Legislature(1997 - 1998)
02/05/1997 01:35 PM Senate CRA
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* first hearing in first committee of referral
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SB 23 EXCISE TAXES ON TRANSIENT LODGING
CHAIRMAN MACKIE brought SB 23 before the committee and directed
attention to a C&RA committee substitute which incorporates an
amendment adopted at the committee's January 22 meeting.
SENATOR WILKEN moved the adoption of CSSB 23(CRA). Hearing no
objection, it was so ordered.
Number 020
SENATOR BERT SHARP , prime sponsor of SB 23, related he met with Mr.
Elander of the Anchorage Convention & Visitors bureau following the
previous meeting on SB 23, where they discussed the need to come to
the table and jointly work on some kind of long range funding plan
to finance the state participation in the marketing of tourism for
the state of Alaska. However, after that meeting, Mr. Elander sent
out a member's alert letter in which he made some statements that
Senator Sharp found distressing. Mr. Elander said that most
legislators know that representatives of the tourism industry are
willing to work towards a broad based taxation policy that will be
acceptable; however, Senator Sharp said he doesn't know of the
industry coming forward with their recommendations, and he has been
involved with that discussion for over nine years. Mr. Elander
also made reference to a dedicated fund, but Senator Sharp stressed
that there is not going to be a dedicated fund just to fund tourism
marketing in this state.
Number 080
SHEILA ROMERO , Executive Director, Fairbanks Convention & Visitors
Bureau, stated the bureau, its board of directors and 400 members
encourage the committee to kill SB 23. If passed, the bill would
have far reaching effects on Alaska's entire visitor industry. For
instance, Fairbanks area hotels, lodges and bed and breakfasts
would collect this tax in addition to the City of Fairbanks and
Fairbanks North Star Borough's current 8 percent bed tax.
Ms. Romero said this proposed tax puts the Alaskan tourism and
hospitality industry in a competitive disadvantage and will likely
diminish the contribution to the communities, to the cities and to
the state economy that is currently derived from the visitor
industry. If it costs more in taxes for the visitors to experience
Alaska, they spend less on the goods and services that the
statewide businesses provide to them, or they don't come at all.
In closing, Ms. Romero urged defeat of the legislation.
Number 110
SENATOR PHILLIPS asked Ms. Romero what the industry is doing in the
Fairbanks area as far as trying to come up with some alternatives.
MS. ROMERO said she believes the industry statewide is ready and
willing to work on this issue. She also pointed out the tourism
industry right now is contributing about $124 million to local and
state government through taxes and other fees that they pay.
Number 183
CHAIRMAN MACKIE commented that the idea of the state wanting the
industry to step up to the plate a little bit more is not a new
idea; it is something that has been around for a long time. He
said he thinks the state will be best served if everyone works
together to find that comfort zone so that adequate marketing for
Alaska as a destination can still be provided. He asked Ms. Romero
if she had any ideas as to how to increase the involvement from the
industry so that there can be that partnership. MS. ROMERO replied
that the Fairbanks Convention & Visitors Bureau's main concerns
with the bill is that it is not a broad based tax and there is no
assurance that this money will be used for tourism marketing.
CHAIRMAN MACKIE reminded her there is a prohibition in the Alaska
Constitution against dedicated funds, and he suggested that coming
to the table and working with Senator Sharp and the committees is
probably the best way to work through the different philosophies on
this issue.
Number 240
BILL ELANDER , a member of the Board of Directors of the Alaska
Tourism and Marketing Council, said from the point of view of those
in marketing, he thinks all would agree that public funding is not
appropriate for tourism marketing, but the government role is to in
some way level the playing field between the competition of this
state. Unfortunately, the legislatures and the governing bodies of
this state's competition don't feel that way, and they put
tremendous amounts of public dollars to draw Alaska's visitors to
their destinations.
Mr. Elander noted a comment was made during the previous hearing on
SB 23 that the state is carrying most of the marketing dollars, but
he pointed out $42 million was marketed for Alaska last year. He
said the tourism marketing dollars for the generic part of Alaska
to get that word out for these small emerging businesses to enable
them to grow and develop is a worthy cause. He stressed it is not
a whole a lot of money that is needed, and the beauty of Alaska is
that a modest budget is all that is needed to get its image out
there, but he cautioned that Alaska has got to get its message out
there because it is getting buried by the competition.
Mr. Elander suggested, as a possible alternative to SB 23, perhaps
a tax with a sunset date to see if enough dollars are generated and
to see if the dollars are committed to satisfy both sides on the
issue. He added that he doesn't know if something like that will
work, but sitting down and discussing those types of ideas will
work better than bringing forth a bill that targets one segment of
the industry.
SENATOR WILKEN asked Mr. Elander to expand on his comment that the
government's role in tourism marketing is to level the playing
field. MR. ELANDER explained that, if another state government was
using their taxes and revenues to compete against one of our major
industries, he thinks it would be incumbent on our state government
to sit down with its industries and see how it can help mitigate
the situation. He said the industry is asking for the state's
help, and he reiterated that it is the generic part of this
marketing program that is so important to them.
Number 352
SUSAN BELL , President, Juneau Convention and Visitors Bureau, said
the businesses that are members of the JCVB and SATC could not
begin to compete with the heavy marketing dollars that are
available with some of the larger companies. She has worked for
three visitor bureaus and each of those bureaus has relied very
heavily on leveraging the state's program, as does SATC. She
pointed out that Juneau gets over a $100 million economic impact
from the visitor industry, and when looking at the state, something
that develops healthy municipalities is going to make sure that
each of our communities needs less municipal assistance at the
state level. She stated the visitor industry is a very competitive
marketplace that is very cost sensitive, and we have to be aware of
how we fall in on a world competitive scale.
CHAIRMAN MACKIE said he knows from being part of the industry
himself that there is a strong desire for additional state
contribution to marketing at a time when our budgets are dwindling,
and this is one way to generate many millions of dollars which
actually could help the industry. He asked if anybody has ever
stopped to take a look at that angle versus the attitude that the
tax will destroy the industry. MS. BELL replied that AVA and
others have voiced support for a broad base tax, and the major
stumbling blocks over SB 23 is that it is not broad based enough.
Number 406
DIANE MAYER-PEARSON , owner of Pearson's Pond Luxury Inn & Travel in
Juneau, testifying in opposition to SB 23, said the majority of
potential travelers list price as one of the things that makes them
reject Alaska as a visitor destination and passage of this
legislation would mean visitors to the Juneau area would be paying
a total of 14 percent in taxes. She advised that as the owner of
small business, she relies very heavily on the image campaign
through the Alaska Tourism and Marketing Council to help promote
Alaska.
Number 431
PHIL GREENEY , who along with his wife owns a bed and breakfast in
Juneau, also voiced concern about 14 percent in taxes on their
particular service. He said he doesn't know of any other service
in Alaska that pays that kind of rate. He suggested a much more
broad based way to generate more funds would be a much more
desirable way to go, and it would be much easier for the people in
the small business community to bear.
KAREN GREENEY of Juneau, said when we market Alaska, we are
marketing entry to Alaska to everyone. If there needs to be a tax
to supplement or to help the state finance tourism marketing, it
needs to be broad based, one where everyone, no matter how they
enter the state, will be paying their fair share of that tax.
Number 494
JUDITH WOOD, a member of the Gustavus Visitor Association and owner
of a fishing lodge in Gustavus, said that area is proposing
incorporation and that incorporation petition includes a three
percent bed tax, which has mixed feelings among the lodge owners in
Gustavus, and she thinks adding an additional two percent tax would
meet with opposition from lodge owners and bed and breakfast
owners. She supports more marketing of Alaska and a broader based
tax.
Number 523
GERD KRAUSE , General Manager of the Baranof Hotel in Juneau, said
not only is the bed tax used for marketing tourism, but it is used
in communities to help build convention centers and to bring more
business into the communities. An added two percent tax would
diminish these communities' chances of attracting conventions,
especially when competing for out-of-state conventions.
Number 542
SENATOR SHARP expressed his appreciation for all the input from the
various industry people. He said there are some innovative ways
possibly that a revenue bill could be structured to give assurance
that the revenue would be spent on marketing tourism. He pledged
his willingness to work with all concerned to find a way to fund
tourism marketing on a state basis and to spread the cost to all of
those that are benefiting from it.
There being no further testimony on SB 23, CHAIRMAN MACKIE stated
it was his intention to move SB 23 out of committee, as well as
stating that as a lodge owner himself and part of the visitor
industry he would be not be voting on whether to move the bill from
committee.
Number 574
SENATOR WILKEN moved CSSB 23(CRA) and the attached fiscal notes be
passed out of committee with individual recommendations. Hearing
no objection, it was so ordered.
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