Legislature(1997 - 1998)

04/21/1998 08:25 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
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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