Legislature(2001 - 2002)
02/19/2002 07:07 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 359
"An Act making a supplemental appropriation for tourism
marketing efforts; and providing for an effective date."
And
SENATE BILL NO. 272
"An Act making a supplemental appropriation for tourism
marketing efforts; and providing for an effective date."
This was the first hearing for these bills in the Senate Finance
Committee. Co-Chair Donley announced these are companion bills and
the Committee would take action on HB 359.
Co-Chair Donley stated this legislation appropriates $6 million for
tourism marketing as an FY 02 supplemental and has an immediate
effective date.
KATRINA KING testified via teleconference from Mat-Su to defer to
the next speaker.
DAVE KING, Owner and Operator of three Alaska companies, testified
via teleconference from Mat-Su about the businesses: a guest ranch,
an air traffic company and a video and music production company. He
stated he recently returned from attending trade shows and learned
that, "definitely the fear factor, especially coming to Alaska, is
alive and well at this time." Therefore, he surmised this is an
important time that funds should be spent "properly marketing
towards tourism in Alaska". He stressed the need to inform that
traveling in Alaska is safe.
JULIE SAUPE, Executive Director, Mat-Su Convention and Visitors
Bureau, testified via teleconference from Mat-Su that similar to
other convention and visitor bureaus (CVB) in the state, the Mat-Su
organization is "very concerned for the fate of our member
businesses as well as non-member businesses that depend on
tourism." She informed the board of directors of this CVB voted
unanimously to support a request for a legislative appropriation,
and more specifically, to support the emergency marketing plan
developed by the Alaska Travel Industry Association (ATIA). She
commented that unanimous votes are generally uncommon in this
region of the state.
Ms. Saupe shared that results of a Mat-Su CVB poll of area
businesses parallel that of an ATIA statewide poll showing that the
number of bookings are reduced significantly. She pointed out this
is of particular concern in the Mat-Su region because tourism
businesses tend to be smaller, younger, and have a lower equity
base to draw upon to "survive a 20 or even 40 percent drop in
revenues." She added that a loss would be "felt way beyond the
visitor industry."
Ms. Saupe stressed that although she does not believe in
"government handouts", the government "does have the responsibility
to level the playing field to help its business community." She
characterized this one-time appropriation as an investment, which
would enable the visitor industry to remain healthy and to
contribute to the state's economy "rather than become a drain in
the form of unemployment." She warned that without this
investment, the tourism industry would be harmed, with the impacts
most prevalent to smaller businesses.
BONNIE QUILL, Mat-Su Convention and Visitors Bureau, testified via
teleconference from Mat-Su to reiterate Ms. Saupe's comments. She
added that the Mat-Su CVB, along with other destination marketing
organizations in Alaska, is unable to reach the national market
within its budget. As a result, she stated there has been reliance
on the ATIA to nationally market Alaska. She noted most members of
the Mat-Su CVB are small businesses.
STU GRAHAM, Manager, Budget Rental Car, and Member, Board of
Directors, Palmer Chamber of Commerce, testified via teleconference
from Mat-Su to relay the impacts of the lessened travel on the
rental car industry. On behalf of the rental car industry and the
Palmer Chamber of Commerce, he requested funding to assist ATIA in
marketing Alaska as a destination. He applauded the efforts of ATIA
in the local media.
RANDI PEARLMAN, Employee, Big Lake Chamber of Commerce, testified
via teleconference from Mat-Su on behalf of herself to inform the
Committee that Big Lake is considered "Alaska's year-round
playground." She said because of this, tourism is a significant
part of the local economy. She expressed this appropriation would
ensure the continued success of the tourism industry in the state.
SANDY KING, Cordova Chamber of Commerce and Visitor's Center,
testified via teleconference from Cordova that the number of
requests for visitor information are 80 percent of what they were
one year prior. However, she stated there is an increase in the
number of visitors who plan to drive to Alaska during the upcoming
summer. She pointed out that these travelers would not visit
communities that are not along the road system. She told of a six
percent tax on rental vehicles and accommodations imposed by the
City of Cordova two years prior in an attempt to distribute the tax
burden. She informed that the organization has been a recipient of
some of those revenues in the form of grants, which have been
expended to promote Cordova as a visitor destination. As a result
of reduced revenue from this tax, she stated "vital advertising"
has been reduced. She noted other revenue sources of the
organization, pull-tab sales and membership dues, have declined as
well. She remarked that a $6 to $9 million appropriation would not
improve the organization's ability to market Cordova.
Ms. King requested $6 to $9 million be allocated to communities
dependant upon tourism. She stated that each community in Alaska
has its own "personality" and stressed that 45 Cordova businesses
are directly associated with tourism.
KRISTIN SMITH, representing, Copper River Watershed Project, and
Council Member, City of Cordova, testified via teleconference from
Cordova to thank the Committee for considering this one-time
appropriation. She informed the mission of the Copper River
Watershed Project is to diversify the region's economy while
maintaining the quality of life. Tourism is a significant part of
this effort she said, and in the past three years, the group has
learned methods to attract more visitors to Cordova. She spoke of
the need to develop and package tourist attractions and the need to
offer a quality experience. She stated the group has also learned
"the hard way" that the most expensive element of expanding tourism
industry is marketing. She stressed it is impossible for small
communities to reach the national market.
Ms. Smith asserted the community has taken steps to fund these
efforts, but noted the funding sources are depleting. Therefore,
she urged support for this legislation. She also requested the
Department of Community and Economic Development to allocate some
of the funds directly to local communities.
ALAN LAMASTER, Owner, Gakona Junction Village, Northern Brochure
Distributors, and Member, Greater Copper Valley Chamber of Commerce
testified via teleconference from Anchorage to tell about Gakona
Junction Village, which he described as "a conglomerate of little
tiny businesses out in the Copper Valley". He listed charter
fishing, a Texaco gasoline station, a grocery store and rental
cabins. He referenced written testimony he had submitted to Co-
Chair Donley [copy not provided]. He spoke of a "concept" that
businesses in Alaska do not participate "their fair share".
However, he stressed he has doubled his marketing expenditure this
year would probably double that amount again to obtain results.
This he said diverts funds from other efforts within his business.
He stated that through his involvement with brochure distribution,
he interacts with large and small tourism businesses across the
state and has learned that the situation is "not a good picture".
He emphasized "we're in big trouble" and warned that this would
impact state revenues as well in the form of fishing and hunting
licenses, docking and airport fees, sales taxes, permits, etc.
SUZANNE RUST, Rust Flying Services, and Patriot Aviation
[unverified company name], testified via teleconference from
Anchorage that these businesses employ 70 people in Anchorage and
Talkeetna. She stressed that one year ago, her plans were to
purchase one or two new aircraft and increase staff by ten percent.
However, as a result of the events of September 11, 2001, these
plans have changed. She noted that although the cruise industry is
booking many passengers, the packages they are purchasing are the
most inexpensive on record and these travelers are less likely to
purchase additional land excursions. She stressed her primary
concern is for small businesses and that larger companies are
outspending for marketing efforts by millions of dollars. She
cautioned, "every day people are making decisions to go to North
Dakota or to some other state and we won't see those people coming
to Talkeetna or to Anchorage."
ERIC DOWNEY, Marketing Director, Alaska Wildland Adventures,
testified via teleconference from Anchorage that he has seen,
first-hand, the impacts to the travel industry since September 11,
2001. He stated that prior to that date, the company had record
sales; but after September 11, 2001, sales dropped within weeks and
have been down 36 percent of a three-year average. He stated that
the company's marketing spending has increased "significantly" and
two managerial positions and two hourly positions have been
eliminated from a year-round workforce of 20 staff. He qualified he
is less concerned about the number of seasonal employees the
company hires then he was for the 20 year round employees "living
in Girdwood, paying taxes, trying to earn a decent living and make
a life for themselves." He listed two single mothers and six
homeowners and warned of the impact these job losses have on the
state.
Mr. Downey continued that although revenues are projected to be 25
percent less than average in the upcoming season, but emphasized,
the company is "not giving up hope". He told of reduced tourism in
the first half of the summer following the Exxon Valdez oil spill
and the subsequent recovery in the second half of the season.
RICKY GEASE, Executive Director, Kenai Visitor's and Cultural
Center, testified via teleconference from Kenai about the 200
tourism-related businesses in the area. He pointed out the western
portion of the Kenai Peninsula is dependent upon the independent
travel market, which this appropriation would target. He stressed
there would be no need for these funds if not for the events of
September 11, 2002. He spoke of the abrupt reduction in the number
of travelers after that date.
Mr. Gease asserted the need "to get this money into the pipeline as
quick as possible" to allow tourism businesses to survive. He
assured this is a healthy industry although it needs assistance. He
pointed out that the tourism industry has "absorbed" workers laid
off from other industries, such as commercial fisheries and the oil
industry.
Mr. Gease added that revenues generated from fishing licenses fund
many of the activities of the Department of Fish and Game on the
Kenai Peninsula.
JEFF BUSH, Deputy Commissioner, Department of Community and
Economic Development testified in support of the legislation. He
noted the governor requested $10 million and that the ATIA has an
effective marketing plan for utilizing either amount.
TINA LINDGREN, President, Alaska Travel Industry Association,
testified that although this legislation has been referred to as
the ATIA plan, the ATIA is under contract with the state and
therefore it is Alaska's plan. She referenced a travel industry
survey [copy on file] conducted in December 2001 and again in
February 2002, showing there has been no recovery in the industry.
She relayed businesses are reporting, "their business is down an
average of 24 percent", which she translated to a loss of
approximately 3,000 jobs in the state. She warned that many of
these companies would not be in business in one year without some
assistance. She noted the options are few for small businesses and
referenced earlier testimony about reduced spending in other areas
to allow for accelerated marketing efforts.
Ms. Lindgren cautioned that delaying this assistance harms the
industry because many travelers are beginning to make their travel
plans at this time. She asserted she has never seen such an impact
on the industry. She also stated that many businesses are wary of
publicly stating their troubles for fear it would only exacerbate
them.
Senator Austerman asked how the marketing plan would be amended to
account for the difference in the $12.5 million originally
requested and the $6 million proposed in this legislation.
Ms. Lindgren replied the plan has not been revised for each level
of funding as it has been discussed, although she acknowledged
adjustments would be necessary. She predicted television
advertising would remain in the plan as well as "direct contact
with the travel trade". She noted other media becomes less
available as time passes, such as magazine advertisements that must
be purchased well in advance.
STEVE BOWHAY, President, Glacier Gardens, testified in Juneau that
this appropriation is a good investment. He asserted a statewide
sales tax, along with increased tourism, would be good revenue
generators. However, he stressed that in order to achieve the
benefits, there must be visitors "bringing money to the state" and
that this appropriation would help attract visitors. He remarked
the state already has a major investment in tourism through the
Marine Highway System. He spoke about small businesses purchasing
advertising space in the visitor guide distributed on the ferries,
but again emphasized the need to have passengers on the ferries to
read the publication. He referenced recent media reports of a
survey showing that the majority of ferry passengers are traveling
to Anchorage. He also pointed out the significant investment in
maintaining the Alaska Highway. Therefore, he surmised the state
would benefit from this tourism investment as well. He also
emphasized travelers need to know that travel in Alaska is safe.
SENATOR STEVE FRANK, Former Co-Chair of the Senate Finance
Committee spoke of the five years since he last served in the
Legislature and his investment in private industry. He stressed the
current situation was caused by the events of September 11, 2001,
and nothing else. He listed 70 percent of his customers are
travelers and those numbers are down 35 percent. He asserted the
proposed plan is viable and would be effective. He cautioned of the
jobs lost without this effort, stressing many workers have already
been laid off. He emphasized this effort targets independent
travelers.
Senator Frank spoke to his concern about whether this appropriation
should be made. He identified with the situation with the fiscal
gap, having faced it himself while serving on the Committee. He
pointed out the legislature would appropriate approximately $2.5
billion for FY 03 and therefore this $6 million investment in
Alaska's second largest private employer, is reasonable. He
predicted most Alaskans would support this expenditure as well.
ROD ARNO, Representing, Alaska Professional Hunters Association,
testified in Juneau about the impacts of the air travel ban in
September 2002, on the guided hunting industry. He told of the
numbers of travelers unable to fly to or from their hunting
destinations. He stated the Association supports this appropriation
in that it would help promote Alaska as a safe destination.
Co-Chair Kelly moved for adoption of SCS HB 359, 22-LS1360\W, as a
working draft.
The committee substitute was ADOPTED without objection.
Co-Chair Donley outlined the committee substitute, noting Section 1
(a) appropriates $5,171,500 from the international trade and
business endowment. He continued that subsection (b) provides the
remainder of the $6 million appropriation from the general fund on
a "dollar for dollar match basis" from industry or other non-state
governmental sources. Subsection (c), he said, relays the intent
that these funds represent "partial forward funding" of the state's
portion of the qualified trade association contract for FY 03.
Co-Chair Donley next pointed out subsection (d) stipulates the ATIA
provide a plan to the legislature within 60 days, for generating
industry funds to replace state funding of the existing marketing
system. He stressed the language clarifies this plan could not
include broad-based taxes such as an income or sales tax.
Co-Chair Donley concluded with subsection (e), which requires the
ATIA report to the legislature the results of this appropriation.
AT EASE 7:53 PM / 7:58 PM
AMENDMENT #1: This amendment inserts language into the title to
read as follows.
An Act making a supplemental appropriation for tourism
marketing efforts and generic salmon marketing; making a
special appropriation for the Joint Legislative Salmon
Industry Task Force and providing for an effective date.
This amendment also insert a new bill section on page 2, following
line 9 to read as follows.
Sec. 2. GENERIC SALMON MARKETING. The sum of $2,000,000
is appropriated from the general fund to the Department of
Community and Economic Development Alaska Seafood Marketing
Institute, for generic salmon marketing for the fiscal years
ending June 30, 2002, and June 30, 2003.
Senator Austerman moved for adoption and clarified this amount
would be included as a portion of the $6 million total
appropriation. Therefore, he explained, $4 million would be
appropriated to the tourism effort and $2 million for the salmon
marketing effort.
Senator Wilken asked if the Alaska Seafood Marketing Institute
(ASMI) has devised a plan for utilizing these funds that is
available for the Committee to review.
Senator Austerman replied such a plan has been discussed and he
could provide details.
SFC 02 # 11, Side B 07:59 PM
Senator Wilken noted a title change would be necessary if this
amendment were adopted. He asked how the salmon industry has been
affected by the terrorism attacks of September 11, 2001.
Senator Austerman stated, "To me it's more of an equity issue of,
it we're going to treat one industry one way, then we should
continue to treat all industries basically the same."
Senator Wilken appreciated "the salmon plight" and noted there is
"general agreement" that this matter would be addressed. However,
he was concerned about diverting funds from a planned effort to
alleviate the impacts of "the September tragedy" into "a place that
is… softer in how they're going to use it." He cautioned this
amendment would delay the passage of the bill by one to two weeks
because the changes require approval from the House of
Representatives. "Frankly Senator, we don't have another week or
two" he remarked. He pledged to assist Senator Austerman in his
efforts to assist the salmon industry at another time.
Co-Chair Kelly echoed Senator Wilken's remarks. He noted that
others may not be as interested in promoting generic salmon
marketing, but assured he is. He warned this amendment could hamper
passage of this bill and threaten funding for either cause. He
supported the formation of a task force to address the hardships
incurred in the fishing industry. He agreed the fishing industry
"has taken a pretty heavy hit" although from a different cause than
the events of September 11, 2001. Therefore, he stressed he
supported Senator Austerman's efforts, but would vote against this
amendment.
Senator Austerman emphasized the "issue of equity is very strong"
otherwise he would not be offering this amendment. He spoke of
state general funds used to market the tourism industry but denied
to the seafood industry. Therefore, he has no other recourse but to
bring this issue to the forefront at times like this. He talked
about the fishing industry taxing itself for marketing purposes, in
addition to being taxed for other purposes. However, he remarked,
the tourism industry is not taxed.
Senator Austerman WITHDREW his motion to adopt the amendment.
Co-Chair Kelly cited Section 1(d), which requires the ATIA to
provide a plan, other than instituting broad-based taxes, to
generate industry funds to replace all state funding. He shared
that he initially did not support this language, but after
discussions on the issue, he now supports it.
Senator Austerman commented that while the provision of subsection
(d) is "a great idea", it is "useless" in this legislation. He
predicted that once the ATIA receives the funds, the funds would be
spent and the legislature has no recourse if a plan is not
submitted within the 60-day deadline.
Co-Chair Donley agreed with Senator Austerman that there are no
direct taxes on the tourism industry, although there are local
taxes, which the state does not receive.
Senator Austerman asserted he would vote against this legislation
as he did with an earlier appropriation to Arctic Power for efforts
to gain congressional approval to conduct oil exploration in the
Alaska National Wildlife Refuge (ANWR). He gave his reason as the
seeming reluctance of the Senate to address a long-range fiscal
plan for the state of Alaska.
AT EASE 8:09 PM / 8:10 PM
Co-Chair Donley appreciated Senator Austerman's remarks and noted
his consistency on the issue. Co-Chair Donley told of efforts made
in the last ten days to secure non-general funds for this purpose.
He stressed the September 11 tragedy is a "very unique
circumstance". He stressed intentions are that the tourism industry
would be self-supporting and that provisions in this bill relay
this intent. He pointed out that many people share Senator
Austerman's concerns.
Senator Austerman expressed that taking funds from an endowment
allocated for other uses "highlights" his point for the need of a
long-range plan.
Co-Chair Donley informed new legislation as well as other ideas are
under consideration at this time.
Co-Chair Kelly offered a motion to move SCS HB 359 (FIN), from
Committee with the House Finance Committee Letter of Intent.
Senator Austerman objected.
A roll call was taken on the motion.
IN FAVOR: Senator Wilken, Senator Green, Senator Leman, Co-Chair
Kelly and Co-Chair Donley
OPPOSED: Senator Austerman
ABSENT: Senator Hoffman, Senator Olson and Senator Ward
The motion PASSED (5-1-3)
The bill MOVED from Committee.
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