Legislature(1999 - 2000)
04/30/1999 02:00 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 107(FIN)
An Act relating to tourism and tourism marketing;
eliminating the Alaska Tourism Marketing Council; and
providing for an effective date.
JOE BALASH, STAFF, REPRESENTATIVE GENE THERRIAULT, pointed
out that CS SB 107 (FIN) was the companion bill to HB 136
which previously had been heard in the House Finance
Committee. Mr. Balash spoke to the changes between the two
bills.
TINA LINDGREN, EXECUTIVE DIRECTOR, ALASKA VISITORS
ASSOCIATION (AVA), ANCHORAGE, touched upon the plan of the
bill. She commented that the bill before the Committee is
the product of several years effort. The actual wording was
agreed to by the Alaska Visitors Association and the
Administration. She hoped that the bill would pass. A
transition team has already begun the work of establishing a
new organization and to date, a number of people have
enrolled. The idea is that industry will create a new
organization that combines the Alaska Tourism Marketing
Council (ATMC) and the Alaska Visitors Association (AVA) and
the marketing functions of the Division. Passing the bill
will provide that the process move forward.
Representative J. Davies asked how realistic is it to assume
that financing will be raised through the private sector.
Ms. Lindgren stated that this will not be an easy challenge,
however, there has been a $2 million dollar commitment from
major players. She acknowledged that the community portion
of $1 million dollars will be more difficult to raise.
Representative J. Davies advised that he would continue to
support implementation of a statewide tourism tax.
SENATOR JERRY MACKIE spoke in support of the Senate Finance
Committee (SFC) version of the legislation. He pointed out
that everything in that version concurred with the proposed
House Finance Committee (HFC) version and that the SFC had
adopted the fiscal notes brought forward by the HFC. He
confirmed that the fiscal notes are appropriate and support
the changes made to the legislation.
Mr. Baylash explained the difference between the fiscal
notes prepared by the SFC and the HFC. He advised that the
two fiscal notes proposed by HFC address the tourism BRU
within the Department of Commerce and Economic Development;
SFC did adopt fiscal notes identical in numbers to the ones
drafted. In FY00, the pertinent note for the Alaska Tourism
Marketing Council (ATMC) numbers indicate personal services,
travel and contractual and are listed as requested in the
Governor's budget. In the Tourism Development component,
the FY00 Division of Tourism fiscal note, there is a $200
hundred thousand-dollar difference in the contractual line.
Mr. Baylash suggested that the Department no longer needs
authority to receive and expend that funding. Additionally,
there is a $100 thousand dollar reduction to the personal
service line. That number was based on a FY01 projection.
The Director of the Division has resigned and it is believed
that additional turnover will occur. Rather than deleting
specific positions, $100 thousand dollars was deleted from
the entire line in order that it could be absorbed in other
areas of their program.
Mr. Baylash continued, the reduction was based on part to
the millenium plan and partially to the legislation. The
other $700 hundred thousand dollars will be used for the
operations and staffing for the Division of Tourism. In
subsequent years, FY02 and FY03, the contractual line will
decrease each year by $500 thousand dollars as the State's
contribution to the marketing effort is ratcheted down.
GINNY FAY, ACTING DIRECTOR, DIVISION OF TOURISM, DEPARTMENT
OF COMMERCE AND ECONOMIC DEVELOPMENT, spoke to the
difference in the fiscal notes. She pointed out that the
ATMC fiscal note submitted by the Division is close to the
same as the HFC proposed note. The big difference is to the
Tourism Development note. The note submitted by the
Department is based on current tourism funding by the State.
Presently, the State of Alaska pays $5.3 million dollars
total tourism funding, of which, $3.3 million dollars of
that is a contract through ATMC, $1.2 million dollars is
program receipts, and that industry provides a 25% match for
the Tourism Marketing contract, and $2.2 million to the
Division of Tourism.
Ms. Fay continued, the marketing provided by the State of
Alaska is done in two pieces. One portion is handled by
ATMC and the other is international marketing addressed by
the Division of Tourism. The Department's fiscal note
envisions that after the merger occurs, the marketing done
by contract now through the Division and that done by
contract through ATMC will be one large contract with the
qualified trade association. The Department's contractual
line indicates the addition of both of those marketing
contracts.
Ms. Fay advised that the personal service line is an area of
major difference. Between the two fiscal notes, there will
be six state employees that vacate. The Department does not
know what the qualified trade association will be doing as
all the marketing currently is done by the State through
contract. She assumed that the Administration would be
handling the additional work of ATMC without additional
staff. That Division continues to do the work that they are
currently doing now and will assumed the new obligations.
She emphasized that the current workload can not be handled
without any additional staff.
Senator Mackie understood the Department's concern, however,
addressed the need of compromising considering the State's
economic budget. He stated that the Division of Tourism
does not need to remain the same as it is now since they
will not no longer be marketing. He noted that what is
reflected in the fiscal notes involves general funding,
program receipts and designated program receipts. In the
current year, the State is spending just over $7 million
dollars for tourism. In the prepared legislative fiscal
notes, that amount will be $6.7 million dollars a $300
thousand dollars reduction. He believed that reduction
would not decimate the Division of Tourism and could provide
a reasonable funding level for the transition.
Representative J. Davies inquired if there are other
function areas of tourism besides the marketing effort. Ms.
Fay explained that there are many services provided that are
not related to marketing as travel into the State,
permitting on federal lands and land use planning. The
Department also works closely with communities as they try
to develop tourism in their areas. She emphasized that
there continues to be growth and need for information on
developing tourist opportunities especially in rural Alaska.
Currently there is insufficient staffing to do the
development functions related to tourism.
Ms. Fay advised that it would be difficult to assume the
role of overseeing in-put on the large contract with current
staffing. Agreement has occurred among all businesses
because the State was willing to oversee the contract to
guarantee that businesses and communities benefit from
tourism activities within the State. Ms. Fay argued that
the current Division of Tourism fiscal note will begin to
de-staff that Division, loosing the ability to have a
reasonably active role in the contract.
Representative J. Davies commented that the funding cut
could decimate the work of the Division. Co-Chair
Therriault interjected that the proposed funding should be
adequate. Senator Mackie agreed that nothing was being
decimated with the proposed level of funding.
Ms. Fay pointed out that in FY00, the Division would not
remain whole with a $100 thousand dollar reduction,
affecting five positions.
Representative J. Davies MOVED an amendment to the Division
of Tourism fiscal note. He proposed a change to the FY01
note adding $100 thousand dollars to personal services,
adding $40 thousand dollars to the travel line, and
subtracting $200 thousand dollars from the contractual line
making it would be a net zero amendment. The employee
position line would increase from six to eight.
Representative Austerman OBJECTED.
(Tape Change HFC 99 - 115, Side 2).
Representative Austerman suggested that the biggest change
would be in FY01. The difference then between what the
Department wants and what the Legislature would be doing
would not be that significant. Senator Mackie noted that
the net change would be zero, however, the effect would be
$200 thousand dollars less in marketing, going to personal
services and travel. The $200 thousand dollars that would
be reduced to marketing would create an additional loss of
$500 thousand dollars because of the 60% match.
Representative J. Davies explained that the intent by making
the shift was to have a continued effort in rural
development tourism. Representative Austerman stated that
effort would be made through a $60 thousand dollar grant
already included. Representative J. Davies emphasized that
the present level of funding is not adequate.
A roll call vote was taken on the motion made on the
Division of Tourism fiscal note.
IN FAVOR: Moses, J. Davies, Grussendorf
OPPOSED: Austerman, Bunde, G. Davis, Foster, Kohring,
Therriault
Representatives Williams and Co-Chair Mulder were not
present for the vote.
The MOTION FAILED (3-6).
Representative Bunde MOVED to report CS SB 107 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS SB 107 (FIN) was reported out of Committee with "no
recommendation" and with two fiscal notes by the House
Finance Committee.
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