SB 110: "An Act establishing the Travel Alaska Board; relating to a tourism marketing assessment; and establishing a tourism marketing fund."

00 SENATE BILL NO. 110 01 "An Act establishing the Travel Alaska Board; relating to a tourism marketing 02 assessment; and establishing a tourism marketing fund." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 LEGISLATIVE FINDINGS. The legislature finds that 07 (1) the Twenty-Ninth Alaska State Legislature, through adoption of CCS HB 08 256, requested that the Alaska Tourism Marketing Board "develop a plan to phase out 09 reliance on unrestricted general funds for marketing, moving toward a self-sustaining program 10 funded by industry to be implemented in the FY18 budget and present the plan to the House 11 and Senate Finance Committees by November 1, 2016"; 12 (2) this Act is the industry's plan to comply with the legislature's request in 13 CCS HB 256; 14 (3) tourism is among the largest industries in the state, contributing over

01 $4,170,000,000 to the state economy and employing an estimated 47,000 residents in 2014 02 and 2015; 03 (4) to retain and expand the tourism industry in the state, it is necessary to 04 market travel to and within the state; 05 (5) state funding, while an important component of marketing, has been 06 unable to generate sufficient funds to meet the threshold levels of funding necessary to 07 reverse losses of the state's tourism market share; 08 (6) it is in the public interest of the state and vital to the welfare of the 09 economy of the state to expand the market for, and develop, tourism through a cooperative 10 partnership funded by business assessments that will allow promotion and communication 11 programs; 12 (7) the mechanisms proposed by this Act are intended to advance and expand 13 tourism in the state for the benefit of the state and the tourism industry in the state; 14 (8) programs implemented under this chapter are intended to complement the 15 marketing activities of individual competitors within the travel and tourism industry; 16 (9) while it is recognized that smaller businesses participating in the travel and 17 tourism market often lack the resources or market power to conduct those activities on their 18 own, this Act is intended to benefit businesses of all sizes; 19 (10) this Act is not intended to impede and does not impede the right or ability 20 of individual businesses to conduct activities designed to increase generally the travel and 21 tourism market or to increase their own respective shares of the travel and tourism market in 22 the state; 23 (11) nothing in this Act is intended to prevent an individual business in the 24 tourism industry from seeking to expand its market through alternative or complementary 25 means, or both; 26 (12) the advertising initiatives of an individual business are typically designed 27 to increase its share of the travel and tourism segment rather than to increase or expand the 28 overall size of that market; in contrast, promotion of the state as a travel and tourism 29 destination is intended and designed to increase the overall demand for travel and tourism in 30 the state, thus increasing the size of the market; 31 (13) the mechanisms in this Act will use promotion methods and techniques

01 that individual businesses typically are unable or have no incentive to employ; 02 (14) this Act creates a mechanism to fund promotions that further specific 03 state governmental goals, as established by the legislature, and results in a promotion program 04 that produces nonideological and commercial communication that bears the characteristics 05 and is entitled to all the privileges and protections of government speech; 06 (15) the programs implemented under this Act will be carried out in an 07 effective and coordinated manner that is designed to strengthen the travel and tourism 08 industry and the state's economy as a whole; 09 (16) an industry-approved assessment provides a private-sector financing 10 mechanism to fund the amount of marketing necessary to increase tourism marketing 11 expenditures in the state; 12 (17) the goal of the assessments is to assess the least amount for each business 13 in the least intrusive manner and spread across the greatest practical number of tourism 14 industry segments; and 15 (18) the Travel Alaska Board will design the assessment to raise the amount of 16 revenue needed to market effectively travel and tourism to and within the state. 17 * Sec. 2. AS 43.52.080(c) is amended to read: 18 (c) The legislature may appropriate the actual balance of the vehicle rental tax 19 account to the Alaska tourism marketing fund established under AS 45.90.181 for 20 tourism development and marketing. This section is not intended to create a dedicated 21 fund. 22 * Sec. 3. AS 45 is amended by adding a new chapter to read: 23 Chapter 90. Travel Alaska Board. 24 Sec. 45.90.011. Travel Alaska Board established. The Travel Alaska Board 25 is established within the Department of Commerce, Community, and Economic 26 Development. Exercise by the board of the powers conferred under this chapter is an 27 essential governmental function of the state. 28 Sec. 45.90.021. Board members. (a) The board consists of between 21 and 25 29 voting board members elected by representatives of assessed tourism businesses. 30 Board members shall represent tourism sectors, business sizes, and regions in the state 31 listed in AS 44.33.136(b)(1), and at least a majority of the board shall be

01 representatives of assessed businesses. In an election to elect board members, the 02 votes by representatives of assessed businesses shall be weighted by the estimated 03 amount of the assessment each assessed business would pay in the subsequent 04 calendar year. The candidate who receives the greatest number of weighted votes is 05 elected. 06 (b) All voting members of the board shall be members of the leading statewide 07 nonprofit tourism marketing association. 08 (c) In addition to the voting members of the board, the board may include 09 additional ex officio, nonvoting members. A nonvoting member need not be a member 10 of a leading statewide nonprofit tourism marketing association. 11 (d) The board members shall annually elect a chair and vice-chair from among 12 the board's members. 13 Sec. 45.90.031. Term of office. Board members serve staggered three-year 14 terms and may be reelected. An individual elected by the board to fill a vacancy shall 15 hold office for the balance of the term for which the board member's predecessor on 16 the board was elected. 17 Sec. 45.90.041. Removal and vacancies. Board members may be removed 18 from the board by a majority vote of the board following a hearing for abuse of office 19 or moral turpitude. A vacancy on the board occurring other than by expiration of term 20 shall be filled by a majority vote of the remaining board members, but only for the 21 unexpired term. 22 Sec. 45.90.051. Quorum. A majority of the board members plus one board 23 member constitute a quorum for the transaction of business and the exercise of the 24 powers and duties of the board. 25 Sec. 45.90.061. Compensation of board members. Board members receive 26 no salary and are not entitled to per diem or travel expenses. 27 Sec. 45.90.071. Meetings. The board shall meet at least twice a year. A 28 meeting of the board shall occur at the call of the chair or upon the written request of 29 five members of the board. 30 Sec. 45.90.081. Administration of board. The board may request 31 administrative support from the leading statewide nonprofit tourism marketing

01 association. The board shall work with the leading statewide nonprofit tourism 02 marketing association to accomplish the purposes of this chapter. 03 Sec. 45.90.091. Powers of the board. In carrying out the powers of the board, 04 the board may 05 (1) prescribe, adopt, amend, and repeal policies related to the board; 06 (2) cooperate with a public or private board, organization, or agency 07 engaged in work or activities similar to the work or activities of the board for 08 destination marketing programs, including market research; 09 (3) establish offices in the state and otherwise incur expenses 10 incidental to the performance of its duties; 11 (4) appear on behalf of the board before boards, commissions, 12 departments, or other agencies of municipal, state, or federal government; 13 (5) acquire, hold, lease, sell, or otherwise dispose of property, but the 14 property is limited to that which is necessary to the administrative functioning of the 15 board; 16 (6) approve the expenditure of, and enter into agreements related to, 17 the expenditure of funds appropriated by the legislature to the board; 18 (7) adjust the number of board members before an upcoming election 19 within the range specified in AS 45.90.021(a); 20 (8) designate or remove ex officio, nonvoting members of the board. 21 Sec. 45.90.101. Duties of the board. The board shall 22 (1) conduct programs of destination marketing, research, advertising, 23 or sales promotion designed to retain and expand the tourism industry in the state; 24 (2) promote all assessed tourism businesses; 25 (3) prepare market research and marketing plans for the promotion of 26 assessed tourism businesses; 27 (4) consider the return on investment for all nonadministrative 28 expenditures of assessment funds; 29 (5) submit an annual report to the governor, assessed tourism 30 businesses, and the senate secretary and chief clerk of the house of representatives on 31 or before the first day of each regular session of the legislature and notify the

01 legislature that the report is available; the report must 02 (A) describe the activities of the board; 03 (B) summarize the income and expenses of the board; 04 (C) provide the balance of the Alaska tourism marketing fund 05 established under AS 45.90.181; and 06 (D) summarize and report on the tourism marketing plan; 07 (6) annually prepare a written marketing plan; the plan must promote 08 travel and tourism in the state and must include 09 (A) an evaluation of the previous year's budget and activities; 10 (B) a review of state tourism trends, conditions, and 11 opportunities; 12 (C) an identification of target audiences for tourism marketing 13 expenditures; 14 (D) marketing strategies, objectives, and targets; 15 (E) the assessment rate applicable to assessed tourism 16 businesses; and 17 (F) the budget for the current year; 18 (7) promote travel and tourism to increase the number of persons 19 traveling to and within the state; and 20 (8) consider the return on investment for all nonadministrative 21 expenditures. 22 Sec. 45.90.111. Expenditures. An expenditure of the board 23 (1) must be consistent with the marketing plan described in 24 AS 45.90.101(6); and 25 (2) may not be spent on capital or infrastructure improvement projects; 26 for purposes of this paragraph, capital or infrastructure improvement projects do not 27 include information technology improvements, website development and maintenance, 28 or office equipment. 29 Sec. 45.90.121. Alaska tourism marketing assessment. (a) An election under 30 AS 45.90.141 shall be held if the proposed election for the levying of an assessment 31 under (c)(1), (2), (3), (4), (5), or (6) of this section is approved by a majority of the

01 whole membership of the board at a regularly scheduled meeting. 02 (b) An assessment shall be levied on the assessed gross revenue of the sales of 03 an assessed tourism business at a rate provided under (c)(1), (2), (3), (4), (5), or (6) of 04 this section if an election is held under AS 45.90.141 at which an assessment rate 05 under (c)(1), (2), (3), (4), (5), or (6) of this section is approved by tourism businesses 06 who together constitute more than 50 percent of the total estimated assessed gross 07 revenue of all assessed tourism businesses that voted in the election during the 08 calendar year. 09 (c) An assessment under this section may require an assessed tourism business 10 to pay an assessment of 11 (1) 0.5 percent of the total assessed gross revenue of the assessed 12 tourism businesses; 13 (2) one percent of the total assessed gross revenue of the assessed 14 tourism businesses; 15 (3) 1.25 percent of the total assessed gross revenue of the assessed 16 tourism businesses; 17 (4) 1.5 percent of the total assessed gross revenue of the assessed 18 tourism businesses; 19 (5) 1.75 percent of the total assessed gross revenue of the assessed 20 tourism businesses; 21 (6) two percent of the total assessed gross revenue of the assessed 22 tourism businesses. 23 (d) An assessed tourism business shall pay the assessment. Each assessed 24 tourism business may pass the cost of the assessment on to its customers at the time a 25 transaction is consummated. If the cost is passed on to a customer, the assessed 26 tourism business shall disclose the amount in advance and separately state the amount 27 from the amount charged and any other applicable taxes, and shall give each customer 28 a receipt of payment. The assessment shall be disclosed as the "Alaska tourism 29 marketing assessment." The assessment is imposed solely on, and is the sole 30 obligation of, the assessed tourism business, even if it is passed on to customers. The 31 assessment may not be considered revenue for any purpose, including calculation of

01 taxes. 02 (e) The board shall determine the business segments of a category that 03 provides similar goods and services to tourists that will be included in the election 04 under (b) of this section. To be assessed, a business segment must be defined with 05 sufficient clarity to allow for the cost-effective identification of assessed tourism 06 businesses within that business segment. 07 (f) The board shall widely advertise an election held under (b) of this section 08 and, before an election is held under (b) of this section, shall schedule public meetings 09 for potential assessed tourism businesses to provide input to the board. 10 (g) Before the term of an assessment is terminated under AS 45.90.131(a)(1), 11 an election must be held under (b) of this section for the assessment to continue. 12 (h) A return or other information furnished to the board or the Department of 13 Revenue by an assessed tourism business under this chapter is confidential and may 14 not be disclosed except 15 (1) by a person during the performance of an official duty under this 16 chapter; 17 (2) to comply with a court order; 18 (3) in the course of a proceeding, hearing, or litigation involving an 19 assessment; or 20 (4) upon written consent of the assessed tourism business. 21 (i) Information obtained by the board or the Department of Revenue to 22 determine the assessment for an assessed tourism business is not a public record for 23 purposes of AS 40.25.100 - 40.25.130. 24 (j) The Department of Revenue may require an assessed tourism business to 25 (1) maintain books and records that verify the gross revenue of the 26 business for purposes of the assessment; 27 (2) furnish any requested information; and 28 (3) permit the inspection by the Department of Revenue of portions of 29 books and records that relate to the gross revenue of the business or the amount of the 30 assessment. 31 Sec. 45.90.131. Termination of the Alaska tourism marketing assessment.

01 (a) An assessment shall be terminated on the earlier of 02 (1) six years after the date of the first assessment; or 03 (2) the effective date stated on a ballot approved under the procedures 04 described in AS 45.90.141 in which the termination is approved by assessed tourism 05 businesses who together constitute more than 50 percent of the total assessed gross 06 revenue of all assessed tourism businesses that voted in the election during the 07 calendar year. 08 (b) An election under (a)(2) of this section shall be held if the proposed 09 election for the termination of the assessment is approved by a majority of the whole 10 membership of the board at a regularly scheduled meeting. The board shall provide 11 notice of an election in accordance with AS 45.90.141 within 60 days after the board 12 approves termination of the assessment. 13 Sec. 45.90.141. Procedures for an election to approve or terminate the 14 Alaska tourism marketing assessment. (a) The board may conduct an election under 15 this section after the director of elections approves 16 (1) the notice to be published by the board; 17 (2) the ballot to be used in the election; and 18 (3) the registration and voting procedures for the approval or 19 termination of the assessment. 20 (b) In conducting an election under this section, the board and the director of 21 elections shall 22 (1) propose and adopt a levy or termination of an assessment at a 23 regularly scheduled meeting of the board held not less than 60 days before the date on 24 which the ballots must be postmarked to be counted; 25 (2) hold at least one meeting not less than 30 days before the date on 26 which ballots must be postmarked to be counted to explain the reason for the proposed 27 levy or termination of the assessment and to explain the voting procedure to be used in 28 the election; the board shall provide notice of the meeting by 29 (A) mailing a notice to each assessed tourism business; and 30 (B) publishing the notice in at least one newspaper of general 31 circulation in each region of the state at least two weeks before the meeting;

01 (3) mail ballots to each assessed tourism business not more than 45 02 days before the date specified as the date ballots must be postmarked; the ballot must 03 (A) state that an assessment is to be levied; 04 (B) state the assessment rate for each category of assessed 05 tourism businesses that provides similar goods or services to tourists or each 06 segment within a category; 07 (C) state that the ballot will be tabulated according to the 08 estimated amount each assessed tourism business will pay in annual 09 assessments; 10 (D) state the effective date of the levy of the assessment or 11 termination of the assessment; 12 (E) ask whether the assessment shall be levied or, if the 13 election is to terminate the assessment, whether the assessment shall be 14 terminated; 15 (F) be returned by mail to the director of elections; the director 16 of elections or a representative shall count the ballots. 17 (c) The director of elections shall certify the results of an election under this 18 section if the director determines that the requirements of (a) and (b) of this section 19 have been satisfied. 20 (d) For purposes of this section, a ballot submitted by a corporation is 21 presumed valid if the ballot is signed by an individual who is indicated to be an officer 22 of the corporation or an authorized representative. 23 Sec. 45.90.151. Determination of value. (a) Upon request of the director of 24 elections, the commissioner of revenue shall determine 25 (1) the total value of assessed gross revenue of an assessed tourism 26 business during any calendar year; or 27 (2) whether the assessed tourism businesses approving the levy or 28 termination of the assessment together constitute more than 50 percent of the total 29 assessed gross revenue of all assessed tourism businesses that voted in the election 30 during the calendar year. 31 (b) The total assessed gross revenue of all assessed tourism businesses in a

01 calendar year is the sum of the total assessed gross sales of assessed tourism 02 businesses. 03 Sec. 45.90.161. Collection of assessments and disposition of proceeds. Each 04 assessed tourism business shall remit to the Department of Revenue within 30 days 05 after the end of each calendar quarter the total amount of the assessment owed on the 06 value of assessed gross revenue in the previous calendar quarter. The Department of 07 Revenue shall inform the board within 60 days after the end of each calendar quarter 08 of the total amount of assessment collections as of the 30 days following the preceding 09 calendar quarter available to be apportioned by the board. An assessed tourism 10 business that fails to remit an assessment is subject to penalties as provided in 11 AS 43.05 and AS 43.10. 12 Sec. 45.90.171. Enforcement of assessments. The provisions of AS 43.05 and 13 AS 43.10 apply to the enforcement and collection of the Alaska tourism marketing 14 assessment. 15 Sec. 45.90.181. Assessment proceeds; Alaska tourism marketing fund. (a) 16 The Alaska tourism marketing fund is established in the general fund. The fund 17 consists of money appropriated to the fund. The legislature may appropriate from the 18 fund for purposes consistent with this chapter. 19 (b) The legislature may appropriate the proceeds of the assessment to the 20 Alaska tourism marketing fund. 21 (c) Nothing in this section creates a dedicated fund. 22 Sec. 45.90.201. Definitions. In this chapter, 23 (1) "assessed tourism business" means a tourism business assessed 24 under this chapter; 25 (2) "assessment" means an assessment levied under AS 45.90.121; 26 (3) "board" means the Travel Alaska Board; 27 (4) "tourism business" means a business that provides goods or 28 services, including information, accommodation, transportation, or entertainment, to a 29 tourist; 30 (5) "tourist" means a person who travels for business, recreation, or 31 pleasure.

01 * Sec. 4. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 TRANSITION. Notwithstanding AS 45.90.011 - 45.90.111, added by sec. 3 of this 04 Act, the board of directors of the leading statewide nonprofit tourism marketing association 05 shall act as a transition committee. The transition committee shall prepare an initial written 06 marketing plan to be voted on at an initial election, establish procedures for elections, 07 determine the initial number of members on the Travel Alaska Board, and designate ex officio 08 members of the board. The initial board members shall be voted on at the initial election and 09 shall take office immediately. The transition committee exists only until the election of the 10 board members.