Legislature(1993 - 1994)

04/06/1993 08:06 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          April 6, 1993                                        
                            8:06 a.m.                                          
  TAPES                                                                        
                                                                               
  SFC-93, #51, Side 1 (000-end)                                                
  SFC-93, #51, Side 2 (575-end)                                                
  SFC-93, #53, Side 1 (000-end)                                                
  SFC-93, #53, Side 2 (575-152)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Drue  Pearce,  Co-chair,  convened the  meeting  at                 
  approximately 8:06 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition   to  Co-chairs  Pearce  and   Frank,  Senators                 
  Kerttula, Rieger,  and Sharp  were present.   Senator  Kelly                 
  arrived  soon  after the  meeting  began, and  Senator Jacko                 
  arrived as it was in progress.                                               
                                                                               
  ALSO  ATTENDING:     Senator  Ellis;  Don   Moore,  Manager,                 
  Matanuska-Susitna  Borough;  Jim  Sampson, Mayor,  Fairbanks                 
  North Star Borough; Riley  Snell, Executive Director, Alaska                 
  Industrial Development  and Export Authority  (AIDEA), Dept.                 
  of  Commerce  and Economic  Development; John  Olson, Deputy                 
  Director,  Development,  AIDEA;  John   Regitano,  Fairbanks                 
  Native   Association;   Jane   Demmert,   Fairbanks   Native                 
  Association;  Judy  Knight,  Director,  Employment  Security                 
  Division, Dept.  of Labor; Mark  Mickelson, JTPA/SDA Program                 
  Manager,  Dept.  of  Community and  Regional  Affairs;  Bill                 
  Pedlar,  Princess  Tours;  Stan  Stecubuan,  Association  of                 
  ARDORS;  Robert  S.  Hatfield,  President  and  CEO,  Alaska                 
  Railroad Corporation;  Phyllis C. Johnson,  General Counsel,                 
  Alaska  Railroad  Corporation;   Tina  Lindgren,   Executive                 
  Director, Alaska  Tourism Marketing  Council; Wendy  Mulder,                 
  Special   Assistant,   Dept.   of  Commerce   and   Economic                 
  Development; Kit  Ballentine, Acting  Director, Division  of                 
  Environmental Health; Dept.  of Environmental  Conservation;                 
  and  aides to  committee members  and other  members of  the                 
  legislature.                                                                 
                                                                               
  ALSO PARTICIPATING VIA TELECONFERENCE  FROM FAIRBANKS:  Neal                 
  Plateau; Nellie Hensley, FNA; Holly Burns; Ted Wicken; James                 
  Wright; Madeline  Williams, Linda  Pearson, Fairbanks  North                 
  Star School District; Ken Hoke;  David Dean; Christina Hill,                 
  FNA; Edna Matthew, FNA; Harry Fields; and Julie Wilson.                      
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 16     -    Act relating  to the  financing authority  of                 
  the            Alaska  Industrial  Development   and  Export                 
                                                                               
                                                                               
                 Authority and giving approval of the issuance                 
                 of  bonds for  an  Anchorage airport  seafood                 
                 facility;  and  providing  for  an  effective                 
                 date.                                                         
                                                                               
                 Discussion  was had  in  conjunction with  SB
                 171.    SB  16  provisions were  incorporated                 
                 within CSSB 171 (Fin).                                        
                                                                               
  SB 57     -    Act relating to employment  contributions and                 
  to             extending  the pilot  project  for the  state                 
                 training   and   employment    program;   and                 
                 providing for an effective date.                              
                                                                               
                 Testimony was presented  by Judy Knight, Mark                 
                 Mickelson, John Regitano,  Jane Demmert,  Jim                 
                 Sampson, and the above-listed individuals who                 
                 spoke via TELECONFERENCE FROM FAIRBANKS.  The                 
                 bill was subsequently HELD  in a subcommittee                 
                 under Senator Kelly.                                          
                                                                               
  SB 85     -    Act  extending  the termination  date  of the                 
  Alaska              Tourism Marketing Council; and providing                 
                      for an effective date.                                   
                                                                               
                 Testimony was presented by Bill Pedlar,  Tina                 
                 Lindgren,   and  Wendy   Mulder.     CSSB  85                 
                 (Finance) was REPORTED OUT  of committee with                 
                 a zero fiscal note from the Dept. of Commerce                 
                 and Economic Development.                                     
                                                                               
  SB 171    -    Act relating to the contracting and financing                 
                 authority    of    the    Alaska   Industrial                 
                 Development  and  Export   Authority,  giving                 
                 approval of  the issuance of  the authority's                 
                 revenue bonds, and  delaying the  termination                 
                 date of the  authority's business  assistance                 
                 program; and providing for an effective date.                 
                                                                               
                 Discussion was had with  Senator Ellis, Riley                 
                 Snell,  and John  Olson.  CSSB  171 (Finance)                 
                 (incorporating  SB  16  as  well  as  revised                 
                 amendment  no.  1  and amendment  no.  2) was                 
                 REPORTED OUT of committee with a  zero fiscal                 
                 note from the Dept.  of Commerce and Economic                 
                 Development.                                                  
                                                                               
                                                                               
  SENATE BILL NO. 16                                                           
                                                                               
       An  Act  relating  to the  financing  authority  of the                 
       Alaska Industrial Development and Export Authority  and                 
       giving  approval  of  the  issuance  of  bonds  for  an                 
                                                                               
                                                                               
       Anchorage airport seafood  facility; and providing  for                 
       an effective date.                                                      
                                                                               
  Upon convening  the meeting, Co-chair  Pearce announced  her                 
  intention to first  deal with  final questions regarding  SB
  16.    Senator  Rieger  inquired  concerning  the  ownership                 
  structure of the Anchorage airport  seafood facility, asking                 
  how much  equity AIDEA would  own.   RILEY SNELL,  Executive                 
  Director, Alaska Industrial Development and Export Authority                 
  (AIDEA), Dept.  of Commerce  and Economic  Development, came                 
  before committee.  He said that of the $163 million project,                 
  AIDEA  would  finance  $50  million  for  the  cold  storage                 
  facility.  Senator Rieger asked if the authority would  loan                 
  100% of that amount.  Mr. Snell answered affirmatively.  The                 
  Senator then asked  what kind of return  AIDEA would receive                 
  as the  bonds are  paid off.   Mr.  Snell said  the rate  of                 
  return  would  be  negotiated.     AIDEA  has  traditionally                 
  received approximately a 6.5% return.   That is the point at                 
  which negotiations would start.                                              
                                                                               
  [See pages 20-21 for incorporation of  SB 16 within CSSB 171                 
  (Fin).]                                                                      
                                                                               
                                                                               
  SENATE BILL NO. 171                                                          
                                                                               
       An  Act  relating  to  the  contracting  and  financing                 
       authority of  the  Alaska  Industrial  Development  and                 
       Export  Authority, giving approval  of the  issuance of                 
       the  authority's  revenue   bonds,  and  delaying   the                 
       termination date of the authority's business assistance                 
       program; and providing for an effective date.                           
                                                                               
  Co-chair  Pearce directed  that  SB 171  be  brought on  for                 
  discussion and pointed to a letter of support from TESORO as                 
  well as information  from the Mat-Su Borough (copies on file                 
  in the original Senator  Finance bill file for SB 171 at the                 
  Legislative Finance Division).                                               
                                                                               
  DON MOORE,  Manager, Matanuska-Susitna Borough,  came before                 
  committee.     Senator   Kerttula  observed   that  recently                 
  distributed  material   relating  to   the  Midrex   project                 
  indicates  that the borough  has already  funded $2,095,000.                 
  Mr. Moore responded affirmatively.  Senator Kerttula further                 
  noted that when  the state provided  moneys for the road  to                 
  Point MacKenzie, funding  was justified not only  by the new                 
  lands project, but  by expectation of  ultimate construction                 
  of a port.   With connection  via causeway to Anchorage,  it                 
  was expected that Pt. MacKenzie  would become the industrial                 
  area of Anchorage.                                                           
                                                                               
  (Senator Kelly arrived at the meeting at this time.)                         
                                                                               
                                                                               
  Senator Sharp also noted a letter of support for the project                 
  from Mayor Jim  Sampson of the Fairbanks  North Star Borough                 
  (copy on file).                                                              
                                                                               
  Co-chair   Pearce   queried  members   regarding  additional                 
  questions   on  either   the  fuel  consortium   project  or                 
  continuation of the small business  program contained within                 
  SB 171.  No questions were raised.  Co-chair Pearce directed                 
  that the meeting be briefly recessed.                                        
                                                                               
                       RECESS - 8:15 a.m.                                      
                      RECONVENE - 8:20 a.m.                                    
                                                                               
  When  the  meeting was  reconvened,  Senator Rieger  posed a                 
  question regarding AIDEA  payment of dividends to  the state                 
  similar to those paid  by AHFC.  Mr. Snell pointed to recent                 
  independent analysis conducted by Bartle Wells Associates on                 
  behalf  of the Legislative Budget and Audit Committee.  That                 
  analysis indicates  that harm  might occur  to AIDEA's  bond                 
  rating should  moneys be  removed from  the authority.   Mr.                 
  Snell acknowledged that  the legislature has the  ability to                 
  appropriate   unrestricted   surpluses  from   AIDEA.     He                 
  reiterated that  such action would have a material affect on                 
  access  to  capital.    Mr.  Snell stressed  that  dividends                 
  provided to the state  by AIDEA are in the form  of jobs and                 
  economic development.   Senator Rieger  advised that he  had                 
  not  come  to  the same  conclusion  as  the  analysis.   He                 
  suggested that the appropriate form of a dividend would be a                 
  fraction of the annual earnings of the corporation.  This is                 
  particularly true since  the authority appears to  be moving                 
  in  the  direction of  equity  ownership rather  than merely                 
  serving as a financier.                                                      
                                                                               
  In  response  to a  further comment  by Senator  Rieger, Mr.                 
  Snell acknowledged that  last year AIDEA generated  revenues                 
  of $40  million.  He noted that a  portion of the revenue is                 
  restricted by Red Dog Mine  bonds, leaving approximately $21                 
  or $22 in unrestricted revenues.                                             
                                                                               
  Co-chair Pearce directed attention  to revised amendment no.                 
  1 which she explained would add projects and funding amounts                 
  to  title language  and authorize  AIDEA to  issue bonds  to                 
  finance the Midrex project  at Port MacKenzie in  the amount                 
  of  $50  million.    Senator  Kerttula MOVED  for  adoption.                 
  Senator Rieger OBJECTED.                                                     
                                                                               
  Senator  Kelly referred  to  amendment no.  2  and asked  if                 
  funding the Anchorage airport fueling facility via a general                 
  obligation rather than revenue bond would allow the facility                 
  to be taxed  by the  Municipality of Anchorage.   Mr.  Snell                 
  explained  that  development/finance  projects  where  AIDEA                 
  retains ownership include agreements relating to payments in                 
  lieu  of taxes.  Under those  agreements the principal users                 
  must reach agreements with local  municipalities.  That type                 
                                                                               
                                                                               
  of agreement would be used for this project as well.                         
                                                                               
  (Senator Jacko arrived at the meeting at this time.)                         
                                                                               
  In response  to inquiries from Co-chair Frank and the above-                 
  noted objection posed by Senator  Rieger, JOHN OLSON, Deputy                 
  Director, Development, AIDEA, Dept. of Commerce and Economic                 
  Development, came before committee.  He pointed to  a packet                 
  of  information (copy on file in the original Senate Finance                 
  file for SB 171)  and explained that it attempts  to address                 
  three concerns, raised at the previous meeting, relating to:                 
                                                                               
       1.   Presentation of the  projects in the  early stages                 
  of                                                                           
                 development.                                                  
                                                                               
       2.   Ownership by  AIDEA rather  than the  rendering of                 
  merely                                                                       
                 financial services by the authority.                          
                                                                               
       3.   AIDEA's general obligation pledge versus issue of                  
                 revenue bonds.                                                
                                                                               
  Speaking to the  need for  authorization while the  projects                 
  are in the early stages of development, Mr. Olson pointed to                 
  statutory  safeguards enacted  by the  legislature to  guide                 
  AIDEA in the conduct of its business.  He noted that private                 
  development projects often  reach the point where  they must                 
  proceed at a  time when the  legislature is not in  session.                 
  Mr.  Olson  next  outlined safeguards  set  forth  within AS                 
  44.88.095(c and d).                                                          
                                                                               
  Directing  attention  to  the third  item  above,  Mr. Olson                 
  explained  that "general obligation" and "revenue" are terms                 
  used to separate bonds that do or do not have the full faith                 
  and credit of the authority.  Buyers view all bond issues as                 
  revenue bonds.  AIDEA attempts to  place as many projects as                 
  possible  under "revenue"  status  because AIDEA's  "general                 
  obligation"  credit  is finite.    It varies  depending upon                 
  AIDEA's balance sheet.   This credit  is used carefully  and                 
  when necessary  to get a  project moving once  all statutory                 
  safeguards have been  addressed.   AIDEA is compensated  for                 
  use of its  pledge by an  interest rate markup and  earnings                 
  from the project once the debt is paid off.                                  
                                                                               
  Mr.  Olson next spoke to  ownership status, advising that by                 
  retaining ownership,  AIDEA can obtain tax-exempt  bonds for                 
  the  project.  The development/finance program envisioned in                 
  AS 44.88. 172 takes  advantage of this provision in  the IRS                 
  code  for  ports,  airports, and  various  utility projects.                 
  These projects  are to  be operated  by the  private sector.                 
  Lack of ownership  would require  issuance of taxable  bonds                 
  which would  substantially diminish the  advantages of AIDEA                 
  and  the competitive position  of the project.   Under those                 
                                                                               
                                                                               
  circumstances  the project may not  go forward.  Funding for                 
  projects  is  safeguarded  by  statutory  requirements   and                 
  prudent use of authority assets.                                             
                                                                               
  Mr.  Olson   further  spoke  to   reimbursement  agreements,                 
  feasibility   analyses,  and   user  agreements   and  noted                 
  requirements associated with each.                                           
                                                                               
  Discussion followed  between  Senator Rieger  and Mr.  Snell                 
  regarding financial consequences  of the recently  announced                 
  layoffs and closure of the Skagway  ore terminal.  Mr. Snell                 
  advised that the company remains in full compliance with all                 
  payments to the authority.  AIDEA is concerned regarding the                 
  credit worthiness of the company.  The company is the victim                 
  of a depressed  metals market.   AIDEA believes that in  the                 
  long term the project will provide anticipated returns.                      
                                                                               
  Senator  Rieger  maintained  his  objection  to  adoption of                 
  revised amendment no. 1.  He concurred in legislative action                 
  to demonstrate support for the project,  desire to see it go                 
  forward,  and  intent to  approve  state  participation upon                 
  appropriate terms,  but questioned  whether approval of  $50                 
  million  in  bonds  was an  appropriate  expression  of that                 
  support.  Co-chair  Frank said that  as a policy matter  the                 
  legislature must decide  whether it has confidence  in AIDEA                 
  to make a proper determination of whether or not the project                 
  is  feasible.  He concurred that if the proposed legislation                 
  contained a loan commitment or  granted credit, action would                 
  be  premature.   Passage  of  the legislation  indicates the                 
  project fits politically  and conceptually, and if  it meets                 
  all statutory safeguards, it should go forward.                              
                                                                               
  Co-chair Pearce called  for additional comments.   None were                 
  forthcoming.  She then  directed that the roll be  called on                 
  revised amendment no. 1:                                                     
                                                                               
       YEA:   Sharp, Kerttula, Kelly, Jacko, Frank, Pearce                     
       NAY:   Rieger                                                           
                                                                               
  Revised amendment no. 1 (Midrex) was  thus ADOPTED on a vote                 
  of 6 to 1.                                                                   
                                                                               
  Co-chair Pearce next  directed attention to amendment  no. 2                 
  which she  explained would  delete the  word "revenue"  from                 
  language relating to the  Anchorage airport fueling facility                 
  project.  Senator  Sharp MOVED for  adoption.  No  objection                 
  having been raised amendment no. 2 was ADOPTED.                              
                                                                               
  Co-chair Pearce directed  that both revised amendment  no. 1                 
  and amendment  no. 2 be incorporated within a Senate Finance                 
  Committee Substitute for  SB 171.  She  then queried members                 
  regarding disposition of  the bill.  Senator  Kerttula MOVED                 
  that CSSB 171 (Finance) pass  from committee with individual                 
  recommendations.   Senator Jacko OBJECTED.   Co-chair Pearce                 
                                                                               
                                                                               
  directed that  the roll  be called  on passage  of CSSB  171                 
  (Finance):                                                                   
                                                                               
       YEA:   Kelly, Kerttula, Rieger, Sharp, Frank, Pearce                    
       NAY:   Jacko                                                            
                                                                               
  The motion for  passage of CSSB  171 (Finance) CARRIED on  a                 
  vote of 6 to 1, and  CSSB 171 (Finance) was REPORTED OUT  of                 
  committee with a zero fiscal note from the Dept. of Commerce                 
  and Economic Development.   Co-chairs  Pearce and Frank  and                 
  Senators  Kelly, Kerttula,  and  Sharp signed  the committee                 
  report  with  a "do  pass"  recommendation.   Senator Rieger                 
  signed "no recommendation."   Senator Jacko signed  but made                 
  no recommendation.                                                           
                                                                               
  [See pages 20-21 for further action on this bill.]                           
                                                                               
                                                                               
  SENATE BILL NO. 57                                                           
                                                                               
       An  Act  relating  to employment  contributions  and to                 
       extending the pilot project for  the state training and                 
       employment  program;  and  providing for  an  effective                 
       date.                                                                   
                                                                               
  Co-chair  Pearce  directed that  SB  57  be  brought on  for                 
  discussion  and  noted a  TELECONFERENCE link  to Fairbanks.                 
  She  referenced   backup   in   members'   files,   pointing                 
  specifically to  fiscal  notes showing  other  than  general                 
  funds,  position  papers  from the  Dept.  of  Community and                 
  Regional  Affairs  and  the  Dept.  of  Labor,  a  sectional                 
  analysis,  a sponsor  statement,  legal opinion,  Fairbanks'                 
  Native Association history, and a number of overviews.                       
                                                                               
  JUDY KNIGHT,  Director, Employment Security  Division, Dept.                 
  of Labor,  came before  committee.   She explained that  the                 
  proposed bill would extend the STEP program for three years.                 
  Employment Security collects and accounts for STEP  revenues                 
  along with  unemployment insurance taxes from  employers and                 
  employees.  STEP  revenues are  1/10 of one  percent of  the                 
  employee  contributions  that  would  have  accrued  to  the                 
  unemployment insurance  trust fund  to provide  unemployment                 
  benefits to Alaskan workers.                                                 
                                                                               
  The STEP program was  originally enacted in 1989 for  a two-                 
  year period.  In 1991 it was extended for an additional  two                 
  years.   It is scheduled to sunset June  30, 1993.  When the                 
  STEP concept was originally proposed, it recognized that the                 
  state  work force  was  in need  of  additional training  to                 
  remain competitive.   Use of revenues from  the unemployment                 
  trust fund was  determined to  be an  appropriate source  of                 
  funds, given  the three purposes  set forth in  the original                 
  legislation (Ch 95, SLA 1989):                                               
                                                                               
                                                                               
       1.   Help prevent future claims against unemployment                    
            benefits.                                                          
                                                                               
       2.   Foster new jobs by encouraging businesses to                       
            locate in Alaska due to the availability of a                      
            skilled labor force.                                               
                                                                               
       3.   Increase training opportunities to workers                         
            severely impacted by fluctuations in the state                     
            economy or technological changes in the work-                      
            place.                                                             
                                                                               
  Ms. Knight acknowledged  a commitment to employers  who bear                 
  the majority of the cost  of unemployment insurance and want                 
  to see this cost reduced.   Employment and training programs                 
  have thus  been targeted and  evaluated based on  trust fund                 
  savings.                                                                     
                                                                               
  In accordance with Sec.  7 of the STEP Act,  last spring the                 
  department   solicited   comments,    recommendations,   and                 
  priorities   from   agencies,   groups,   and   individuals.                 
  Regulations  were then promulgated  to ensure  that training                 
  funded with STEP revenues  would result in a savings  to the                 
  UI trust fund.   Included in target groups  to be served are                 
  individuals   presently   claiming   unemployment  insurance                 
  benefits (including women  and minorities), persons enrolled                 
  in the unemployed parent program  (JOBS program under AFDC),                 
  persons   responsible   for   court-ordered  child   support                 
  payments,  and those who  lack skills  or whose  skills have                 
  been outdated.                                                               
                                                                               
  Ms. Knight made reference to  amendments to the legislation,                 
  advised   that  the  administration  does  not  support  the                 
  amendments, and  urged the  committee to  pass the  original                 
  bill.   Co-chair Pearce  said that amendments  had not  been                 
  presented  to  the committee.    Ms. Knight  advised  that a                 
  packet  of  amendments  had  earlier  been provided  to  the                 
  department.   Co-chair Pearce  said they  were not  included                 
  within  members' files  since they had  not been  offered by                 
  anyone.    Senator  Kelly  voiced  need  to  hear  from  the                 
  department if the amendments are offered.                                    
                                                                               
  Ms.  Knight  stressed  need for  Alaskan  workers  to obtain                 
  better skills.  Thousands of unemployed Alaskans do not have                 
  the wherewithal to return  to work.  Human resources  are an                 
  important factor in economic development.                                    
                                                                               
  End, SFC-93, #51, Side 1                                                     
  Begin, SFC-93, #51, Side 2                                                   
                                                                               
  In response to  a question  from Co-chair  Frank asking  how                 
  STEP  moneys  are expended,  Ms.  Knight explained  that the                 
  Dept.  of Labor  collects  STEP  revenues from  unemployment                 
                                                                               
                                                                               
  insurance payments.  The department then contracts or enters                 
  into a  reimbursable services  agreement with  the Dept.  of                 
  Community  and Regional  Affairs  which  is responsible  for                 
  delivery of services and training.  Funding is divided among                 
  the three service  delivery areas established under  the Job                 
  Training  Partnership  Act.    The  mechanism for  JTPA  was                 
  utilized in an  attempt to minimize overhead  administrative                 
  costs.                                                                       
                                                                               
  MARK MICKELSON, JTPA/SDA Program Manager, Dept. of Community                 
  and  Regional  Affairs,  next  came  before committee.    He                 
  explained  that  the  federal JTPA  is  administered  by the                 
  department and passed along to three entities:                               
                                                                               
       1.   The Anchorage/Mat-Su private industry council.                     
       2.   Fairbanks private industry council.                                
       3.   The  statewide  private industry  council, located                 
  within                                                                       
                 the department,  that serves  the balance  of                 
  the            state.                                                        
                                                                               
  The  intent  with   the  STEP   program  was  to   piggyback                 
  administrative functions  with  JTPA which  was  already  in                 
  place.  The STEP program fills an important niche in overall                 
  program  strategy  in that  it does  not generally  focus on                 
  people with multiple barrier, severe dysfunction in terms of                 
  the  labor force.  That focus is  subsidized by Title 2A and                 
  2B of JTPA.                                                                  
                                                                               
  In response to  further inquiries from Co-chair  Frank, Judy                 
  Knight explained that the job  training council, a 21-member                 
  board appointed by the Governor, determines how funding will                 
  be apportioned.                                                              
                                                                               
  Mr.  Mickelson  voiced   support  for   the  STEP   program,                 
  describing it  as an  important contributor  to the  overall                 
  effort of work force preparation.                                            
                                                                               
  Senator Rieger  asked if the  above-listed councils contract                 
  with  other  entities  to  provide  direct  training.    Mr.                 
  Mickelson   said  that  the  state  merely  administers  the                 
  program.  Training  is provided by non-state  private-sector                 
  businesses,  nonprofits,  the  Alaska  Vocational  Technical                 
  Center in Seward, joint apprenticeship programs, etc.  These                 
  direct  service providers  are more  familiar with  industry                 
  requirements  and  the  skills that  need  to  be developed.                 
  Grant    award    is   through    competitive   procurement.                 
  Representatives  of  private industry  councils  sit on  the                 
  proposal review committee that makes final selections.                       
                                                                               
  Further  discussion followed  regarding  paper handling  and                 
  reporting  responsibilities  at  various  levels within  the                 
  program.   In response to  comments by  Co-chair Frank,  Mr.                 
  Mickelson said  that the  private industry  council provides                 
                                                                               
                                                                               
  planning, oversight, and guidance to administrative staff.                   
                                                                               
  JANE DEMMERT and JOHN REGITANO next came before committee on                 
  behalf of the  Fairbanks Native  Association.  Mrs.  Demmert                 
  noted that the Fairbanks Native Association is unique in its                 
  30-year  history of  service  in Fairbanks.    While it  was                 
  originally established to  serve the Native community,  many                 
  services  have  been  extended  and  expanded to  serve  all                 
  ethnicities  in  Fairbanks.    Services  include  education,                 
  social services,  services to elders, alcohol  and addiction                 
  prevention  and treatment  to  adults and  adolescents,  and                 
  employment counseling, training, and placement.                              
                                                                               
  The employment services component was established during the                 
  pipeline construction  days and  has provided services  with                 
  public funds since that time.                                                
                                                                               
  Mrs.  Demmert noted  that the  Association  is not  a tribal                 
  entity.  It is not eligible  for tribal job training funding                 
  as are some  regional nonprofits.  The  Association focus is                 
  upon provision  of services  to residents  of the  Fairbanks                 
  North Star Borough.  One becomes eligible for services after                 
  residing in the Fairbanks area 30 days.                                      
                                                                               
  Mrs. Demmert next  spoke to  allegations that the  Fairbanks                 
  Native Association prefers not to go through the competitive                 
  process to apply  for funding.  That  is not the case.   The                 
  purpose of this  appearance before  committee is to  suggest                 
  that a  competitive process which would enable organizations                 
  such as the Fairbanks Native Association to be a part of the                 
  STEP program would serve the state  very well.  Mrs. Demmert                 
  directed attention to the Association's position paper on SB
  57.                                                                          
                                                                               
  Mr.  Regitano spoke  to  needed adjustments  in the  bill to                 
  better  serve  the  large demand  for  employment assistance                 
  among  minority  populations  in  the  Fairbanks North  Star                 
  Borough.  The timing  of awards is now sporadic and does not                 
  allow  FNA   and  other  organizations   seeking  employment                 
  assistance money to apply for and  obtain funding on a year-                 
  round basis to provide a continuum of service to clients.                    
                                                                               
  A  further  problem  is  the   screening  process  for  STEP                 
  applicants.  That  process is long  and so detailed that  it                 
  discourages many from seeking employment assistance.                         
                                                                               
  The requirement  that STEP applicants must  have contributed                 
  to the  unemployment insurance  fund within  the last  three                 
  years is prohibitive and eliminates any people.  During  the                 
  past year,  two out of  three individuals "who  came through                 
  the door" were not eligible and had to be denied service.                    
                                                                               
  Mr. Regitano stressed need for flexibility and adjustment of                 
  eligibility criteria  to cover  a broader  range of  people.                 
                                                                               
                                                                               
  Some mechanism should  be built into  SB 57 to directly  tie                 
  funding  cycles to  the  state fiscal  year.   Mr.  Regitano                 
  acknowledged that the current  unscheduled cycle serves some                 
  programs but not FNA.  He  again voiced need for adjustments                 
  providing FNA equal access to funding.                                       
                                                                               
  Mr. Regitano noted  that FNA  competition for funding  would                 
  not interrupt  the flow of  moneys to PIC  (private industry                 
  council).  Dept.  of Community and Regional  Affairs figures                 
  for FY 92 indicate $552.0 in unused STEP moneys.                             
                                                                               
  Co-chair Frank inquired concerning the  success rate for FNA                 
  programs.  He asked that  representatives elaborate on other                 
  federal funds for  the FNA  employment program and  indicate                 
  how  a  competitive mechanism  could  be implemented  in the                 
  legislation.  Mr. Regitano proposed a competitive process at                 
  the Dept. of Community and Regional Affairs similar  to that                 
  utilized  by the Dept.  of Health and  Social Services where                 
  RFPs issue in April or May for funding to be  made available                 
  July 1.   Following application,  review, and award  by June                 
  30, organizations would then know what amounts they would be                 
  receiving.                                                                   
                                                                               
  In  further discussion  with  Co-chair  Frank, Mr.  Regitano                 
  expressed a preference for award to be made at the 21-member                 
  state JTPA council level.                                                    
                                                                               
  Speaking  to the success rate  of FNA programs, Jane Demmert                 
  advised that long-term  follow-up of clients placed  in jobs                 
  indicates 69% have  remained in permanent employment.   That                 
  is a  significant turn  around.   Those  individuals are  no                 
  longer on  state welfare rolls, and they are contributing to                 
  the state economy.                                                           
                                                                               
  Addressing the question of alternative funding, Mrs. Demmert                 
  explained that  FNA is  not eligible  for categorical  funds                 
  provided to Indian  tribes.   FNA is thus  not eligible  for                 
  specific JTPA funding.                                                       
                                                                               
  Co-chair  Frank  asked  if FNA  programs  duplicate  similar                 
  programs offered by  the private  industry council or  other                 
  entities.  Mrs. Demmert said that  75% of the clients served                 
  by FNA are Native and other minorities.  The reverse is true                 
  of  the Fairbanks private  industry council.   Approximately                 
  30% of those clients are Native  or other minorities.  Need,                 
  demand, and  response is  such that  the two programs  serve                 
  different client  groups and  hopefully meet  the employment                 
  needs of the entire community of Fairbanks.                                  
                                                                               
  Senator  Kerttula  inquired  concerning FNA  overhead.   Mr.                 
  Regitano answered that the currently approved rate is 19.3%.                 
  Delivery is  thus at  81%.   The STEP  program, however,  is                 
  capped at 15%.                                                               
                                                                               
                                                                               
  Discussion  followed  between   Mr.  Regitano  and   Senator                 
  Kerttula regarding the cross referencing of services.                        
                                                                               
  Senator Kelly inquired concerning FNA's  annual budget.  Mr.                 
  Regitano advised that  the most recent audit  evidenced $5.1                 
  million.   The STEP program is  merely one piece of  a total                 
  service system.  It is an important piece  in that FNA works                 
  on a  multiple department basis, offering community service,                 
  family  intervention, education, and  the largest (80%) drug                 
  and   alcohol   prevention   and  rehabilitation   programs.                 
  Employment  is  a key  component  of  these services.    Mr.                 
  Regitano  observed  that   clients  who  receive  assistance                 
  through other FNA  services but who are  subsequently unable                 
  to find work, are often readmitted to assistance programs.                   
                                                                               
  Senator Kelly voiced his understanding that the STEP program                 
  is  currently successful.    FNA is  requesting a  change in                 
  funding source, criteria, screening, etc.  He then asked why                 
  that should  be done when the program  is working well.  Mr.                 
  Regitano acknowledged  that the  program is  working for  "a                 
  certain  group."   He  then voiced  his  opinion that  it is                 
  "missing  a large  group  of  people."   Further,  there  is                 
  available  funding  that  could  be   used  to  serve  those                 
  individuals.   FNA is only asking for changes in order to be                 
  able to compete.                                                             
                                                                               
  In  response to an additional question by Senator Kelly, Co-                 
  chair  Frank noted  that FNA  seeks to  serve  the long-term                 
  unemployed as well  as short-term.  Senator  Kelly suggested                 
  that STEP is not designed to do that.  Mr.  Regitano advised                 
  that those who have been out of work for a longer period are                 
  not  being  served.    He  noted  that  minority  population                 
  unemployment in Fairbanks is double that of the majority.                    
                                                                               
  Co-chairman Frank  acknowledged  a  teleconference  link  to                 
  Fairbanks   and    directed   that   testimony    from   the                 
  teleconference site commence.                                                
                                                                               
  NEAL PLATEAU, (683-2698) Alascan, Inc., first testified.  He                 
  voiced support for the STEP program, saying that it has been                 
  of  great benefit  in  enabling the  company  to employ  new                 
  techniques  that allow  Alascan  to lower  the  cost of  its                 
  product.  Without  STEP, Alascan would  not be able to  keep                 
  its employees  working full time.   The  program is  working                 
  well as  it is.   It should  not be  changed.   Alaska needs                 
  manufacturing  and   other  industry.     Under  STEP,  more                 
  businesses can utilize  funds for  special training than  if                 
  certain amounts  of funding  are dedicated  to a  particular                 
  group.                                                                       
                                                                               
  BOB SWOPE next spoke in support of continued funding through                 
  FY  96.    He  explained  that  as a  non-Native  client  of                 
  Fairbanks Native  Association  services  he  benefited  from                 
  FNA's job referral program.                                                  
                                                                               
                                                                               
  End, SFC-93, #51, Side 2                                                     
  Begin, SFC-93, #53, Side 1                                                   
                                                                               
  It represents a  proactive rather than reactive  response to                 
  problems  associated  with getting  a younger  generation of                 
  Native men and women trained and employed in the work force.                 
  There  is  an  overwhelming savings  from  reduction  of the                 
  number  of  individuals  on unemployment  rolls  and  social                 
  service programs  that far  outweighs the  cost of  the STEP                 
  program.  Mr. Swope asked that regardless of whether funding                 
  issues  through   grants  or   competitive  proposals,   the                 
  committee  ensure  that  the  level   remains  the  same  or                 
  increases.                                                                   
                                                                               
  NELLIE   HENSLEY,   Program   Director,   Fairbanks   Native                 
  Association  employment   program,  next  testified.     She                 
  explained  that  over the  past  two years  the  program has                 
  served over  1,000 clients.   That  number reflects  the FNA                 
  STEP program, a federal program,  and a small JTPA  project.                 
  If these clients had not been served, they would qualify for                 
  AFDC   or   other   welfare   programs   for    economically                 
  disadvantaged individuals.   Of  the 1,000,  FNA placed  301                 
  individuals in jobs, and 69%  have retained their employment                 
  and are  contributing to the unemployment  insurance system.                 
  The  FNA  program is  needed.    It provides  services  to a                 
  population  that  is   not  being  served  through   present                 
  employment  and training  programs  available in  Fairbanks.                 
  There  is  need for  both the  STEP  program and  changes to                 
  enhance the program.                                                         
                                                                               
  HOLLY  BURNS  voiced  support  for  the program.    (Unclear                 
  transmission  and  noises  in the  committee  room  make Ms.                 
  Burns'   brief   teleconference   testimony   difficult   to                 
  understand.)                                                                 
                                                                               
  TED  WICKEN  next  spoke in  support  of  the  program.   He                 
  explained that  it  made a  great  difference in  his  life.                 
  After having  worked construction for many years,  he is now                 
  undergoing  training  through  STEP so  he  can  continue to                 
  support his family.                                                          
                                                                               
  JAMES  WRIGHT next spoke  via teleconference from Fairbanks.                 
  He  advised that  he is  an  Alaska Native,  originally from                 
  Ruby, who is presently undergoing  FNA training in cadastral                 
  surveying.    Mr.  Wright urged  continued  support  for the                 
  program.                                                                     
                                                                               
  MADELINE WILLIAMS advised that  she is a Native from  Huslia                 
  and  a client at  FNA.  She voiced  support for FNA training                 
  and urged that support continue.                                             
                                                                               
  LINDA   PEARSON,   Counselor,   Hutchinson  Career   Center,                 
                                                                               
                                                                               
  Fairbanks   North   Star  Borough   School   District,  next                 
  testified.    She  explained  that  the  career  center  has                 
  traditionally prepared  students for  the job  market.   Ms.                 
  Pearson attested to the fact that a number of adult minority                 
  clients have taken classes and thereafter secured jobs.  She                 
  voiced support for FNA's employment  program.  It provides a                 
  one-stop-shopping type service  to a  unique clientele  (75%                 
  minority), with  a  personal  touch.   In  addition  to  job                 
  development,  education,  work  experience,   and  day-labor                 
  placement, counselors teach  clients how to  get and keep  a                 
  job.  Clients explore their interests and assets.  They work                 
  on   application  and   resume   development  and   practice                 
  interviewing in order  to improve interview  skills.  It  is                 
  the personal touch that reaches  discouraged individuals who                 
  might  not  otherwise seek  help  from  job service  or  the                 
  private industry council.  It is valuable in that it puts to                 
  work   individuals  who   might   not   otherwise  have   an                 
  opportunity.   Speaking  from  a national  perspective,  Ms.                 
  Pearson  said that job readiness  skills are as important as                 
  actual job training.                                                         
                                                                               
  KENNY HOKE, member, Fairbanks Private Industry Council, next                 
  spoke to  committee.   He voiced  private-sector support  as                 
  well  as support  for FNA's  competitive bid  approach.   He                 
  suggested that that approach could be more readily addressed                 
  through regulatory rather  than statutory change.   He urged                 
  support of SB 57 without the amendments.                                     
                                                                               
  In response to  a question from Co-chairman  Frank, Mr. Hoke                 
  suggested  that proposed changes  should address  funds that                 
  lapsed to the  general fund.  Unused  unemployment insurance                 
  funds from the  previous year  should be held  in a  special                 
  account and issued via competitive bid.                                      
                                                                               
  DAVID DEAN,  executive director, Fairbanks  Private Industry                 
  Council, next testified.  He referred to earlier comments by                 
  Mr. Regitano that two out of three individuals coming to FNA                 
  are not eligible  for the  STEP program.   That analysis  is                 
  based upon a designated grant to FNA.  It does not represent                 
  the statistics  of the  Fairbanks Private  Industry Council.                 
  Council statistics indicate  that far more are  eligible for                 
  the program.                                                                 
                                                                               
  Addressing comments regarding STEP funding cycles,  Mr. Dean                 
  said  funding  is based  upon  actual allocation  arrival at                 
  private industry councils.  There is no delay in advertising                 
  for proposals or award of contracts.                                         
                                                                               
  Mr.  Dean  noted that  the  long-term unemployed  are served                 
  under Title  2 of JTPA.  Councils administer those programs.                 
  Long-term  unemployed individuals  would certainly  meet the                 
  economically  disadvantaged  criteria.     The  council   is                 
  currently serving  approximately 30% minority  clients in  a                 
  city with a minority population of less than 20%.                            
                                                                               
                                                                               
  The  Fairbanks  Private  Industry  Council  has  cooperative                 
  agreements  with the  Fairbanks Native  Association and  the                 
  Tanana Chiefs Conference,  and clients are referred  by both                 
  agencies.                                                                    
                                                                               
  Mr.  Dean next read  a letter of support  for SB 57, without                 
  amendments,  from the  chairman  of  the  Fairbanks  Private                 
  Industry  Council.  In  response to an  inquiry from Senator                 
  Kelly, Mr. Dean advised that a  copy of the March 31,  1993,                 
  correspondence was faxed to each Senator's office.                           
                                                                               
  CHRISTINA HILL, member,  FNA, next spoke  in support of  the                 
  bill.    She explained  that she  is  a public  employee who                 
  employs approximately 23  Native staff  members.  She  urged                 
  continuation of funding for FNA  services and requested that                 
  the  legislature  consider  expansion  of  funding  sources,                 
  noting  that   agencies  that  directly   serve  the  Native                 
  community and other  minority communities should be  able to                 
  compete for funding.                                                         
                                                                               
  EDNA  MATTHEW,  employment   specialist,  Fairbanks   Native                 
  Association, next testified, requesting continued funding of                 
  FNA STEP  programs.  There  are presently 262  clients being                 
  served by three counselors at FNA.   Each client is provided                 
  orientation   regarding   the  association's   programs  and                 
  services.   They then progress through intake and work skill                 
  assessment.  Clients  are provided a job readiness class and                 
  learn resume skills prior to  referral to jobs or additional                 
  training.     FNA  services   are  not  duplicating  similar                 
  programs.   Although  minorities  may  only  be 20%  of  the                 
  Fairbanks    population,    they    are   disproportionately                 
  represented  in the  unemployed  sector.   FNA's  employment                 
  program serves a need that must be met in Fairbanks.                         
                                                                               
  HARRY FIELDS  next voiced  support for the  STEP program  on                 
  behalf of  the  private industry  council.   (Teleconference                 
  testimony is unclear and difficult to discern.)                              
                                                                               
  JULIE WILSON next testified.   She explained that she  is an                 
  instructor at the  Fairbanks Native  Association.  She  then                 
  voiced support for  continued funding of the  FNA employment                 
  program through STEP moneys.  Ms. Wilson said that she works                 
  specifically with adult basic education, academic assessment                 
  of  clients, and job  readiness workshops.   FNA services do                 
  not duplicate other programs in the Fairbanks area.                          
                                                                               
  Co-chair Pearce called for additional testimony on the bill.                 
  None   was   forthcoming.      Upon    conclusion   of   the                 
  teleconference, Co-chair Pearce directed that  SB 57 be HELD                 
  in  committee  pending  arrival of  Mayor  Jim  Sampson from                 
  Fairbanks.                                                                   
                                                                               
  [See page 22 for further comments on this legislation.]                      
                                                                               
                                                                               
  SENATE BILL NO. 85                                                           
                                                                               
       An Act  extending the  termination date  of the  Alaska                 
       Tourism  Marketing  Council;   and  providing  for   an                 
       effective date.                                                         
                                                                               
  Co-chair Pearce  directed  that  SB 85  be  brought  on  for                 
  discussion and further directed attention to amendments  for                 
  the bill.  She recalled  prior committee discussion relating                 
  to need to shorten the time of sunset and place a task force                 
  on tourism into temporary  law.  The  task force is to  work                 
  during the interim and make recommendations next January for                 
  new methods of funding tourism marketing on a public/private                 
  basis.  The legislature is interested in a  greater private-                 
  sector infusion into the ATMC program.  That is reflected in                 
  the  budget.   Both the  Governor's and  the  Senate budgets                 
  increase the private portion to 20%.  The House budget shows                 
  an increase to 22.5%.                                                        
                                                                               
  Directing  attention  to page  2, lines  21  and 22,  of the                 
  Senate  Labor  and Commerce  version  of the  bill, Co-chair                 
  Pearce noted that,  at the request  of the department,  bill                 
  language removes the  director of  tourism as the  presiding                 
  officer of  the board.   Senate Finance  received a  request                 
  from the Governor's  office through  boards and  commissions                 
  that  the  Governor  be  allowed  to appoint  the  presiding                 
  officer from among board members.                                            
                                                                               
  BILL  PEDLAR,  Princess Tours,  came  before committee.   He                 
  advised that all Alaskan businesses  in the tourism industry                 
  benefit  greatly   from  cooperative   marketing.     As   a                 
  destination, Alaska competes with Canada,  Europe, and other                 
  locations where millions  are spent at the federal  level to                 
  promote those destinations.  Travel to Alaska often ranks as                 
  a foreign vacation rather than travel to another state.                      
                                                                               
  Mr. Pedlar  took exception  to the  perception that  certain                 
  members   of  the   industry--most   notably,  cruise   ship                 
  operators--have    disproportionately     benefitted    from                 
  cooperative marketing.   From 1986 through 1993,  the cruise                 
  industry in  Alaska has grown  from 201,000 beds  to 320,000                 
  beds.  That  represents over  a 60% increase.   During  that                 
  time, pleasure vacations and visits to friends and relatives                 
  grew only 43%.  The cruise  market outsupplied growth in the                 
  vacation  pleasure/visitor market.  That was accomplished by                 
  two things:  marketing and supply.  The cruise industry is a                 
  supply based segment of the industry.   It will find a price                 
  that will clear the supply in  the marketplace.  If inherent                 
  demand is not there  for the destination, the  industry will                 
  find a way of  liquidating its product at a  price that will                 
  fill  its  assets.   From  1986  to  1993, Princess  Cruises                 
                                                                               
                                                                               
  increased  its  marketing budget  from  $6.1 million  to $13                 
  million to market  $383 million worth of  assets deployed in                 
  the trade.  That  represents $63 million worth of  assets in                 
  the State of  Alaska, including hotels, motor  coaches, rail                 
  cars, and  an equivalent investment of $320 million worth of                 
  ships.                                                                       
                                                                               
  Alaska  is the only trade in  which Princess Cruises markets                 
  the destination first and the mode of transportation second.                 
                                                                               
  During  the   time  that  Princess   Cruises  increased  its                 
  marketing  budget 113%,  funding  for cooperative  marketing                 
  increased from  $4.5 million to $6.2 million.   The industry                 
  contribution increased from  $1.2 million  to $1.4  million.                 
  The Division of Tourism budget  increased from $2 million to                 
  $3.2 million in that same period.                                            
                                                                               
  Mr. Pedlar voiced  his contention  that the cruise  industry                 
  has  not  disproportionately  benefitted   from  cooperative                 
  marketing.   It has benefitted  from application of  its own                 
  resources to an  expanding market.   He noted that in  1993,                 
  Alaska  has  no  more  market  share  of  the  world  cruise                 
  deployment than it had in 1986.  The cruise growth in Alaska                 
  has maintained its position since that time.                                 
                                                                               
  The  council  does an  excellent job  with  the funds  it is                 
  given.    While  the  21  members  have  not  always  worked                 
  harmoniously, eleven of the 21 must  agree upon how to spend                 
  state funds and the private industry match.   It is the best                 
  check and balance  the state  has to ensure  that funds  are                 
  spent in an intelligent manner.  No one person or one entity                 
  on the council  can expend funds.   There is no  subterfuged                 
  control.                                                                     
                                                                               
  In  his  closing  remarks,  Mr.  Pedlar voiced  support  for                 
  continuation of the  council, reiterating  that there is  no                 
  disproportionate benefit  to  any one  entity  from  generic                 
  marketing.    He  again  attested  to the  effectiveness  of                 
  existing  checks   and  balances  associated   with  council                 
  expenditures.    Mr.  Pedlar  urged  committee  support  for                 
  continued and increased funding for the council.                             
                                                                               
  Co-chair Pearce asked if the marketing increase from $6.1 to                 
  $13 million represents Princess Cruise marketing  for Alaska                 
  or for  the  entire  company.    Mr.  Pedlar  answered  that                 
  marketing is tracked by trade.   The Alaska trade has grown.                 
  Marketing  the  Alaska  destination in  light  of  worldwide                 
  global competition has required additional funds.                            
                                                                               
  In response  to a question  from Co-chair Frank,  Mr. Pedlar                 
  acknowledged that  he was in  favor of expanding  year round                 
  television at the expense of "some  of the travel planners."                 
  The last 100,000 distribution of travel planners may  not be                 
  the most cost  effective advertising.  Mr. Pedlar  voice his                 
                                                                               
                                                                               
  belief that  "One of  the things  that .  . .  has hurt  the                 
  growth in other segments is  the overall, generic appearance                 
  of  Alaska  in  the  marketplace."   When  Princess  Cruises                 
  markets Alaska, it  has a vested  corporate interest in  the                 
  minds  of  consumers.    When  the  state  produces  generic                 
   television  ads  featuring the  beauty  of Alaska,  there is                
  great  credibility   that  builds   consumer  interest   and                 
  awareness.   That  part  of the  budget has  constantly been                 
  eroded since 1981.   When faced with impending  budget cuts,                 
  the  council  reassessed  its  efforts  and felt  there  was                 
  greater  need  for   consumer  awareness  of  Alaska   as  a                 
  destination, via increased  television advertisements.  That                 
  meant  sacrificing,  in   the  short  term,  "a   couple  of                 
  distributions of travel planners."   That was done with  the                 
  hope that the  planner could again go  forward once consumer                 
  awareness was built.                                                         
                                                                               
  Responding to comments by Senator  Kerttula, Mr. Pedlar said                 
  that  the  general  fund allocation  to  the  Alaska Tourism                 
  Marketing Council was  approximately $6.2 million  for 1993.                 
  Advertising  and  distribution  associated with  the  travel                 
  planner comprises $4.5 million of that total.  The remainder                 
  is for  public  relations, fam  trips, administration,  etc.                 
  What  is  left  over  is   utilized  for  network  or  cable                 
  television.  Market  place rating  points for  1993 are  not                 
  even close to those of 1983 and 1984.                                        
                                                                               
  Co-chair  Pearce  directed attention  to  packet information                 
  (copy  on  file  in  the  original  SFC  bill  file  at  the                 
  Legislative Finance Division) demonstrating  distribution of                 
  funds since 1989.                                                            
                                                                               
  Co-chair  Frank asked  if  domestic  marketing includes  the                 
  Alaska  Highway.   Mr.  Pedlar  answered affirmatively.   He                 
  explained that  the Division  of Tourism  has commenced  the                 
  Tourism  North project.  It funds a strategic market focused                 
  on highway travel.                                                           
                                                                               
  Co-chair Frank spoke  to criticism  that marketing does  not                 
  focus on Alaskan-owned  businesses and  is dominated by  the                 
  cruise ship industry.   He then  suggested that it would  be                 
  worthwhile  for  generic   advertising  to  include  various                 
  methods of getting to Alaska.   Mr. Pedlar said that generic                 
  marketing,  through  distribution  of  the  travel  planner,                 
  features different methods  of traveling to the state.   The                 
  other  impression  attempted to  convey  through ads  is the                 
  myriad of  interesting things in  Alaska.  He  conceded that                 
  perhaps  a  picture  of  an  R.V.  should   be  worked  into                 
  advertising.  Mr.  Pedlar next spoke to  problems associated                 
  with attempting to target marketing for a specific region or                 
  type of travel under a  generic banner, indicating that such                 
  an approach means that there is usually not enough money "to                 
  do anything really well."                                                    
                                                                               
                                                                               
  End, SFC-92, #53, Side 1                                                     
  Begin, SFC-92, #53, Side 2                                                   
                                                                               
  Mr. Pedlar acknowledged that cruise ship marketing sometimes                 
  supplants  state   marketing  in  the  minds   of  potential                 
  travelers.   He further acknowledged that pricing calculated                 
  to  fill  ships  often  makes  highway  travel  appear  less                 
  economical.                                                                  
                                                                               
  Co-chair  Frank  voiced  his   belief  that  many  potential                 
  visitors do  not even know that  it is possible to  drive to                 
  Alaska.    He  noted  that the  recent  Alaska  Highway 50th                 
  anniversary   celebration   would  have   provided   a  good                 
  opportunity to focus on that type of travel.                                 
                                                                               
  Senator  Sharp suggested that  most state advertising moneys                 
  have been channelled to benefit those who can most afford to                 
  advertise,  at  the expense  of  others.    There should  be                 
  opportunity  to  channel  funding toward  a  broad  scope of                 
  advertisement that benefits many.                                            
  Senator Kerttula spoke to the value of the vacation planner,                 
  advising of support  from constituents.   He voiced  concern                 
  over reduced distribution  and attested  to need to  promote                 
  rural  wilderness  experiences.   Increases  in  the  budget                 
  should be dedicated to destination tourism.                                  
                                                                               
  Senator  Jacko questioned support for expenditure of general                 
  fund  moneys  for   tourism  in   light  of  resistance   to                 
  expenditure of general funds for seafood marketing.                          
                                                                               
  Co-chair  Pearce  directed  attention to  Amendment  No.  1,                 
  requested by the  Governor's Office,  and explained that  it                 
  would add the following language at page 2, lines 21 through                 
  23:                                                                          
                                                                               
       the  governor shall  appoint a  presiding  officer from                 
       among board members;                                                    
                                                                               
  Senator  Kelly   MOVED  for  adoption.     Senator  Kerttula                 
  OBJECTED,  inquiring  concerning  the  reasoning behind  the                 
  change.   Co-chair Pearce explained that the director of the                 
  division  of  tourism  currently serves  as  chairman.   The                 
  director did not  feel it appropriate that  he automatically                 
  be  designated.    The  board  consists  of  21 members  (10                 
  appointed  by the  Governor, 10  appointed  by AVA,  and the                 
  director  of  tourism).    The  Senate  Labor  and  Commerce                 
  Committee included  language requiring that the  board elect                 
  the chairman.   The Governor's  Office indicated that  since                 
  the state  is funding  77.5%  of the  marketing effort,  the                 
  administration should select the  chairman from among  board                 
  members.   Senator  Kelly  noted that  the  director of  the                 
  division of tourism  would continue  to sign all  contracts,                 
  regardless of whether he serves as chairman.   That provides                 
  additional protection.                                                       
                                                                               
                                                                               
  Co-chair Frank voiced  his preference  for retention of  the                 
  director of tourism as chairman.   That arrangement provides                 
  integration  between  domestic  and international  marketing                 
  efforts.   He also  attested to  the benefits  of having  an                 
  individual   working  full  time  in  tourism  do  necessary                 
  background work and form the agenda.  To expect a lay person                 
  to fill that role is unrealistic.                                            
                                                                               
  TINA LINDGREN, Executive Director,  Alaska Tourism Marketing                 
  Council,  and  WENDY  MULDER,  Special  Assistant,  Dept. of                 
  Commerce   and  Economic   Development,  next   came  before                 
  committee.   Ms. Lindgren  concurred  in foregoing  comments                 
  that the director  of tourism  asked that he  be removed  as                 
  presiding officer  of the  council.   She explained  that at                 
  times  he  has been  put  in  an awkward  position  when the                 
  Governor's  viewpoint  is  in conflict  with  the  council's                 
  position.                                                                    
                                                                               
  Senator Sharp  raised  questions  concerning  the  following                 
  explanation associated with Amendment No. 1:                                 
                                                                               
       This board approves  millions of dollars each  year for                 
       state  funded tourism  promotion.   It would  certainly                 
       injure the public  perception of the  ATMC to have  the                 
       AVA-dominated board selecting their own  chair.  At the                 
       least, the chair  should be accountable to  the public,                 
       not  just  one  private  organization.    Allowing  the                 
       governor to appoint the chair will accomplish this.                     
                                                                               
  He noted that the governor could appoint a representative of                 
  a  strong  private  organization  as   chairman.    He  then                 
  suggested  that  Amendment  No.  1  would not  preclude  the                 
  situation warned of in  the above language and  advised that                 
  he  could  not  support  the   amendment.    Co-chair  Frank                 
  concurred in lack of support.                                                
                                                                               
  Co-chair Pearce called  for a show  of hands on adoption  of                 
  Amendment  No. 1.  The motion  carried on a vote  of 4 to 3,                 
  and AMENDMENT NO. 1 was ADOPTED.                                             
                                                                               
  Co-chair Pearce directed  attention to  Amendment No. 2  and                 
  explained that it would establish, in  temporary law, a task                 
  force  on tourism.  She attested  to concern regarding long-                 
  term funding for  generic marketing and past  utilization of                 
  those moneys.   Senator Kerttula asked  if Senate Labor  and                 
  Commerce  could   undertake  the  effort  if   provided  the                 
  necessary funding.  Senator Kelly  said that as chairman  of                 
  Senate Labor and  Commerce Committee, he was  not interested                 
  in performing the work.  He then suggested that there should                 
  not be great  expense associated with  the task force.   Co-                 
  chair  Pearce  concurred, advising  that  no staff  would be                 
  involved.   Travel would be  paid from  leadership funds  in                 
  both houses of the legislature.                                              
                                                                               
                                                                               
  Senator Kelly MOVED  for adoption  of Amendment No.  2.   No                 
  objection having been raised, AMENDMENT NO. 2 was ADOPTED.                   
                                                                               
  Co-chair Pearce  directed attention to Amendment No. 3.  She                 
  explained that the bill currently has a sunset date of 1997.                 
  Because of concerns surrounding ATMC and the task force, the                 
  proposed  amendment   would  replace  June  20,  1997,  with                 
  December 30, 1994.   That date was chosen since  the council                 
  markets on  a seasonal  bases rather  than the state  fiscal                 
  year.  The task  force could thus return to  the legislature                 
  with  recommendations prior  to  sunset.   Senator  Kerttula                 
  voiced support and  MOVED for adoption  of AMENDMENT No.  3.                 
  Senator Kelly OBJECTED.   He said he  saw no reason for  the                 
  one-year  extension.   While  voicing  support for  the task                 
  force, he advised that the council "does a fine job."  There                 
  is  no need  to  hold the  extension  over council  members'                 
  heads.   Co-chair Pearce spoke to concern that extension may                 
  not be forthcoming  from the House.   It is  hoped that  the                 
  shortened  time  frame  and  interim  task force  would  aid                 
  passage and avoid impending sunset of the Council.                           
                                                                               
  Co-chair Pearce called  for a show  of hands on adoption  of                 
  Amendment No. 3.   The motion carried on a  vote of 5 to  1,                 
  and AMENDMENT NO. 3 was ADOPTED.                                             
                                                                               
  Co-chair  Frank  suggested that  the  following language  be                 
  added at page 2, following Line 17:                                          
                                                                               
       including the promotion of Alaska  as a destination and                 
       all form of travel to Alaska, including travel by  air,                 
       highway, water                                                          
                                                                               
  Co-chair Pearce designated the foregoing as Amendment No. 4.                 
  She then directed  that action on  the amendment be held  in                 
  abeyance  pending  formal  presentation of  the  language in                 
  written form.                                                                
                                                                               
  Senator Kelly referenced title language at page  1, line 12,                 
  and  spoke  to   need  to  remove  the   word  "substantial"                 
  therefrom.    He explained  that  Senate Labor  and Commerce                 
  Committee  action  deleted a  requirement that  certain ATMC                 
  board  members  be substantially  involved  in a  visitor or                 
  recreation industry business.  Such  language should also be                 
  removed from the title.                                                      
                                                                               
  Co-chair Pearce directed that discussion of SB 85 be HELD IN                 
  ABEYANCE pending formal presentation of Amendment No. 4.                     
                                                                               
  [See pages 22-23 for continued discussion of SB 85.]                         
                                                                               
                                                                               
  SENATE BILL NO. 171                                                          
                                                                               
                                                                               
       An  Act  relating  to  the  contracting  and  financing                 
       authority  of  the  Alaska Industrial  Development  and                 
       Export Authority,  giving approval of  the issuance  of                 
       the  authority's   revenue  bonds,  and   delaying  the                 
       termination date of the authority's business assistance                 
       program; and providing for an effective date.                           
                                                                               
  Senator  Kerttula MOVED to  rescind committee action passing                 
  CSSB 171 (Finance) from committee.  No objection having been                 
  raised, IT WAS  SO ORDERED.   CSSB 171  (Finance) was  again                 
  before committee.                                                            
  SENATOR JOHNNY ELLIS came before  committee, asking that the                 
  substance of SB 16 (AIDEA BONDS: ANCHORAGE SEAFOOD FACILITY)                 
  be incorporated within CSSB 171  (Finance).  He then offered                 
  an amendment to that effect.                                                 
                                                                               
  (Recording  problem.  Minutes relating to action on CSSB 171                 
  (Finance) and testimony  on SB  57 reflect transcription  of                 
  shorthand notes.  There is no recording.)                                    
                                                                               
  Co-chair Pearce  directed that  the amendment be  designated                 
  Amendment No. 3 and called for objections.  She also advised                 
  of  her  preference  for  inclusion  of all  three  projects                 
  contained  in  CSSB  171  (Finance)  within  title language.                 
  Senator Kerttula MOVED for adoption of Amendment No. 3 and a                 
  listing  of  the projects  within  title language.   Senator                 
  Kelly initially OBJECTED  and then  WITHDREW his  OBJECTION.                 
  Senator Rieger  reiterated  his  earlier  expressed  concern                 
  regarding  lack  of  information  associated  with  projects                 
  within the bill.  Co-chair Pearce called for a show of hands                 
  on the motion.  The motion CARRIED on a vote  of 5 to 1, and                 
  AMENDMENT NO. 3 and the TITLE CHANGE were ADOPTED.                           
                                                                               
  Senator  Kerttula  then  MOVED  for   passage  of  CSSB  171                 
  (Finance)  with individual  recommendations.   No  objection                 
  having  been raised, CSSB 171  (Finance) was REPORTED OUT of                 
  committee  with  a  zero  fiscal noted  from  the  Dept.  of                 
  Commerce  and Economic  Development.   Co-chair  Pearce  and                 
  Senators  Kelly, Kerttula,  and Sharp  signed the  committee                 
  report  with  a "do  pass"  recommendation.   Senator Rieger                 
  signed "no recommendation."   Senator  Jacko signed  without                 
  making a recommendation.                                                     
                                                                               
                                                                               
  SENATE BILL NO. 57                                                           
                                                                               
       An  Act  relating to  employment  contributions  and to                 
       extending the pilot project for  the state training and                 
       employment  program;  and  providing for  an  effective                 
       date.                                                                   
                                                                               
  JIM  SAMPSON,  Mayor,  Fairbanks North  Star  Borough,  came                 
                                                                               
                                                                               
  before committee in support  of SB 57.  He said  that a good                 
  public policy argument could be made for investment in long-                 
  term  programs allowing  unemployed  individuals to  develop                 
  skills needed  in the  current job  market.   He voiced  his                 
  belief that FNA should be allowed to compete for funding and                 
  stressed need for earlier receipt of STEP moneys.  The mayor                 
  concurred in previous  testimony regarding  need to  provide                 
  programs for the long-term unemployed.                                       
                                                                               
  Co-chair  Pearce  directed   that  SB  57  be  placed  in  a                 
  subcommittee under Senator Kelly.                                            
                                                                               
                                                                               
  SENATE BILL NO. 85                                                           
                                                                               
       An Act  extending the  termination date  of the  Alaska                 
       Tourism  Marketing   Council;  and  providing   for  an                 
       effective date.                                                         
                                                                               
  (Remaining minutes reflect tape transcription.)                              
                                                                               
  Co-chair Pearce directed  that discussion  revert to SB  85.                 
  Co-chair  Frank distributed  Amendment No.  4 and  explained                 
  that the intent is  to place in statute, under  ATMC duties,                 
  direction that the  council promote Alaska as  a destination                 
  in all forms  of travel, including air, highway,  and water.                 
  He suggested that the new directive would send a signal that                 
  the  legislature  is  concerned  about  all aspects  of  the                 
  tourism market.                                                              
                                                                               
  TINA LINDGREN, Executive Director, Alaska Tourism  Marketing                 
  Council, again came before committee.   She advised that the                 
  council  is  attempting to  accomplish  the intent  embodied                 
  within  the  proposed amendment,  noting  that  the vacation                 
  planner contains information on  different modes of  travel.                 
  Ms.  Lindgren  voiced  concern  that  the   amendment  might                 
  restrict the  marketing of  highway travel  per se  since it                 
  might  preclude  the  council  from  conducting  a  specific                 
  promotion.   Co-chair Frank advised that he  did not foresee                 
  that becoming a problem.                                                     
                                                                               
  Senator Kelly reiterated  earlier comments  (see page 20  of                 
  these  minutes)   regarding   need  to   delete   the   word                 
  "substantially"  from  title language.    He then  MOVED for                 
  adoption of that  technical amendment.  No  objection having                 
  been raised, IT WAS SO ORDERED.                                              
  [NOTE the  drafter subsequently  determined  that since  the                 
  legislation  would  delete  the   requirement  that  certain                 
  members  of  the  council  be  substantially involved  in  a                 
  visitor or recreation  business, it was necessary  to retain                 
  "substantially" within  title language.  That  retention was                 
  cleared  with Senator  Kelly's  office, and  "substantially"                 
  remained within the title of CSS 85 (Finance).]                              
                                                                               
                                                                               
  Co-chair Frank MOVED for  adoption of Amendment No. 4.   Co-                 
  chair Pearce initially OBJECTED to allow time  for review of                 
  specific wording by members.   Following review of amendment                 
  language, Tina Lindgren advised  that she did not foresee  a                 
  problem.  Wendy  Mulder voiced support for  the amendment on                 
  behalf of the  Dept. of  Commerce and Economic  Development.                 
  Co-chair  Pearce   REMOVED  her  OBJECTION  to  adoption  of                 
  Amendment  No. 4.   She then called  for further objections.                 
  None were forthcoming, and Amendment No. 4 was ADOPTED.                      
                                                                               
  Senator  Jacko  MOVED  that  CSSB  85  (Finance)  pass  from                 
  committee with  individual recommendations.   Senator  Sharp                 
  OBJECTED.  Co-chair Pearce called for a show of hands.   The                 
  motion CARRIED on  a vote of 5  to 1, and CSSB  85 (Finance)                 
  was REPORTED OUT of  committee with a zero fiscal  note from                 
  the Dept. of  Commerce and Economic Development.   Co-chairs                 
  Pearce  and  Frank  and Senators  Jacko,  Kelly,  and Rieger                 
  signed the committee report with a "do pass" recommendation.                 
  Senator Sharp  signed "Do not  pass."  Senator  Kerttula had                 
  left the meeting and did not sign.                                           
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:15 a.m.                        
                                                                               

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