Legislature(2017 - 2018)BARNES 124


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11:35:05 AM Start
11:36:05 AM Confirmation Hearing(s)
11:59:55 AM HB383
12:48:46 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Rescheduled from 03/27/18 --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
+ Confirmation Hearing: Dept. of Commerce, TELECONFERENCED
Community, & Economic Development
                    ALASKA STATE LEGISLATURE                                                                                  
           HOUSE SPECIAL COMMITTEE ON ARCTIC POLICY,                                                                          
               ECONOMIC DEVELOPMENT, AND TOURISM                                                                              
                         March 29, 2018                                                                                         
                           11:35 a.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Representative John Lincoln, Chair                                                                                              
Representative Bryce Edgmon                                                                                                     
Representative David Talerico                                                                                                   
Representative Mark Neuman                                                                                                      
Representative Chris Tuck                                                                                                       
Representative Andy Josephson                                                                                                   
MEMBERS ABSENT                                                                                                                
Representative Gary Knopp                                                                                                       
COMMITTEE CALENDAR                                                                                                            
CONFIRMATION HEARING(S):                                                                                                        
Commissioner, Department of Commerce, Community & Economic                                                                    
     Mike Navarre - Juneau                                                                                                      
     - CONFIRMATION(S) ADVANCED                                                                                                 
HOUSE BILL NO. 383                                                                                                              
"An Act establishing the Travel Alaska Board; relating to a                                                                     
tourism marketing assessment; and establishing a tourism                                                                        
marketing fund."                                                                                                                
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 383                                                                                                                  
SHORT TITLE: TOURISM MARKETING:BOARD;ASSESSMENT;FUND                                                                            
SPONSOR(s): REPRESENTATIVE(s) GRENN                                                                                             
02/21/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/21/18       (H)       AET, FIN                                                                                               
02/27/18       (H)       AET AT 11:30 AM BARNES 124                                                                             
02/27/18       (H)       Heard & Held                                                                                           
02/27/18       (H)       MINUTE(AET)                                                                                            
03/06/18       (H)       AET AT 11:30 AM BARNES 124                                                                             
03/06/18       (H)       Heard & Held                                                                                           
03/06/18       (H)       MINUTE(AET)                                                                                            
03/15/18       (H)       AET AT 11:30 AM BARNES 124                                                                             
03/15/18       (H)       -- MEETING CANCELED --                                                                                 
03/20/18       (H)       AET AT 11:30 AM BARNES 124                                                                             
03/20/18       (H)       --  Meeting  Postponed   to  3/22/18  at                                                               
                         11:35 am --                                                                                            
03/22/18       (H)       AET AT 11:35 AM BARNES 124                                                                             
03/22/18       (H)       -- MEETING CANCELED --                                                                                 
03/29/18       (H)       AET AT 11:35 AM BARNES 124                                                                             
WITNESS REGISTER                                                                                                              
MIKE NAVARRE, Commissioner Designee                                                                                             
Office of the Commissioner                                                                                                      
Department of Commerce, Community & Economic Development                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Answered questions during  his confirmation                                                             
hearing to be commissioner of the department.                                                                                   
REPRESENTATIVE JASON GRENN                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Introduced HB  383 as  the sponsor  of the                                                             
BROOKE IVY, Staff                                                                                                               
Representative Jason Grenn                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     Answered  questions  and   presented  an                                                             
overview  of the  changes to  the proposed  committee substitute,                                                               
Version R.                                                                                                                      
ACTION NARRATIVE                                                                                                              
11:35:05 AM                                                                                                                   
CHAIR JOHN LINCOLN  called the House Special  Committee On Arctic                                                             
Policy,  Economic Development,  and Tourism  meeting to  order at                                                               
11:35 a.m.  Representatives Lincoln,  Edgmon, Tuck, and Josephson                                                               
were present at the call  to order.  Representatives Talerico and                                                               
Neuman arrived as the meeting was in progress.                                                                                  
^CONFIRMATION HEARING(S)                                                                                                        
                    CONFIRMATION HEARING(S):                                                                                
             Commissioner, Department of Commerce,                                                                          
                Community & Economic Development                                                                            
11:36:05 AM                                                                                                                   
CHAIR LINCOLN  announced that the  first order of  business would                                                               
be  the  confirmation  hearing for  Commissioner,  Department  of                                                               
Commerce, Community & Economic Development.                                                                                     
11:36:20 AM                                                                                                                   
MIKE NAVARRE, Commissioner Designee,  Office of the Commissioner,                                                               
Department of Commerce, Community  & Economic Development, shared                                                               
his "fairly  diverse background in government"  pointing out that                                                               
he had  obtained a  Bachelor of  Arts degree  in government.   He                                                               
reported  that, as  he  had been  a member  of  the Alaska  State                                                               
Legislature for  12 years  and the Mayor  of the  Kenai Peninsula                                                               
Borough  for  9  years,  in  3 separate  terms,  he  had  both  a                                                               
legislative  and  an administrative  background,  as  well as  an                                                               
educational background.   He added that his role  as president of                                                               
the family company  had given him a  diverse business background.                                                               
He expressed his  growing concern for the Alaska  economy and its                                                               
preparedness  for  taking  advantage  of  all  the  opportunities                                                               
available,  citing   the  state's   natural  resources   and  its                                                               
geographic location to world markets.                                                                                           
11:39:27 AM                                                                                                                   
REPRESENTATIVE  EDGMON   lauded  Mr.   Navarre  as   a  practical                                                               
legislator and a problem solver,  willing to work with both sides                                                               
of the aisle,  especially during some tough times.   He asked for                                                               
some background  on the various  dimensions of the  Department of                                                               
Commerce, Community  & Economic  Development and why  Mr. Navarre                                                               
was qualified to be appointed commissioner.                                                                                     
COMMISSIONER NAVARRE  acknowledged that, for the  past ten years,                                                               
this  was  a combination  of  two  departments, and  its  mission                                                               
included  oversight  and  regulation of  insurance,  banking  and                                                               
securities,  and  professional  licensing.   He  noted  that  the                                                               
department  was currently  working to  speed up  the process  for                                                               
issuance of  professional licenses.   He spoke about the  work in                                                               
rural  communities  by the  Division  of  Community and  Regional                                                               
Affairs.  He pointed to  the revolving loan funds administered by                                                               
the Division of Economic Development  which were used to generate                                                               
economic activity  throughout the  state.   He reported  that his                                                               
responsibility as  commissioner was to offer  assistance in areas                                                               
identified as needing improvements.   He declared that regulation                                                               
and customer  service were not  mutually exclusive, and  that the                                                               
department's  responsibilities included  "getting back  to people                                                               
quickly, addressing  what their  concerns are,  and, at  the same                                                               
time, meeting out responsibilities for regulation."                                                                             
11:45:15 AM                                                                                                                   
CHAIR  LINCOLN asked  what  the best  opportunity  for the  state                                                               
regarding economic development  was which was not  related to oil                                                               
and gas.                                                                                                                        
COMMISSIONER   NAVARRE  offered   his   belief   that  the   best                                                               
opportunities were  the "tremendous, world class  mining deposits                                                               
around the state,"  an area for continued growth  if energy could                                                               
be brought to  those project areas. He added  that further global                                                               
exploration for  markets to the vast  fisheries resources through                                                               
the Alaska Seafood Marketing Institute  and for increased visitor                                                               
numbers  in  the  tourism market,  especially  for  the  northern                                                               
lights in the winter shoulder season, were also expanding areas.                                                                
CHAIR LINCOLN  asked about administration  of the  municipal land                                                               
trust with communities which were not incorporated.                                                                             
COMMISSIONER NAVARRE  relayed that there had  been discussion for                                                               
a  strategy  to distribute  these  lands  into communities  where                                                               
municipalities   would  never   form   as   those  economies   or                                                               
populations were not significant enough to support them.                                                                        
11:48:44 AM                                                                                                                   
REPRESENTATIVE  TUCK, reflecting  on the  new marijuana  industry                                                               
and  the current  fiscal crisis,  asked if  Alaska should  have a                                                               
state bank.                                                                                                                     
COMMISSIONER  NAVARRE, in  response, pointed  out that  the state                                                               
had the ability  to charter state banks, and that  there had been                                                               
some inquiries  with respect  to the  issues associated  with the                                                               
marijuana  industry, such  as the  federal  conflicts with  state                                                               
laws.   He reported that  the Division of Banking  and Securities                                                               
was exploring this.                                                                                                             
REPRESENTATIVE TUCK  asked if there were  still any opportunities                                                               
in the timber industry.                                                                                                         
COMMISSIONER NAVARRE  opined that, although there  were statewide                                                               
opportunities, these  were dependent  on the worldwide  demand in                                                               
the  timber  market.   He  addressed  the federal  roadless  rule                                                               
regarding access to the timber  resources in the Tongass National                                                               
Forest  in Southeast  Alaska.   He  stated  that mining,  timber,                                                               
agriculture,  oil  and  gas,  and  tourism  were  all  critically                                                               
important, and  that it  was necessary to  position the  state to                                                               
take advantage.   He explained  that, absent a  broad-based state                                                               
tax, Alaska may  not be well positioned to take  advantage of the                                                               
opportunities for the  vast natural resources.   He declared that                                                               
it was necessary  to "spread the tax burden a  little bit further                                                               
in order  to build  an economic foundation  for Alaska  that will                                                               
allow  us to  take advantage  of the  vast opportunities  that we                                                               
have."   He opined that  a strong economy  was not a  party issue                                                               
and  that agreement  was necessary  for the  foundation to  allow                                                               
11:53:14 AM                                                                                                                   
REPRESENTATIVE JOSEPHSON emphasized that  Mr. Navarre was as well                                                               
suited for the  commissioner position "as anyone I've  seen.  His                                                               
background is  impeccable, he's  experienced everything  there is                                                               
to experience  in local  and state government,  and he's  a great                                                               
asset  and he's  a great  choice."   He expressed  his confidence                                                               
that Mr. Navarre would continue to do a good job.                                                                               
REPRESENTATIVE  TUCK expressed  his  agreement  that Mr.  Navarre                                                               
could "navigate through the web of obstacles."                                                                                  
REPRESENTATIVE  EDGMON offered  his belief  that "in  the current                                                               
times, he's the perfect guy for the job."                                                                                       
CHAIR LINCOLN moved to advance  the confirmation of Mike Navarre,                                                               
commissioner designee  for the Department of  Commerce, Community                                                               
&  Economic Development  to  a  joint session  of  the House  and                                                               
Senate for consideration.   He reminded members  that signing the                                                               
reports  regarding appointments  in  no  way reflects  individual                                                               
members' approval or  disapproval of the appointee,  and that the                                                               
nominations  are merely  forwarded  to the  full legislature  for                                                               
confirmation  or  rejection.    There  being  no  objection,  the                                                               
confirmation was advanced.                                                                                                      
11:55:17 AM                                                                                                                   
The committee took an at-ease from 11:55 a.m. to 12:00 p.m.                                                                     
         HB 383-TOURISM MARKETING:BOARD;ASSESSMENT;FUND                                                                     
11:59:55 AM                                                                                                                   
CHAIR LINCOLN announced that the  next order of business would be                                                               
HOUSE  BILL 383,  An Act  establishing the  Travel Alaska  Board;                                                               
relating to  a tourism marketing  assessment; and  establishing a                                                               
tourism marketing fund.                                                                                                         
12:00:52 PM                                                                                                                   
The committee took a brief at-ease.                                                                                             
12:01:09 PM                                                                                                                   
REPRESENTATIVE  TUCK  moved  to   adopt  the  proposed  committee                                                               
substitute  (CS)   for  HB  383,  labeled   30-LS1214\R,  Nauman,                                                               
3/21/18,  as  the  working  draft.   There  being  no  objection,                                                               
Version R was before the committee.                                                                                             
12:01:36 PM                                                                                                                   
REPRESENTATIVE JASON  GRENN, Alaska State  Legislature, expressed                                                               
his appreciation for the committee  work on this "new, innovative                                                               
idea that's come before our  legislature" and "to really clean up                                                               
and make it  a better bill."  He acknowledged  that more work was                                                               
still necessary.                                                                                                                
12:03:07 PM                                                                                                                   
BROOKE  IVY,  Staff,  Representative Jason  Grenn,  Alaska  State                                                               
Legislature,  said  that  she would  describe  the  changes  from                                                               
Version O to Version R of  proposed HB 383.  She paraphrased from                                                               
the  "Explanation of  Changes"  [Included  in members'  packets],                                                               
which read [original punctuation provided]:                                                                                     
     Throughout the  bill: The term "Department  of Revenue"                                                                    
     is   changed  to   "department."  The   terms  "tourism                                                                    
     segments"   and    "business   segments"    have   been                                                                    
     abbreviated to "segments"  for clarity and consistency.                                                                    
     Additional  changes  were  adopted  as  recommended  by                                                                    
     Legislative Legal to conform  to amendments made to the                                                                    
     bill, as well as legislative drafting standards.                                                                           
MS. IVY continued her paraphrase of the changes, which read:                                                                    
     Page  1,  Line 1:  Amends  the  bill title  to  include                                                                  
     reference to a Vehicle Rental Tax credit.                                                                                  
     Page 1,  Lines 5-12: Deletes Sections  1-4 and replaces                                                                  
     with a new  Section 1. Replaces the  Vehicle Rental Tax                                                                    
     (VRT)  mechanism  in  the  original  bill  with  a  VRT                                                                    
     credit,  addressing structural  concerns raised  by the                                                                    
     Department of Revenue  and Legislative Legal. Renumbers                                                                    
     remaining bill sections accordingly.                                                                                       
MS.  IVY explained  that  there  had been  some  issues with  the                                                               
Department  of  Revenue for  the  deposit  of revenues  from  the                                                               
Vehicle  Rental Tax  (VRT)  into the  Tourism  Marketing Fund  as                                                               
there  was not  a precedent  in statute  for this  mechanism, and                                                               
there were concerns  by the Legislative Legal  Services that this                                                               
"could trigger some federal tax  code issues for those entities."                                                               
She  declared that  this  would  now be  like  other tax  credits                                                               
existing in statute.                                                                                                            
MS. IVY continued to paraphrase the changes, which read:                                                                        
     Page 2,  Lines 25-26:  New language permits  the Travel                                                                  
     Alaska Board to remove  ex officio nonvoting members in                                                                    
     44.25.205(d),  which previously  only  allowed them  to                                                                    
     elect nonvoting members.                                                                                                   
     Page  2,  Lines  28-29:   Amends  44.25.205(d)  to  add                                                                  
     electing a chair  or vice-chair to the  list of actions                                                                    
     for which nonvoting members may not be counted.                                                                            
     Page   3,  Lines   1-6:  New   subsection  44.25.205(f)                                                                  
     clarifies  that if  an  assessment  is terminated,  the                                                                    
     Travel Alaska  Board can remain active  through June 30                                                                    
     of  the  following  year to  performing  its  remaining                                                                    
     duties. A new  assessment may be proposed  and voted on                                                                    
     during this time.                                                                                                          
     Page 9,  Lines 14-30: Adds new  subsection 44.25.270(c)                                                                  
     clarifying procedures for board member elections:                                                                          
     (c)(1) requires  notice to be provided,  either by mail                                                                    
     or  electronically, to  voters  in advance  of a  board                                                                    
     member  election. This  subsection also  clarifies that                                                                    
     in  the case  of a  board member  election in  which an                                                                    
     assessment is also being voted  on, voters will consist                                                                    
     of all tourism  businesses who would be  subject to the                                                                    
     proposed assessment,  should it pass. In  the case that                                                                    
     no assessment  is being voted on  (only board members),                                                                    
     voters  will consist  of  tourism businesses  currently                                                                    
     subject to an existing assessment.                                                                                         
     (c)(2)   clarifies  that   ballots  for   board  member                                                                    
     elections  will  also  be mailed  by  the  Director  of                                                                    
     Elections 45  days before  the required  postmark date.                                                                    
     Outlines  required elements  to  be  included on  board                                                                    
     election ballots,  and that  the Director  of Elections                                                                    
     will count ballots.                                                                                                        
     Renumbers following subsections accordingly.                                                                               
MS.  IVY explained  that this  would  allow the  board to  remain                                                               
active  through  June 30  of  the  following  year to  spend  any                                                               
remaining  funds  and fulfill  the  remaining  marketing plan  in                                                               
order to  resolve any  issues resulting  from the  termination of                                                               
assessments.   She added that  an additional assessment  could be                                                               
proposed during this time.                                                                                                      
12:07:47 PM                                                                                                                   
MS. IVY returned to the changes, which read:                                                                                    
     Page 9,  Lines 22-27: Adds new  subsection 44.25.270(d)                                                                  
     clarifying that  assessment election ballots  must list                                                                    
     proposed  and existing  assessments  for all  segments,                                                                    
     and  be approved  or  rejected in  total,  as a  single                                                                    
     vote. If an  existing assessment is up  for renewal and                                                                    
     the  vote  fails,  the  assessment  terminates.  If  an                                                                    
     existing assessment  is up for  amendment and  the vote                                                                    
     to   change   the   assessment  fails,   the   existing                                                                    
     assessment  remains.   If  an  assessment  is   up  for                                                                    
     termination  and   the  vote  passes,   the  assessment                                                                    
     Renumbers following subsections accordingly.                                                                               
MS.   IVY   explained   that  an   assessment   would   terminate                                                               
automatically after  six years, but that  these changes clarified                                                               
three possible  scenarios:  a  reauthorization vote,  an election                                                               
to amend the assessment, or a vote to terminate the assessment.                                                                 
12:09:26 PM                                                                                                                   
MS. IVY,  in response to  Representative Tuck,  acknowledged that                                                               
although  it  was   not  clarified  in  the   proposed  bill,  an                                                               
assessment was  good for six  years; if  it was amended  prior to                                                               
this, it was good for another six years.                                                                                        
REPRESENTATIVE TUCK  asked whether a new  assessment was required                                                               
should there be a sunset to the proposed bill.                                                                                  
MS.  IVY  explained  that  it  would be  necessary  to  vote  for                                                               
reauthorization of  the assessment,  which could  include changes                                                               
to the assessment.                                                                                                              
12:11:09 PM                                                                                                                   
MS. IVY returned attention to the changes, which read:                                                                          
     Page  10,  Line  18:  Amends   the  vote  threshold  in                                                                  
     44.25.275 from "at  least 50 percent" to  "more than 50                                                                    
     percent"  of   the  weighted   votes  received   in  an                                                                    
     Page  10, Line  24:  Inserts language  in 44.25.275  to                                                                  
     ensure the weight of a  tourism business's vote remains                                                                    
     Page 10, Lines 25-28:  Adds new subsection 44.25.275(b)                                                                  
     giving  the  Department  of Revenue  the  authority  to                                                                    
     establish  a  method  for weighting  votes  of  tourism                                                                    
     businesses  when  gross   revenue  information  is  not                                                                    
     provided to the Department.                                                                                                
12:12:57 PM                                                                                                                   
REPRESENTATIVE  TUCK asked  for clarification  whether the  first                                                               
vote was for qualification or for self-assessment.                                                                              
MS.  IVY replied  that the  first assessment  would require  more                                                               
work to  acquire gross revenue  information for the  weighting of                                                               
the vote.   She said that it  would be necessary to  reach out to                                                               
new  businesses  in  the  first year  to  acquire  gross  revenue                                                               
information to determine estimates  for future payment, and after                                                               
that, the  payments in the  previous calendar year would  be used                                                               
for determination.                                                                                                              
12:14:04 PM                                                                                                                   
REPRESENTATIVE NEUMAN  requested additional information  for ways                                                               
the department  would structure the  tourism business  to provide                                                               
the information necessary to weigh their vote.                                                                                  
MS.  IVY offered  her  understanding that  the  department had  a                                                               
method  to reach  out  to  businesses to  establish  a tax  payer                                                               
REPRESENTATIVE  NEUMAN  said  that   this  was  "pretty  critical                                                               
12:16:08 PM                                                                                                                   
REPRESENTATIVE  TUCK  offered  his  understanding  that,  as  the                                                               
Department  of  Revenue  would have  the  information,  it  would                                                               
determine the  weight of the  business in order to  ascertain its                                                               
number of votes.  He asked how the weight would be defined.                                                                     
MS. IVY replied that the weight  would first be determined on the                                                               
estimated payment in  the upcoming calendar year,  based on gross                                                               
revenues  and the  proposed  assessment rate.    After that,  the                                                               
weight would be based on the actual payments.                                                                                   
REPRESENTATIVE TUCK asked how this was determined.                                                                              
MS. IVY  replied that the proposed  bill did not yet  determine a                                                               
specific level.                                                                                                                 
REPRESENTATIVE NEUMAN shared  his concern that there  was not any                                                               
specific information.                                                                                                           
12:18:56 PM                                                                                                                   
REPRESENTATIVE  TUCK  asked  about the  recourse  should  someone                                                               
refuse to report revenue.                                                                                                       
12:19:20 PM                                                                                                                   
MS.  IVY  shared  that  this  concern  had  been  raised  by  the                                                               
Department  of  Revenue.   She  offered  her  understanding  that                                                               
currently the  department did not  have the authority  to require                                                               
any  gross revenue  information for  payment until  an assessment                                                               
was in  place; hence,  the inclusion of  amended language  in the                                                               
proposed bill to  ensure the authority to "come up  with a method                                                               
to address"  the lack of  access to  the information.   She noted                                                               
that AS  44.25.260 did  address the  confidentiality requirements                                                               
related  to  the  information  collected  by  the  Department  of                                                               
MS. IVY returned to paraphrasing the "Explanation of Changes,"                                                                  
which read:                                                                                                                     
     Page 11,  Lines 17-21:  Amends 44.25.295 to  ensure the                                                                  
     Legislature  is not  appropriating both  into, and  out                                                                    
     of, the  Alaska tourism  marketing fund  established in                                                                    
     this section,  addressing a drafting concern  raised by                                                                    
     Legislative  Legal.  This  section  now  clarifies  the                                                                    
     Department   of   Revenue    will   deposit   collected                                                                    
     assessment revenue and donations into the fund.                                                                            
     Page  11,  Lines  22-24:  Adds  language  in  44.25.295                                                                  
     allowing  money to  be appropriated  out of  the Alaska                                                                    
     tourism marketing fund to  cover costs of administering                                                                    
     the assessment, as well as executing a marketing plan.                                                                     
     Page 11,  Line 30    Page 12, Line 3:  Adds definitions                                                                  
     in  44.25.300  for  "department,"  "fund,"  and  "gross                                                                    
     revenue." Renumbers following subsections accordingly.                                                                     
     Page  12,  Lines  10-27:  Amends  Section  3(a)-(c)  to                                                                  
     ensure   a  Governor-appointed   transition  board   is                                                                    
     established    before   any    Travel   Alaska    Board                                                                    
     member/assessment  election  takes  place.  Under  this                                                                    
     structure,  the  "leading statewide  nonprofit  tourism                                                                    
     marketing association" forwards a  list of names to the                                                                    
     Governor for the appointment  of a 24-member transition                                                                    
     board.  At  the  recommendation of  Legislative  Legal,                                                                    
     this  would   ensure  the   entity  working   with  the                                                                    
     Department of Revenue to  define tourism "segments" and                                                                    
     holding  an  initial  assessment election  would  be  a                                                                    
     Governor-appointed    board,    versus   an    industry                                                                    
     association independent of  state government. Renumbers                                                                    
     following subsections accordingly.                                                                                         
     Page  12, Line  28    Page 13,  Line 6:  Amends Section                                                                  
     3(d)  and  (e),  and  deletes  previous  Section  3(f),                                                                    
     renumbering accordingly. Adds  clarifying language that                                                                    
     the  Director of  Elections and  Department of  Revenue                                                                    
     are  involved in  the first  election process,  just as                                                                    
     they would be in  all future elections. Ratification of                                                                    
     the  first approved  assessment  by  the Travel  Alaska                                                                    
     Board is no longer required,  as payers will have voted                                                                    
     on  its  approval.  Finally,   this  section  now  also                                                                    
     clarifies that the transition  board will dissolve upon                                                                    
     the appointment of the first Travel Alaska Board.                                                                          
12:24:38 PM                                                                                                                   
REPRESENTATIVE NEUMAN asked about the [VRT] credit.                                                                             
MS. IVY offered  her understanding that this credit  was like the                                                               
education tax  credit.  She  said that  an entity subject  to the                                                               
VRT  could donate  funds  to the  Alaska  Tourism Marketing  Fund                                                               
established  in the  proposed bill  and then  apply for  a credit                                                               
against their VRT tax liability.                                                                                                
REPRESENTATIVE NEUMAN asked if this  would be "back-filled by UGF                                                               
MS. IVY opined that the  appropriations would be dependent on the                                                               
Alaska State Legislature.                                                                                                       
REPRESENTATIVE   NEUMAN   offered   current   examples   of   the                                                               
supplemental use of UGF (unrestricted  general fund) dollars with                                                               
taxes.   He declared that  the State of  Alaska did not  have the                                                               
ability to  continue to give  away money.   He shared  that there                                                               
were a lot of questions.                                                                                                        
REPRESENTATIVE  GRENN offered  his belief  that these  were valid                                                               
questions requiring  answers.  He  reiterated that the  intent of                                                               
the  proposed  bill  would  be  a focus  for  the  House  Finance                                                               
REPRESENTATIVE  NEUMAN  shared his  belief  that,  as there  were                                                               
already a lot  of proposed bills in the  House Finance Committee,                                                               
the committee was not the place for solutions.                                                                                  
12:28:36 PM                                                                                                                   
REPRESENTATIVE  TALERICO observed  that, because  of geographical                                                               
location, gross  revenues were not  always equal.  He  shared his                                                               
concerns that, as this approach  did not consider the operational                                                               
costs,  the  assessment process  would  be  more complicated  and                                                               
would require  a better definition.   He offered his  belief that                                                               
this needed a careful approach.                                                                                                 
REPRESENTATIVE GRENN replied that he  "was more than happy to dig                                                               
into that more."                                                                                                                
12:31:56 PM                                                                                                                   
MS. IVY,  in response to Representative  Talerico, explained that                                                               
the specific definition was in  statute, although the concept for                                                               
use  of  gross  revenues  was  commonly  used  in  other  tourism                                                               
improvement districts.                                                                                                          
REPRESENTATIVE TALERICO said it was  difficult for him to compare                                                               
other  transportation corridors  to  the geographical  challenges                                                               
that created  the cost  differentials for  goods and  services in                                                               
12:33:21 PM                                                                                                                   
REPRESENTATIVE JOSEPHSON shared  that he was not  receiving a lot                                                               
of communications  for the  grievances alluded  by Representative                                                               
Talerico.  He  said that the TID  (tourism improvement districts)                                                               
formula  had  worked in  other  states.   Although  he  expressed                                                               
support for the proposed legislation,  he shared his concern that                                                               
the House  Finance Committee would  find another solution  to the                                                               
VRT which  Department of Transportation  & Public  Facilities and                                                               
Department of Natural Resources had  relied.  He acknowledged the                                                               
need for a fiscal plan.                                                                                                         
12:34:59 PM                                                                                                                   
REPRESENTATIVE  TUCK stated  that it  was his  understanding that                                                               
there were  two reasons for  necessitating the  financial records                                                               
of a  company.  First,  it was necessary  to weight the  vote and                                                               
second, it was  necessary to determine the assessment.   He asked                                                               
if there  was an appeal  process for  either.  He  suggested that                                                               
there should  also be an appeal  process if a business  was being                                                               
assessed even though they were not doing any tourism business.                                                                  
MS.  IVY, in  response, said  that  currently there  was not  any                                                               
appeal  process in  the proposed  bill.   She offered  her belief                                                               
that  there was  not  an  appeal process  in  the Alaska  Seafood                                                               
Marketing Institute  statute, either.   She explained  that there                                                               
was a termination mechanism included  in the proposed bill, which                                                               
was  intended  to  allow  industry   to  terminate  or  amend  an                                                               
REPRESENTATIVE  TUCK  asked if  a  new  business was  immediately                                                               
assessed, whether or not it was initially profitable.                                                                           
MS.  IVY deferred  to  the Department  of  Revenue, although  she                                                               
surmised that a  business would be subject to  assessment as soon                                                               
as gross revenues were available.                                                                                               
REPRESENTATIVE TUCK  offered an example  of a bicycle  shop which                                                               
added  bicycle rentals  and asked  if the  entire business  would                                                               
then be assessed.                                                                                                               
MS.  IVY explained  that  the transition  board  would work  with                                                               
Department  of Revenue  to determine  and  identify exactly  what                                                               
those segments  included based on  those definitions  outlined in                                                               
the bill.   She reported that the industry had  requested to "let                                                               
us figure  that out as a  group and come up  with definitions and                                                               
come up with proposed rates for  segments."  She pointed out that                                                               
the  proposed  bill  was  enabling  legislation  "to  allow  that                                                               
conversation to happen."                                                                                                        
12:39:09 PM                                                                                                                   
The committee took an at-ease from 12:39 p.m. to 12:42 p.m.                                                                     
12:43:04 PM                                                                                                                   
REPRESENTATIVE GRENN  acknowledged that  this was a  complex bill                                                               
offering a new,  innovative path for the industry  to work toward                                                               
a  solution.   He  pointed  out that  tourism  marketing was  the                                                               
second  largest private  sector in  the  state, and  that it  was                                                               
vital to  the economy.  He  pointed out that this  assessment was                                                               
passed  on  to  customers  and  would  not  directly  impact  the                                                               
12:44:49 PM                                                                                                                   
REPRESENTATIVE  TUCK pointed  out that  he was  a sponsor  of the                                                               
bill, and  that he  supported the idea.   However,  he questioned                                                               
whether the  legislature could "give  away its  taxing authority"                                                               
other than  to municipalities and sub-governments.   He expressed                                                               
concern  that, although  the Alaska  Seafood Marketing  Institute                                                               
worked, it had  not been challenged in the courts.   He expressed                                                               
the desire to better prepare and  develop a clear, clean cut bill                                                               
that would  not incur litigation and  jeopardize similar systems.                                                               
He said  that he was not  comfortable in moving the  bill forward                                                               
at this point.                                                                                                                  
12:48:04 PM                                                                                                                   
CHAIR LINCOLN announced that proposed HB 383 would be held over.                                                                
12:48:46 PM                                                                                                                   
There being no further business before the committee, the House                                                                 
Special Committee On Arctic Policy, Economic Development, and                                                                   
Tourism meeting was adjourned at 12:48 p.m.                                                                                     

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