SB 122-NONRES.GAME TAG FEES/WILDLIFE TOUR PASS  MR. GORDY WILLIAMS, special assistant, Alaska Department of Fish and Game (ADF&G), explained to members that SB 122 contains two parts. The first part establishes a $15 wildlife conservation pass for certain visitors who use a commercial opportunity to view wildlife. The second part raises non-resident alien big game tag fees for certain species. He provided the following statement: The Administration believes it is appropriate for a broad range of visitors to the state to make contributions to the management of our wildlife resources. Historically, hunters, fishermen and trappers have provided the bulk of the funding and we think it is appropriate that those who are coming to the state - visitors - help out in that regard when they're viewing our wildlife. About 1.5 million visitors come to Alaska annually and the opportunity to view wildlife is an important part of that experience for many of them. The wildlife conservation pass will raise a little over $7 million annually at the beginning. As provided in the bill, those revenues will be deposited into a separate account in the general fund and appropriated for various wildlife management programs and other uses. The pass establishes a requirement for nonresidents who use a commercial provider of an opportunity to view wildlife to have one of these passes unless they qualify for one of the exemptions in the bill. Alaska residents are exempt from this requirement; all persons under 16 are exempted; disabled veterans are exempted; travelers on the marine highway system are exempted; and any visitor who holds a hunting, fishing or trapping license good for that year would also be exempt. We believe that people who come to the state should make a contribution to wildlife management. If they're making it through the purchase of a hunting or fishing license, than that is a contribution enough [so] that showing that license will allow them to take the commercial tours. MR. WILLIAMS said ADF&G believes a portion of the additional revenue raised can assist the state in reaching match requirements for the federal-state wildlife grant program. Alaska receives about $3.9 million under that program. ADF&G is currently in a planning phase with that funding, which means the state is only matching it at a rate of 1:3. Once the programs are implemented, the match rate will increase to 1:1. He explained that the second part of the bill will raise tag fees for non-residents and non-resident aliens for caribou, moose, sheep, and goat in varying amounts from $50 to $100. Alaska's tag fees fall in the mid-range when compared to fees charged by other Western states. The Governor believes it is appropriate to increase these fees for non-residents and non- resident aliens. He offered to answer questions. SENATOR ELTON asked Mr. Williams why programs like fish and wildlife protection or the promotion of tourism were precluded as appropriate uses of the fund that these fees could be deposited into. MR. WILLIAMS said nothing has been excluded as the money will be deposited into the general fund and the legislature has appropriation powers. SENATOR ELTON noted that SB 122 specifies three purposes for which the legislature intends to use those funds. MR. WILLIAMS said that ADF&G believes it can make good use of a portion of these funds but it will be under the purview of future legislators to decide exactly how the funds are spent. CHAIR OGAN stated the separate accounting language really pushes the limits but will have no effect due to the constitutional ban on dedicated funds. He added if the legislature is going to raise taxes, he believes the money should go into the general fund to be used to offset the budget gap. SENATOR WAGONER asked whether vendors who do not submit the collected fees to the state will be subject to penalties and whether any enforcement will be available. MR. WILLIAMS said that is not specifically addressed in SB 122 but, by adding the wildlife conservation fee to the list of licenses in the bill, violators will be subject to the same penalties that apply to a vendor who does not submit revenues raised from the sale of sport fish licenses. He offered to provide specific information at a later date. SENATOR WAGONER noted that vendors will also be collecting the fees, not just those who sell hunting and fishing licenses. He asked if a person who runs raft trips will sell the $15 permit to his or her customers. MR. WILLIAMS said those business owners will become vendors. He pointed out that ADF&G has about 1500 vendors who sell fish and game licenses statewide. ADF&G anticipates that number will increase significantly if this bill passes because a lot of tourist operators will want to sell these licenses. CHAIR OGAN noted the presence of Representative Kohring. SENATOR SEEKINS asked how much money SB 122 is anticipated to raise per year. MR. WILLIAMS said about $7.5 million in FY 04. SENATOR SEEKINS asked how much revenue ADF&G receives from the sale of fish and game licenses each year. MR. WILLIAMS did not have that information and offered to provide it at a later date. SENATOR SEEKINS said it appears to him that the only new purpose for which this fund would be used is for wildlife viewing. He asked if ADF&G is currently using any fish and game fees that it collects for viewing programs. MR. WILLIAMS said the short answer is yes, for the match of the state wildlife grant funds. He then deferred to Ms. Sydeman for the specifics. MS. MICHELLE SYDEMAN, Assistant Director of the Division of Wildlife Conservation, told members that ADF&G does not currently use fish and game funds to match the federal funds it receives for wildlife viewing programs. The source of the matching funds for those programs are receipts from the McNeil River bear viewing area, Pack Creek, and the Round Island walrus viewing area. SENATOR SEEKINS asked if, under current statute, the receipts from viewing areas can be used as a match for federal funds. MS. SYDEMAN said they can. SENATOR SEEKINS asked if SB 122 will just add another category from the $7.5 million that can be used for matching funds for those same purposes. MS. SYDEMAN said the difficulty that Mr. Williams spoke about is due to the fact that under the statute that pertains to receipt of the federal funds, the state match rate is 1:3 while wildlife viewing programs are in the planning phase. As ADF&G moves into the implementation phase, the required match rate will increase to 1:1. In addition, ADF&G does not have an adequate source of matching funds for research or management of non-hunted species or for any of ADF&G's education programs. SENATOR SEEKINS asked: In the total universe of funding that comes to the department, what percentage would this add? If we were to pass this, let's say, you know kind of on a weak manner, as the Chairman said, that you may use these funds for this purpose, how much as a percentage would that add to the budget that you are already getting from these various sources of federal funds - Pittman Robinson funds, fish and game funds, etcetera, that are dedicated now to the department? MS. SYDEMAN replied it is her understanding that the division's budget totals about $25 million. ADF&G's request to the administration and to the legislature would be for a portion of these funds. ADF&G has stated a hope that if this bill passes, some of this money might be made available to match the state wildlife grant money. She thought the fees might amount to $3 million of the division's total $25 million budget. SENATOR ELTON referred to page 1, line 10, and asked what the breakdown is between state general funds, federal, and other funds for the wildlife management program. MS. SYDEMAN said the Division of Wildlife Conservation does not receive any general funds at this time. It receives about $8 million of fish and game funds, primarily from the sale of hunting and trapping licenses and other tag fees. It also receives about $8 million of Pittman Robinson money. SENATOR ELTON commented that SB 122 makes it sound as if the fees will replace general fund dollars, while it will actually add dollars to a program that does not get any general fund dollars. He then noted that about 800,000 people will visit Alaska on cruise ships this year. Those ships have programs in place to collect receipts for onshore tours, a portion of which is remitted to the businesses. He felt this legislation will give the cruise ships the opportunity to collect up to $500,000 for something they are already doing. He asked if that is correct. MR. WILLIAMS said that cruise ships provide an opportunity to view wildlife so cruise ship passengers will have to pay this fee or be exempted when they enter Alaskan waters. SENATOR ELTON asked if those licenses will be sold by the cruise ship operators, who will retain $1 for each license. MR. WILLIAMS said they would be eligible to do that should they want to become vendors. SENATOR ELTON noted their profit margin could go up significantly. CHAIR OGAN said that "significantly" is subjective if they have to process 500,000 applications. SENATOR ELTON asked Mr. Williams if he anticipates any skewing whereby a person could evade the $15 wildlife viewing fee by purchasing a fishing license for $10. MR. WILLIAMS said that possibility was discussed, but ADF&G does not believe that will be a significant problem. He said for one thing, he assumes some folks who choose to sell these passes will also become full vendors and sell all licenses. He noted the problem with exempting people who have a $10 one-day fishing license is the burden it will place on the commercial operators who must verify that passengers have valid licenses. SENATOR WAGONER said it would be a lot simpler to avoid the ability to do that by raising the one-day license fee to $15. SENATOR LINCOLN asked where the entry point is for collecting the fees. MR. WILLIAMS said it is an annual pass and will be purchased the first time a person avails him or herself of a commercial opportunity to view wildlife. The pass could be purchased from the vendor or from other sources. SENATOR LINCOLN asked what will happen if a person does not have one. MR. WILLIAMS said the person would not be eligible to take the trip. SENATOR LINCOLN asked who will enforce that. MR. WILLIAMS said because the program is under Title 16, it will be enforced in the same way the Division of Fish and Wildlife Protection deals with other hunting and fishing license violations. SENATOR LINCOLN said the Governor's budget reduces the number of fish and game wildlife protection officers. She expressed concern that enforcement as proposed in this bill will rely on an honor system. She pointed out that a tour operator will not be required to sell these licenses. She then noted the Alaska Travel Industry Association does not support this legislation and questioned whether the Administration asked the Association's opinion of this bill. MR. WILLIAMS said there are different levels of support in different sectors of the industry. He said he does not know what the level of outreach was to specific groups. The Governor feels this is an appropriate contribution. ADF&G believes a lot of visitors will be happy to make this contribution because wildlife viewing is one of the reasons they travel to Alaska. Regarding enforcement, he pointed out there will be penalties for the operator and the person who does not hold a license. SENATOR LINCOLN asked where that provision is located in the bill. MR. WILLIAMS repeated it falls under Title 16 so it is not specifically listed in the legislation. SENATOR LINCOLN emphasized that someone will have to enforce it for a person to be penalized. She suggested that with a reduction in the number of wildlife protection officers, this will place another burden upon a smaller staff. She then asked if the Administration has assessed the impact this legislation will have on the Alaska Visitors Association. She noted she has not received one letter of support from that Association. She asked what kind of an assessment the Administration did before it introduced this legislation. MS. SYDEMAN said she does not know much about the outreach that was done, but she does know that the Alaska Wilderness, Recreation and Tourism Association came forward and said it supported this concept. That organization represents 300 small operators. SENATOR SEEKINS commented that when the Governor provided his budget, it appeared to be targeted toward meeting a certain draw down in the Constitutional Budget Reserve (CBR) by cutting expenses in one place and providing additional revenue elsewhere. In some respects, this fee was represented as a source of additional revenue. He asked if ADF&G views it as an additional source of revenue for the department, not necessarily as a budget balancing mechanism to provide revenue to offset other cuts. MR. WILLIAMS said that ADF&G is hopeful that with this kind of revenue generating mechanism, it could make a case that a portion of it should go to the department for needs he described earlier. He stated it will be a revenue generator for the state and the Governor has stated support for tourism related wildlife experiences. SENATOR SEEKINS said if some of this money is used for additional matching funds while the intent was to use it to balance the budget, the legislature would be rather disingenuous about how it is earmarked. He said he is supportive of more wildlife management education programs for tourists, but he is concerned that legislators don't misrepresent the facts that the funds are to be earmarked for ADF&G rather than to balance the draw down on the CBR. CHAIR OGAN noted that he shares Senator Seekins' concern and suggested striking that language from the bill. SENATOR SEEKINS noted he is a wildlife viewer for all but the one time he harvests a moose each year so he appreciates the value of wildlife viewing and wants to enhance it as much as possible. He repeated his concern is about the impression the legislature may leave with SB 122 if not careful. SENATOR WAGONER questioned whether the legislature will set a bad precedent by allowing the separate accounting language to remain in the bill. He pointed out that the Administration already knows that the wildlife viewing stamp will generate so much money and it is up to the Administration to recommend where it wants to budget that money, therefore it is not necessary to keep that language in the bill. SENATOR SEEKINS commented that the tourism industry would also like to have a slice of this pie. SENATOR WAGONER noted that he contacted the tourism industry and asked where the proposal is that they told legislators they would be submitting. That proposal was a tax package that would amount to a 2 percent sales tax on certain tourist-oriented activities. He was told two weeks ago they would have that package to the legislature but he has not received it so he said he is not sure how serious they are. CHAIR OGAN asked if SB 122 will be a "freebie" for those who drive up the highway and never use a vendor to view wildlife. He asked if passengers would owe the state $15 each if they saw a moose along the highway. MR. WILLIAMS said the issue of how to charge independent travelers was raised on the House side. ADF&G anticipates that a large number of those folks will purchase either a hunting or fishing license or avail themselves of some commercial opportunity. He said short of a tollgate at the border, it would be difficult to collect the fee. CHAIR OGAN considered renaming the fee and whether visitors could file a class action lawsuit if they do not see any wildlife. TAPE 03-20, SIDE B  SENATOR ELTON noted the Governor is not calling it a tax, he is calling it a user fee, which means the committee would want to name it for its intended purpose. SENATOR WAGONER suggested renaming it the "Alaska State Conservation Fee." He said the word "wildlife" should be removed because he agrees with Chair Ogan that people might not see any wildlife. CHAIR OGAN informed members that he did not intend to pass SB 122 from committee today. SENATOR LINCOLN asked how many states have a similar fee and what amount they charge. MS. SYDEMAN said the notion of charging to set up a user-pay system akin to the programs in place for hunting and fishing licenses has taken a lot of forms. She said she is not aware of fees in any other states except Louisiana, which requires a wildlife stamp to visit fish and game state managed lands. Some states have imposed a sales tax on items used by consumptive wildlife users and some use a portion of the proceeds from lotteries. Some countries charge a conservation fee of several dollars upon exit. CHAIR OGAN said he thought there was consensus among committee members to rename the fee the "Alaska Wolf Control Tax" and to change the intent language so that the money will be used for a predator control program. SENATOR ELTON noted that although he does not plan to make a motion today, he would like the committee to consider amending the bill to add, on page 2, line 12, after the word "viewing," "fish and wildlife protection, tourism promotion,". He explained that the intent of the amendment would be to use the balance of the $7 million that is not used for fish and wildlife conservation for enforcement and tourism promotion. He felt this money might be an appropriate source to replace those general fund dollars. He said he would wait for a response from ADF&G and members of the industry before he offers the amendment. SENATOR BEN STEVENS noted that as a Senate Finance Committee member, he is the chair of the subcommittees on the Departments of Fish and Game and Public Safety. He told members that the wildlife conservation portion of ADF&G's budget is $29.3 million, an increase of $1.5 million over last year. It receives no general funds. The Division of Fish and Wildlife Protection's budget [in the Department of Public Safety] is $15.6 million with a decrement of about $400,000 under the Governor's proposal. He noted the Division will lose two administrative positions, not enforcement positions. He said from his perspective, ADF&G is asking for a fish and wildlife viewing fee but the Division of Fish and Wildlife Protection has not been at the table even though it has the responsibility of protecting fish and game for everybody. He said he'd be interested in exploring the concept of using the increased revenues for existing protection in a department that is already stretched to fulfill its current obligations. He said that Section 2 [Separate accounting for wildlife conservation pass fees] concerns him because it says the money will be appropriated for management, viewing and education programs when the state has a problem protecting the existing game. CHAIR OGAN announced that with no further discussion, he would hold SB 122 in committee and that the committee would take up HB 16.