Legislature(1997 - 1998)

02/05/1997 01:35 PM CRA

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