  frustrations with  the                                                               
arcane  agreements  and  the unwillingness  of  manufacturers  to                                                               
revise or  edit the agreements,  dealers have turned to  the MRAA                                                               
for  assistance.    He  recalled   that  MRAA  promoted  a  model                                                               
agreement in 1966 that more  closely resembled the business model                                                               
of the  time and would have  made a fair and  level playing field                                                               
between  dealers and  manufacturers to  meet the  expectations of                                                               
buyers and consumers.                                                                                                           
                                                                                                                                
4:41:37 PM                                                                                                                    
                                                                                                                                
MR. INNIS related that after  circulating the model agreement the                                                               
manufacturers did not comment.   Once more, changes were made and                                                               
copies were distributed but dealer  agreements did not change and                                                               
manufacturers  did not  express  any willingness  to address  the                                                               
changing  climate.   Eventually dealers  began to  turn to  state                                                               
legislatures  for  relief.   He  related  his understanding  that                                                               
currently seven  or eight states  have dealer  manufacturing laws                                                               
in place and four additional  states are working to adopt changes                                                               
this  year.   Presently the  legislatures' approach  more closely                                                               
addresses   the   market   place    than   agreements   by   boat                                                               
manufacturers.  Thus, the market  is thriving in states that have                                                               
passed similar  consumer protection.   He related  that long-term                                                               
agreements  provide  dealers   increased  security  and  business                                                               
value,  and more  importantly, boating  customers enjoy  improved                                                               
warranty  service  and  enhanced  boat  buying  experience.    He                                                               
concluded by  stating MRAA believes  that HB  177 is a  good bill                                                               
that addresses many of the  issues expressed by dealers including                                                               
fair and timely  payment of warranty claims,  product buyback due                                                               
to manufacturer cancellations,  long-term multiyear contracts and                                                               
protection  from  unwarranted  cancellations.    He  thanked  the                                                               
committee and offered strong support for HB 177.                                                                                
                                                                                                                                
4:43:10 PM                                                                                                                    
                                                                                                                                
RALPH SEEKINS,  Owner, Seekins Ford  Mercury, stated that  he has                                                               
been a  Ford dealer in Fairbanks  for over 32 years  and has been                                                               
in the auto business for 40 years.   He further stated that he is                                                               
the  primary author  of the  automobile dealer  franchise law  as                                                               
well as the Alaska Motor  Vehicle Warranties Act, or "Lemon Law,"                                                               
prior to  being a  member of  the Alaska  State Legislature.   He                                                               
noted  that he  worked with  Ms. Moss  to review  this bill.   He                                                               
offered several suggestions.  First,  he suggested that this bill                                                               
takes the customer  out of the middle between the  dealer and the                                                               
manufacturers.     He   recalled  similar   experiences  in   the                                                               
automobile industry.   At the  time, car dealers were  picking up                                                               
expenses for  the manufacturers in  an attempt to  keep customers                                                               
happy  with  the  products.    He opined  that  the  dealers  had                                                               
adhesion  contracts, which  are basically  "take it  or leave  it                                                               
contracts."   He offered  his belief  that virtually  every state                                                               
has an Automobile Franchise law and  some version of a Lemon Law.                                                               
He  opined that  was the  only  way to  require manufacturers  to                                                               
uphold their responsibilities.                                                                                                  
                                                                                                                                
4:45:11 PM                                                                                                                    
                                                                                                                                
MR. SEEKINS referred  to the applicability section of  HB 177 and                                                               
related  his understanding  that this  means the  bill would  not                                                               
apply to current dealership agreements.   Thus, a dealer could be                                                               
covered,  but one  down  the street  might not  be  covered.   He                                                               
highlighted that  in the  Automobile Franchise  Law, the  law was                                                               
crafted to apply to franchise  contracts between the manufacturer                                                               
and dealers.   He  applauded members for  continuing to  keep the                                                               
term snowmachine and not snowmobile,  which he stated is truly an                                                               
Alaskan term.  He recalled  that several things were important to                                                               
the automobile  dealers.  First,  they wanted to ensure  that the                                                               
franchise  agreements apply  to all  dealers.   Secondly, dealers                                                               
wanted the  jurisdiction or venue to  be within the state.   Most                                                               
contracts required  that disputes  be adjudicated under  the laws                                                               
of the state  of Michigan, for example, with  Ford Motor Company.                                                               
However,  the  legislature  changed  the  law  so  disputes  were                                                               
adjudicated in Alaska,  more specifically to the  location of the                                                               
dealer's  principal   place  of  business.     Additionally,  the                                                               
automobile law prohibited manufacturers  from forming a corporate                                                               
or subsidiary to accomplish what was  prohibited by the bill.  He                                                               
recalled  that  the  manufacturers  came to  the  legislature  to                                                               
attempt to get  the applicability changed to  after the effective                                                               
date.  He  opined that would have  left him 20 plus  years out of                                                               
time.                                                                                                                           
                                                                                                                                
4:47:19 PM                                                                                                                    
                                                                                                                                
MR. SEEKENS  explained that  some contracts  may be  renewable on                                                               
regular cycles such  as a five year cycle.   He further explained                                                               
that may be  something the committee might want to  consider.  He                                                               
said,  "Otherwise,  I   look  at  this  bill   as  pure  consumer                                                               
protection.  I know  what it meant to my consumers  to be able to                                                               
have the force  of law to require manufacturers  to be reasonable                                                               
about what  they paid  for repairs."   He opined  that encourages                                                               
dealers to  perform a quality  repair since he/she does  not lose                                                               
money in doing  so.  Additionally, he opined  that most reputable                                                               
manufacturers  would prefer  to  have the  quality  service.   He                                                               
encouraged passage of the bill  on behalf of consumers across the                                                               
state.                                                                                                                          
                                                                                                                                
4:48:30 PM                                                                                                                    
                                                                                                                                
CLINT KIRRY,  Representative, Hewes  Marine Company,  stated that                                                               
Hewes  Marine Company  has been  creating  high quality  aluminum                                                               
boats  since  1944  and  is  currently  the  number  one  selling                                                               
aluminum  boat  in  Alaska.     He  expressed  concern  with  any                                                               
legislation  that might  affect  the risk  of  doing business  in                                                               
Alaska.   He related that  Hewes Marine Company does  not support                                                               
HB 177.  In general, he offered his belief the bill is one-                                                                     
sided, in  that it protects  marine dealers  against cancellation                                                               
by  manufacturers,   while  leaving  manufacturers  at   risk  of                                                               
cancellation  by dealers.    He  related that  even  when a  boat                                                               
manufacturer  meets all  requirements  for  cancellation or  non-                                                               
renewal  the boat  manufacturer  would be  required  to buy  back                                                               
large amounts of inventory.  He  opined that a dealer could under                                                               
perform  in selling  products and  the  manufacturer would  still                                                               
have  requirements  to buy  back  perfectly  fine products.    He                                                               
highlighted that  manufacturers work with  each dealer on  a case                                                               
by case basis  and have dealer agreements in place.   He stressed                                                               
the importance  of the  need for freedom  to put  together dealer                                                               
agreements.                                                                                                                     
                                                                                                                                
4:50:23 PM                                                                                                                    
                                                                                                                                
MR. KIRRY offered his belief that  HB 177 makes the playing field                                                               
uneven and  protects the  dealers at  the risk  of manufacturers.                                                               
He  also expressed  concern that  warranty  requirements seek  to                                                               
hold the manufacturers responsible  for warranty coverage that is                                                               
already being provided by the  manufacturers is good faith to the                                                               
dealers in  Alaska.  He  opined that his company  already commits                                                               
to paying  retail for  labor costs,  with respect  to warranties.                                                               
Further,  warranty  policies  between Hewes  Marine  Company  and                                                               
dealers have already been determined  in writing.  He related his                                                               
understanding that  the proposed legislation is  unnecessary.  He                                                               
maintained that his company has  had few recalls, and every claim                                                               
has been  handled fairly and all  parts and labor are  handled by                                                               
the  manufacturer.   He  pointed out  his  company realizes  that                                                               
warranties are put in place for a reason.                                                                                       
                                                                                                                                
MR. KIRRY  stated when  the manufacturer has  placed a  defect in                                                               
the product  that manufacturers  must take  care of  that through                                                               
warranties.  He emphasized that  his company hopes to do business                                                               
in  Alaska  for  a  long  time and  simply  do  this  within  the                                                               
marketplace without this type of  legislation.  Additionally, the                                                               
issues  brought forward  seem to  be  aimed at  correcting a  few                                                               
isolated incidents  of bad practices  by one or two  motor sports                                                               
or  marine  manufacturers who  do  not  handle their  dealerships                                                               
relationships in the  right way.  He objected to  having the bill                                                               
apply  to all  manufacturers since  the industry  has voluntarily                                                               
established  practices that  have made  doing business  in Alaska                                                               
agreeable for  a long  time.   He concluded  by stating  the bill                                                               
seems  to attempt  to  rewrite  and supplant  dealer/manufacturer                                                               
agreements  and hinders  the ability  for manufacturers  to enter                                                               
into business freely.  He urged members not to approve HB 177.                                                                  
                                                                                                                                
4:52:57 PM                                                                                                                    
                                                                                                                                
DAVID  DICKERSON, Representative,  National Marine  Manufacturers                                                               
Association (NMMA),  stated that  the NMMA represents  about 1500                                                               
boat    builders,    engine    manufacturers,    and    accessory                                                               
manufacturers.    He recalled  earlier  testimony  today and  had                                                               
several comments  to make.   First, the  bill does  not recognize                                                               
how  cancellations  by the  dealer  impacts  manufacturers.   For                                                               
example, a  cancellation at the end  of a model year  can leave a                                                               
manufacturer  with  a  tremendous   amount  inventory  to  store.                                                               
Secondly,  he related  that he  visited Alaska  and learned  more                                                               
about the  Alaska market.   In particular, a cancellation  by the                                                               
dealer can  be a  crisis for  the manufacturer  due to  the small                                                               
number of  dealers in Alaska and  the ability to retain  a market                                                               
presence.    He related  his  understanding  of the  intent,  but                                                               
opined that  he is not  sure the  proposal provides balance.   To                                                               
illustrate he indicated  a number of issues raised  should not be                                                               
addressed in this bill such  as proper replacement of fuel pumps,                                                               
the amount  of money expended for  a drive shaft recall,  and the                                                               
method  by which  recalls are  handled.   He agreed  that recalls                                                               
must be  handled appropriately.  He  referenced other legislation                                                               
in the Lower 48, stating that  Minnesota and Iowa have chosen not                                                               
to take  any action.  And  Michigan has not taken  any action for                                                               
two  full legislative  terms.   He acknowledged  that contractual                                                               
obligations between  manufacturers and  dealers are  respected in                                                               
the bill.                                                                                                                       
                                                                                                                                
4:55:38 PM                                                                                                                    
                                                                                                                                
MR. DICKERSON questioned the need  for the legislature to intrude                                                               
when so  much weight  is placed  on the  contracts.   He asserted                                                               
that  the   contracts  should  be  supreme   and  should  oversee                                                               
relationships   between  the   manufacturers  and   their  marine                                                               
dealers.   He recalled testimony  suggesting consumers  wanted to                                                               
move to purchase their products  other than the dealer closest to                                                               
their home since  the consumer preferred the service  or a better                                                               
deal.   In  fact, anything  to encourages  better service  rather                                                               
than  allow the  consumer to  leave the  area for  better service                                                               
creates a  disservice to the  consumer.   Yet, that is  what this                                                               
bill does rather  than protecting dealers that perform  well.  He                                                               
recognized that testimony was given  by what appears to be superb                                                               
dealers.    However,   he  offered  his  belief   that  the  real                                                               
protection  this  bill  provides  is   to  dealers  who  are  not                                                               
providing  the level  of service  that the  testifiers strive  to                                                               
give.                                                                                                                           
                                                                                                                                
4:57:06 PM                                                                                                                    
                                                                                                                                
MR.  DICKERSON  referred  to  the  warranty  reimbursement.    He                                                               
explained that marine  reimbursement provides "full reimbursement                                                               
plus,  plus."   A  large  number of  the  brands  sold in  Alaska                                                               
provide full warranty reimbursement.   He offered his belief that                                                               
this bill is well intended, but  it over regulates and misses the                                                               
mark.  He said,  "And overall, I think it is a  real thumb on the                                                               
scale  of  competition and  in  the  end  will  not be  good  for                                                               
consumers  because it  will protect  those  dealers that  provide                                                               
poor  service  rather than  provide  any  real benefit  to  those                                                               
dealers who are at the top of  their game and doing the best they                                                               
can."  He concluded by asking  Chair Olson to not report out this                                                               
bill.                                                                                                                           
                                                                                                                                
4:58:03 PM                                                                                                                    
                                                                                                                                
DAVID MCCORMICK  stated that  he has  operated a  marine business                                                               
since 1999.   He related  that he  has had the  same manufacturer                                                               
for five years.  He mentioned  he has raised his family in Bethel                                                               
and  loves the  area.   He pointed  out that  his customers  come                                                               
first.   He stressed his experience  that in the past  five years                                                               
his manufacturer  has been an  anchor that has been  sinking him.                                                               
He opined  that there has  not been a  year except for  this year                                                               
that  he has  not  had to  take  out loans.    In particular,  he                                                               
pinpointed warranties as the reason.   He offered his belief that                                                               
the unfair  reimbursement from the manufacturers  makes it nearly                                                               
impossible for  him to do  business.  He  said he is  in business                                                               
since  he  loves his  business,  the  state,  and the  people  in                                                               
Bethel.  He said,  "I'd like to continue what I do.   I do it.  I                                                               
do it well and I want  to continue doing it.  But, unfortunately,                                                               
how long can I keep on taking  loans out that keep mounting up to                                                               
hundreds  of thousands  of dollars  and  keep in  business."   He                                                               
emphasized that  this bill  is long overdue.   In  particular, he                                                               
related that  warranties have caused  problems for  dealers since                                                               
the  1970s.   He  related  his  understanding that  manufacturers                                                               
worry about paying too much  for unwarranted repairs.  Typically,                                                               
he  finds  warranty  issues  to   be  legitimate.    He  stressed                                                               
manufacturers are  often aware  of issues  at the  factory level.                                                               
He explained  that he sells  50 machines per year,  cannot afford                                                               
to pay employees  due to insurance costs.  Thus,  he must provide                                                               
warranty work  himself.  He reiterated  he would love to  stay in                                                               
this business.  He said, "I find this  to be a very good bill.  I                                                               
just hope  you guys can pass  it.  I'd love  to stay in this.   I                                                               
know my  customers deserve  a good product.   The  product should                                                               
come  out of  the factory  without  these defects  that they  are                                                               
coming here  with."   He thanked members  for his  opportunity to                                                               
testify.                                                                                                                        
                                                                                                                                
5:02:15 PM                                                                                                                    
                                                                                                                                
CRAIG  COMPEAU,  Vice  President,   Compeau  Marine,  stated  his                                                               
testimony would  be brief.  He  said his testimony is  similar to                                                               
that  of  other dealers  who  have  testified.   He  provided  an                                                               
incident in  which one of  the manufacturers had  outboard motors                                                               
that  could  not   be  fixed.    The   manufacturers  refused  to                                                               
repurchase  the  outboard  motors.    After  much  pleading,  the                                                               
compromise offered was  to have the dealer remove  the power pack                                                               
and serial  number tag from the  motor for a $2  thousand credit.                                                               
He  stated that  the company  paid $7  thousand per  motor, which                                                               
totaled  over $100,000.   More  importantly, the  outboard motors                                                               
potentially could  have affected his  customer's safety.   And to                                                               
maintain  credibility with  his  customers,  Mr. Compeau  further                                                               
stated that he  had to purchase back the motors  from many of his                                                               
customers.   He implied  this is  not an  isolated case,  but one                                                               
that  is repeated.   He  said, "We  think HB  177 truly  benefits                                                               
Alaska's consumers,  who are the  ones behind the  steering wheel                                                               
of that boat,  behind the four-wheeler, you know,  who are really                                                               
operating  this  product  that  isn't  just a  toy.    We  really                                                               
appreciate the opportunity  to do testimony here and  I thank the                                                               
committee for their time and service."                                                                                          
                                                                                                                                
5:04:09 PM                                                                                                                    
                                                                                                                                
PETER THOMPSON, President, River and  Sea Marine, stated his deep                                                               
appreciation for the  opportunity to speak in support  of HB 177.                                                               
He  related  that  the  uniqueness  of  Alaska  also  poses  many                                                               
challenges including transportation.   He offered his belief that                                                               
HB 177 provides  many safeguards for customers  and consumers who                                                               
use the products  as daily tools.  He opined  that dealers invest                                                               
large  sums and  pay Alaskan  workers.   He  further opined  that                                                               
businesses  have a  ripple  affect  including transportation  and                                                               
aviation.   Dealers can only  satisfy customers  if manufacturers                                                               
initially produce  a good  product.   He emphasized  that dealers                                                               
expend thousands of  dollars to train with the  new technology in                                                               
order to  be able  to provide  warranty service.   If  the dealer                                                               
does  not invest  in  adequate  training, it  could  result in  a                                                               
breach  of   the  manufacturer's  contract.     He  related  that                                                               
consumers are often deprived of the  use of products for weeks or                                                               
months while  the dealer  attempts to remedy  the situation.   He                                                               
said:                                                                                                                           
                                                                                                                                
     This is not  in any way, shape, or  form, an acceptable                                                                    
     scenario.   We need to  come into line with  many Lower                                                                    
     48  states  [that]   have  already  passed  legislation                                                                    
     designed to  mitigate this totally  untenable situation                                                                    
     and rectify to the fullest  extent possible the need to                                                                    
     have a  cohesive support line from  manufacturer to end                                                                    
     user  and to  endeavor  to have  these past  inequities                                                                    
     minimized.     To   all  the   parties  involved,   and                                                                    
     ultimately to  better serve the needs  of the customers                                                                    
     in  this state,  to ultimately  the future  development                                                                    
     and success of  the state rests.  In  closing, I'd like                                                                    
     to address  the concerns of Mr.  David Dickerson, NMMA,                                                                    
     and Mr.  Clint Kirry,  from Hewes  Craft, that  if this                                                                    
     bill  is enacted  it  is not  intended  to polarize  or                                                                    
     antagonize  any parties,  but is  in fact  a chance  to                                                                    
     form  a new  and  fair and  beneficial  chance for  all                                                                    
     parties to start afresh.                                                                                                   
                                                                                                                                
5:08:37 PM                                                                                                                    
                                                                                                                                
MARK  HORDEMANN  stated  that  his  snowmachine  came  in  during                                                               
October, but the  machine had a recall  due to the gas  tank.  He                                                               
waited  several   weeks  for  the   remedy  and  picked   up  his                                                               
snowmachine.    Part  way  through the  season  the  drive  shaft                                                               
snapped.  He said:                                                                                                              
                                                                                                                                
     I was  told, yes,  they are having  a problem  with it.                                                                    
     This was a new and  improved drive shaft, in which fact                                                                    
     it was  nothing more  than the  same exact  drive shaft                                                                    
     that they'd  put in from  the manufacturer.   The drive                                                                    
     shaft  was put  in and  this year  I received  a recall                                                                    
     notice  once  again  to  have   the  same  drive  shaft                                                                    
     replaced  with a  new and  upgraded drive  shaft.   All                                                                    
     this time put out basically  was around three months of                                                                    
     not  being able  to use  my snowmachine.   This  is the                                                                    
     type  of thing  I would  like protection  from.   And I                                                                    
     support the bill and thank  you very much for listening                                                                    
     to me.                                                                                                                     
                                                                                                                                
5:10:03 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify,  closed public  testimony on  HB  177.   He removed  his                                                               
objection [Version P was before the committee].                                                                                 
                                                                                                                                
5:10:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES  asked  if  Mr. Sniffen  had  any  overall                                                               
thoughts on the proposed committee substitute.                                                                                  
                                                                                                                                
5:10:47 PM                                                                                                                    
                                                                                                                                
CLYDE  (ED)  SNIFFEN,  JR., Senior  Assistant  Attorney  General,                                                               
Commercial/Fair  Business  Section, Civil  Division  (Anchorage),                                                               
Department of  Law (DOL), stated  that he has reviewed  the bill.                                                               
He related that  he does not have too many  comments.  He further                                                               
related he noticed  that the Lemon Law section is  a fairly short                                                               
and streamlined  process compared to  the motor vehicle law.   He                                                               
pointed  out that  the motor  vehicle statutes  consist of  three                                                               
pages and  include details such  as for noticing, and  under what                                                               
circumstances a  replacement is  not authorized.   He  offered to                                                               
discuss the details with the  sponsor prior to the next committee                                                               
hearing.  Otherwise, he offered that  the DOL has no other issues                                                               
with the bill.                                                                                                                  
                                                                                                                                
5:12:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BUCH commented he  first reviewed the bill several                                                               
years   ago  and   had  reservations,   particularly  with   some                                                               
provisions     that    were     very    restrictive     regarding                                                               
manufacturer/dealership  requirements.   He recognized  the major                                                               
modifications made  to the  bill and suggested  it may  need some                                                               
minor tweaking  as mentioned by  the assistant  attorney general.                                                               
Thus, he has chosen to cosponsor the bill and endorses HB 177.                                                                  
                                                                                                                                
5:12:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  offered  that  he worked  on  this  issue                                                               
several years  ago in  order to protect  Alaskans, not  only with                                                               
respect to costs, but for the  safety aspects.  He stated that he                                                               
wanted to  ensure that Alaskans  have good equipment  since their                                                               
lives are  at stake.  He  recalled the testimony from  the Bethel                                                               
businessman  who  cannot  afford   the  warranty  problems.    He                                                               
stressed when businesses  must pay for extra  equipment and parts                                                               
that the  additional business costs  reduce profits to  the point                                                               
the  dealer will  simply  go out  of business.    He thanked  the                                                               
sponsor and  his staff for  their hard work.   He opined  that HB                                                               
177 is a good consumer protection bill.                                                                                         
                                                                                                                                
5:13:54 PM                                                                                                                    
                                                                                                                                
MS. MOSS  asked to point  out that  the only repurchase  the bill                                                               
requires is  when a manufacturer  terminates or fails to  renew a                                                               
contract without  good cause.   She said,  "Very straightforward.                                                               
I  have before  me  a  dealership agreement  that  does not  even                                                               
address  warranty  work and  defects.    She  asked to  read  two                                                               
sentences.  She  said she would not name the  company.  She read,                                                               
"This company  has the absolute  right in its sole  discretion to                                                               
terminate this agreement  on written notice of ten  days prior to                                                               
the effective date of termination.                                                                                              
                                                                                                                                
MS. MOSS  stated under repurchases,  it reads,  "Upon termination                                                               
or nonrenewal  of this  agreement the  company has  no obligation                                                               
but shall have first option  to repurchase any inventory."  Thus,                                                               
these dealership agreements do not  provide much protection for a                                                               
dealer.                                                                                                                         
                                                                                                                                
REPRESENTATIVE  COGHILL  commented  that  he  will  work  on  the                                                               
replacement issue with  respect to the Lemon Law.   He offered to                                                               
work to  tighten up  the language.   He stated  that he  does not                                                               
want to slow down the bill.                                                                                                     
                                                                                                                                
5:15:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN moved  to  report Version  P, labeled  26-                                                               
LS0477\P,  Bannister, 4/2/09,  out of  committee with  individual                                                               
recommendations and  the accompanying  fiscal note.   There being                                                               
no  objection, the  CSHB  177(L&C) was  reported  from the  House                                                               
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                
5:15:59 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 5:15 p.m. to 5:18 p.m.                                                                       
                                                                                                                                
5:18:02 PM                                                                                                                    
                                                                                                                                
HB 185-LABOR NEUTRALITY FOR STATE CONTRACTS                                                                                   
                                                                                                                              
5:18:04 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE BILL  NO. 185, "An  Act relating to the  labor organization                                                               
position   of  state   agencies   and  others   with  regard   to                                                               
construction contracts paid for by state money."                                                                                
                                                                                                                                
REPRESENTATIVE MIKE KELLY, Alaska  State Legislature, speaking as                                                               
prime  sponsor of  HB 185,  stated  that the  bill promotes  open                                                               
construction and  is also called  the "Government  Neutrality and                                                               
Contracting Act."   He related  that Alaska's  construction force                                                               
consists of about  70 to 75 percent non-union and  about 25 to 30                                                               
percent  union.    This  bill   would  promote  and  ensure  open                                                               
competition  on  state  construction projects  while  maintaining                                                               
government  neutrality   toward  construction   contractor  labor                                                               
relations, he further stated.                                                                                                   
                                                                                                                                
5:19:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KELLY offered  that the  intent of  HB 185  is to                                                               
reduce construction costs, expand  job opportunities, and prevent                                                               
unfair  discrimination   based  on  labor  affiliation   or  non-                                                               
affiliation.    This  bill supports  awarding  construction  work                                                               
based  on  the  merit  of   the  bid  or  proposal  through  open                                                               
competition  without favoritism  to  any special  interest.   The                                                               
bill forbids  the state from  requiring union only  project labor                                                               
agreements (PLA), while  at the same time  providing that nothing                                                               
in  its  terms  prohibit  any contractor  or  subcontractor  from                                                               
voluntarily entering  into a  PLA or other  labor agreement.   He                                                               
related that this bill is about  fairness.  It's about the three-                                                               
fourths of  our state that  operate non  union.  It  ensures PLAs                                                               
are voluntary,  that the state  does not  impose its will  on the                                                               
construction work force.                                                                                                        
                                                                                                                                
CHAIR OLSON  stated that HB  185 would  be held over  for further                                                               
consideration.                                                                                                                  
                                                                                                                                
5:20:37 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
5:20 p.m.                                                                                                                       

Document Name Date/Time Subjects
01 HB167 ver R.pdf HL&C 4/6/2009 3:15:00 PM
HB 167
01 HB177 ver E.pdf HL&C 4/6/2009 3:15:00 PM
HB 177
02 CSHB167 ver E Sponsor Statement.pdf HL&C 4/6/2009 3:15:00 PM
HB 167
03 CSHB167 ver E Sectional Analysis.pdf HL&C 4/6/2009 3:15:00 PM
HB 167
04 HB167 Draft CS ver E.pdf HL&C 4/6/2009 3:15:00 PM
HB 167
05 HB167 Fiscal Note DOR-TAX-04-03-09.pdf HL&C 4/6/2009 3:15:00 PM
HB 167
06 HB167 PPT Presentation by ATIA.pdf HL&C 4/6/2009 3:15:00 PM
HB 167
02 HB177 Sponsor Statement.pdf HL&C 4/6/2009 3:15:00 PM
HB 177
03 HB177 Sectional Analysis.pdf HL&C 4/6/2009 3:15:00 PM
HB 177
04 HB177 Draft CS ver P.pdf HL&C 4/6/2009 3:15:00 PM
HB 177
04 HB185 Fiscal Note DOT-AD-CA-3-26-09.pdf HL&C 4/6/2009 3:15:00 PM
HB 185
17 HB185 Multiple Letters of suppor-opposition.pdf HL&C 4/6/2009 3:15:00 PM
HB 185
18 HB185 Multiple Letters of suppor-opposition_2.pdf HL&C 4/6/2009 3:15:00 PM
HB 185
April 6 Packet Information.pdf HL&C 4/6/2009 3:15:00 PM
HB 167
HB 177