Legislature(1997 - 1998)
04/21/1998 08:25 AM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 478
"An Act relating to tourism; relating to grants for
tourism marketing; eliminating the division of tourism
and the Alaska Tourism Marketing Council; and providing
for an effective date."
MATT ATKINSON, CHAIR, VISITOR'S BUREAU, FAIRBANKS spoke in
support of HB 478. He observed that the goal of the
legislation is to shift tourism marketing to the private
sector. He maintained that a new method of tourism
marketing is needed. State support for tourism marketing
has been reduced from $15 million dollars in FY 90 to $6.7
million dollars in FY 98. The Alaska Visitor's Association
has worked to create a new plan. He maintained that the
plan would combine the marketing activities of the Alaska
Tourism Marketing Council (ATMC), Alaska Visitors
Association (AVA) and the Division of Tourism. It would
decrease confusion, duplication of effort and increase
private sector contributions.
PAUL SMITH, BUSINESS OWNER, TOK spoke in support of the
legislation. He stressed the need to protect small highway
businesses.
ALAN LEMASTER, BUSINESS OWNER, GAKONA spoke in support of
the legislation. He observed that the state of Alaska
spends $4 million dollars to market tourism while the state
of Queensland in New Zealand spends $40 million dollars in
tax money. He stressed that there has been a decline in
tourism. He maintained that small and large business must
carry the ball.
HB 478 was HELD in Committee for further consideration
during the meeting.
HOUSE BILL NO. 478
"An Act relating to tourism; relating to grants for
tourism marketing; eliminating the division of tourism
and the Alaska Tourism Marketing Council; and providing
for an effective date."
TINA LINDREN, ALASKA VISITORS ASSOCIATION, ANCHORAGE
stressed that the legislation is a response to indications
by the Legislature that industry should increase its
contribution to marketing. She maintained that reductions
in state support has put Alaska at a competitive
disadvantage. The legislation would consolidate statewide
marketing into one nonprofit organization. The state of
Alaska would grant to the nonprofit organization. There
would be a reduction in state general funds and an increase
in private sector funds. Communities would be able to
leverage their own marketing plans in conjunction with the
overall program. She observed that bylaws would be needed
for the new organization. The state of Alaska would be able
to impose conditions on the funds through the grant
contract.
(Tape Change, HFC 98 - 119, Side 2)
Ms. Lindren observed that the legislation would eliminate
the Division of Tourism. She emphasized that there is a
continued role for the state in tourism. The state would
continue planning and coordination functions. She reviewed
the legislation. She noted that the purpose of the ATMC and
the Division of Tourism are identical. The legislation
deletes reference to both entities and leaves their
responsibilities in the Department of Commerce and Economic
Development. Section 4 creates a new grant program.
Section (b) provides that materials produced and marketing
information and tourism related data generated under a grant
are the sole property of the qualified trade association.
Revenues raised would be retained as part of the funding
mechanism. Materials would be provided Department of
Commerce and Economic Development on request. Materials
would not be part of the public record. This retains
current law. She observed that names from mailing lists
would have no value if they were under public records. A
qualified trade association may not use money granted to
lobby a municipality or an agency of a municipality or to
lobby the state or state agency. Section (e) defines a
qualified trade association:
"qualified trade association" means a private,
nonprofit organization whose primary purposes are the
promotion of tourism within the state encouraging
tourists to visit the state and that has a statewide
membership consisting of representatives of all major
sectors of the visitor industry, including hotels,
airlines cruise lines, wholesale and retail travel
agencies, visitor attractions, and convention and
visitors bureaus.
Ms. Lindren observed that statutes that currently deal with
the Division of Tourism and the ATMC are repealed. Section
6 contains an effective date. She spoke in support of a
one-year transition to setup a new organization.
In response to a question by Representative Davies, Ms.
Lindren provided members with a copy of the proposed budget
for the "New Millenium Plan" by the Alaska Visitors
Association (copy on file). She compared budget numbers
provided by the Department of Commerce and Economic
Development (copy on file) with those contained in the Plan.
She discussed funding levels of Pay to Play programs. She
noted that the AVA budget is currently $805 thousand
dollars.
HEATHER DODSON, PRESIDENT, ALASKA VISITORS ASSOCIATION
ANCHORAGE CHAPTER, WINDSONG LODGE, ANCHORAGE spoke in
support of the legislation. She maintained that it is time
for a change.
Ms. Lindren observed that the Plan would reduce the general
fund contribution over a three year period from $5.3 to $4.0
million dollars. Industry contribution would be increased
from $1.4 to $6 million dollars. The total combined budgets
of the ATMC and Division of Tourism is $6.7 million dollars.
Part of this is not for marketing activities. Approximately
$650 thousand dollars is spent by the AVA to produce the
vacation planner. The AVA contributes approximately $1.4
million dollars to the state of Alaska.
Representative Davies expressed support for the legislation.
He questioned how confident is the private sector that the
money would be collected. He asked how smaller business
would be affected. Ms. Lindren noted that there are no
guarantees. She emphasized that it is in the industry's
interest to promote the entire state of Alaska. Small
communities and businesses need the Plan more than large
ones since they have no means of their own to generate
tourist to Alaska. Smaller businesses would be charged less
under the Plan then they are currently paying. More money
would come from larger companies. Larger communities would
participate more than they currently do. She observed that
state marketing has been reduced to printing and
distributing the vacation planner.
Ms. Lindren discussed funding sources. There is a cruise
formula based on the number of passenger days in Alaska.
There is an amount for businesses based on employee numbers.
Larger businesses would pay more than smaller businesses. A
number of Pay to Play programs, such as the vacation planner
would raise revenues. Businesses can pick and chose among
Pay to Play programs to pick ones that will benefit their
businesses. There is no hammer to make sure that everyone
participates. The budget estimate is conservative.
Representative Davies expressed concerns regarding the Pay
to Play portion of the Plan. Ms. Lindren envisioned that
participation would be charged for in a number of things
such as trade shows. A new marketing plan would have to be
created.
JEFF BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY AND
REGIONAL AFFAIRS clarified that the Department does not
oppose the privatization of tourism marketing in Alaska or
the elimination of the ATMC. He expressed concerns with
portions of the Plan. He observed that the nonprofit
organization would be greatly dependent on contributions
from the cruise industry. He expressed concern that there
would be bias in favor of industry sectors that give large
contributions. He observed that the Division of Tourism has
focused on a highway tourism program in the last year.
Significant funds have been received from the Alaska Marine
Highway System. He expressed concern that this kind of
promotion would not exist under the plan. The Alaska Marine
Highway System competes with the cruise industry and the
cruise system would have control over the program. He
proposed multiple contracts for tourism marketing. He
acknowledged that a large portion of the funding might go to
a single contract. Some money should be retained for
programs that might not be a priority of the private
organization that receives the grant. Winter tourism is
very important to the Fairbanks area. He observed that an
aurora borealis program has been successfully marketed to
Japanese tourist to come to Fairbanks. He stressed that
this kind of a grant should be allowed.
Representative Mulder asked if Mr. Bush's concerns could be
addressed under the proposed program. Mr. Bush noted that
the legislation would fund a single grant, which would run a
marketing program. He questioned how much control the State
could place on the operation of the grant. He noted that
the program would not be competitive. The state of Alaska
would have to choose between awarding the AVA the grant or
not having a tourism program. The State's ability to
negotiate terms of the agreement would be limited. He added
that there is no guarantee for a private match. He
maintained that there should be a required match and a
competitive award. He stated that unless formal proposals
are required in a competitive situation there is a loss of
accountability.
Mr. Bush did not see that there would be much more money
going to tourism under the Plan than under the current
system. He observed that state funding would be reduced by
approximately 25 percent over three years. Local
communities would pick up a significant percentage of this
decrease. He maintained that state funding would be
transferred to local municipal funding. Municipalities have
contacted the Divisions with concerns regarding contribution
levels.
Representative Davis noted that tourism marketing in the
State has merged into one large group. Mr. Bush explained
that the Department is not advocating that state funds be
split into small pieces. He clarified that the Department
is concerned about the small amount that the Division of
Tourism uses to do things like run the Tok visitor center or
specialized programs for highway traffic and winter tourism.
There needs to be attention to the little pieces.
Representative Davis noted that section 3 establishes
tourism promotion in the Department of Commerce and Economic
Development. Mr. Bush stressed that the Department would
not be provided any funding for promotion. The Department
would retain one or two positions for general tourism land
use planning activities to assist the Department of Natural
Resources. All marketing and promotional activities would
be given to the nonprofit. Representative Davis stressed
that the legislation states that the Department of Commerce
and Economic Development would "promote" tourism. Mr. Bush
stressed that it is a funding issue. If the Legislature
gives the Department money, the Department would find a way
to promote tourism under the legislation.
HB 478 was HELD in Committee for further consideration.
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