Legislature(2013 - 2014)BARNES 124
02/07/2013 11:15 AM House ECON. DEV., TRADE & TOURISM
| Audio | Topic |
|---|---|
| Start | |
| Overview (s): Film and Tourism Programs by Division of Economic Development, Department of Commerce, Community & Economic Development | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE AND
TOURISM
February 7, 2013
11:18 a.m.
MEMBERS PRESENT
Representative Shelley Hughes, Chair
Representative Lynn Gattis
Representative Pete Higgins
Representative Lance Pruitt
Representative Harriet Drummond
Representative Geran Tarr
MEMBERS ABSENT
Representative Bob Herron
Representative Craig Johnson
Representative Kurt Olson
COMMITTEE CALENDAR
OVERVIEW (S): FILM AND TOURISM PROGRAMS BY DIVISION OF ECONOMIC
DEVELOPMENT~ DEPARTMENT OF COMMERCE~ COMMUNITY & ECONOMIC
DEVELOPMENT
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
LORENE PALMER, Director
Division of Economic Development (DED)
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation
entitled, "Economic Development - Tourism & Film," dated 2/7/13.
CARYL MCCONKIE, Development Specialist
Juneau Office
Development Section
Division of Economic Development (DED)
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the PowerPoint
presentation entitled, "Economic Development - Tourism & Film."
GLEN HAIGHT, Development Manager
Juneau Office
Development Section
Division of Economic Development (DED)
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the PowerPoint
presentation entitled, "Economic Development - Tourism & Film."
ACTION NARRATIVE
11:18:59 AM
CHAIR SHELLEY HUGHES called the House Special Committee on
Economic Development, Trade and Tourism meeting to order at
11:18 a.m. Representatives Drummond, Gattis, Higgins, and
Hughes were present at the call to order. Representatives
Pruitt and Tarr arrived as the meeting was in progress.
^OVERVIEW (S): FILM AND TOURISM PROGRAMS BY DIVISION OF
ECONOMIC DEVELOPMENT, DEPARTMENT OF COMMERCE, COMMUNITY &
ECONOMIC DEVELOPMENT
OVERVIEW (S): FILM AND TOURISM PROGRAMS BY DIVISION OF ECONOMIC
DEVELOPMENT, DEPARTMENT OF COMMERCE, COMMUNITY & ECONOMIC
DEVELOPMENT
11:19:55 AM
CHAIR HUGHES announced that the only order of business would be
an overview of the Film and Tourism Programs by the Division of
Economic Development, Department of Commerce, Community &
Economic Development. She directed the committee's attention to
DCCED's fiscal year 2013 (FY 13) second quarter tourism
marketing report and a response to questions from the meeting on
1/31/13 that were included in the committee packet.
11:20:46 AM
LORENE PALMER, Director, Division of Economic Development (DED),
Department of Commerce, Community & Economic Development
(DCCED), provided a PowerPoint presentation entitled, "Economic
Development - Tourism & Film." Ms. Palmer informed the
committee the focus of her presentation would be on the tourism
and film sectors of DED, and what they mean to the state's
economy. The tourism industry brings $3.72 billion in direct
and indirect spending into the state and $179 million comes to
the state through taxes and fees. Tourism represents
approximately 38,000 jobs, increasing to 45,000 jobs during the
peak season. The tourism industry is recovering from the
recession and 1,005,000 visitors are expected in 2013, which is
an increase of 7 percent. Also, there is increased air capacity
into Alaska with the addition of Icelandair and new flights by
Jet Blue, United, and Alaska Airlines [slide 2].
11:23:24 AM
REPRESENTATIVE DRUMMOND asked for a forecast on the number of
independent travelers expected this year, and for their numbers
in past years.
MS. PALMER said the economic impact study and the Alaska Visitor
Statistics Program include that information and both reports
have recently been posted online. As far as a forecast, she
opined independent travelers will have a similar increase.
REPRESENTATIVE DRUMMOND urged for the inclusion of all of the
travelers in the total estimated amount.
MS. PALMER stated there were 1.586 million total visitors in
2012 and the numbers are back on the rise to the peak of 1.7
million in 2007 and 2008.
CHAIR HUGHES asked how many non-cruise visitors drive or travel
by air.
11:25:46 AM
CARYL MCCONKIE, Development Specialist, Juneau Office,
Development Section, DED, DCCED, stated that in summer 2012,
there were 1.586 million visitors, of which 59 percent traveled
by cruise ship, 37 percent entered and exited the state by air,
and 4 percent entered and exited by highway and/or ferry.
REPRESENTATIVE HIGGINS asked how this information is known.
MS. MCCONKIE explained the legislature commissioned a study by
DCCED called the Alaska Visitor Statistics Program. The study
has been conducted six times since 1986 and visitors are
interviewed as they enter and exit the state. The visitors are
asked many questions about their homes, travels, and spending,
and the information is used by DED's marketing program and
provided to the tourism industry and communities. In response
to Chair Hughes, she said a baseline study is conducted every
four years, and is updated annually.
MS. PALMER pointed out that compared to the previous study done
in 2008-2009, in 2011-2012 there have been increases in
employment to 37,800, labor income is up to $1.24 billion, and
total spending is up to $3.72 billion [slide 3]. Turning to
DED's tourism marketing effort, she said there are a variety of
activities that create demand for Alaska visitation and that are
directed to the private sector, the travel trade, and
international markets. She advised that the travel trade has an
established distribution channel which is used by the division
to reach their customers. The highest item in the budget is for
advertising which is the activity that creates the greatest
volume of awareness about Alaska [slide 4]. In response to
Chair Hughes, Ms. Palmer said no federal dollars are a part of
the marketing program.
11:30:49 AM
CHAIR HUGHES then asked how the ratio of economic benefit from
the tourism marketing budget compares with the value of other
industries that use state funds, such as fishing and timber.
MS. PALMER said the minerals industry supports 3,800 jobs, the
seafood industry supports 53,000 jobs, tourism supports about
40,000 jobs, timber supports 619 jobs, and agriculture supports
680 farms.
CHAIR HUGHES observed that DED indicated that the tourism
industry contributes an economic benefit of $3.72 billion with a
state investment of $17 million. She expressed her interest in
knowing what level of investment is put in other industries and
how the economic benefit compares.
MS. PALMER said the division will provide that information to
the committee. She turned attention to the public relations
program and activities in direct contact with consumers; in this
fiscal year, nearly 447 stories about Alaska have been generated
in a variety of publications. If purchased as advertising, this
exposure would cost about $31.5 million. Other activities
include a media road show, a New York media luncheon, and the
use of social media. In response to Representative Drummond,
she said Facebook and Twitter are used as social media outlets.
There are also special projects such as the Top Chef television
show, which will reach 5.2 million viewers and has a public
relations value of $5.4 million to the state [slide 5]. The
show was an opportunity to combine attracting visitors to make
Alaska their destination and also to promote the Alaska Seafood
Marketing Institute (ASMI) message. As an aside, she read three
of the 30,000 tweets sent during the show's first episode.
11:36:24 AM
CHAIR HUGHES asked how the state was the state involved in the
Top Chef show, and what else may be coming up.
11:36:37 AM
MS. PALMER explained special projects are either targeted by the
division or are opportunities that "come our way." The state's
role was to make connections with the show and try to
accommodate the interests of the show through DED's public
relations contractor. Along with involvement from ASMI there
was tremendous support from the private sector. In further
response to Chair Hughes, she said the first contact was through
the tourism association contract two or more years ago.
CHAIR HUGHES asked, "Would it have happened without the tourism
association being involved or did you respond because they were
pursuing it?"
MS. PALMER said at the time of the tourism association, it was
the lead; after the association was replaced, the division
followed through. She continued to the next element of the
presentation: Alaska Tourism Marketing. The current budget for
television advertising is $5.7 million, and print advertisements
in targeted magazines are to encourage readers to order the
State Vacation Planner or visit the web site.
REPRESENTATIVE DRUMMOND asked whether the advertisements air on
Alaska reality television shows.
MS. PALMER said she did not know; however, 30-second cable spots
will be aired on The History Channel, Discovery Channel, Fox
News, The Weather Channel, Travel Channel, Animal Plant, and
National Geographic. Ten-second spots will air on game shows
[slide 6].
CHAIR HUGHES inquired as to whether there is an effort to align
commercials with audiences that may be the most interested in
traveling to Alaska.
11:41:36 AM
MS. PALMER deferred to the advertising committee. In further
response to Chair Hughes, she advised that the division has a
media contractor who makes informed and skilled choices on the
placement of advertising. She continued with the presentation,
and said opportunities to connect with the private sector are
very important, so the division publishes travel brochures with
advertising purchased by businesses in the travel industry.
These are used as planning tools by those considering a trip,
and so far 300,000 requests have been received. The web site is
another tool for visitors to use to begin planning a trip and to
make connections with private businesses. German, [Korean], and
Japanese language web sites support the international marketing
effort [slide 8].
REPRESENTATIVE DRUMMOND asked whether other countries are
targeted.
MS. PALMER was unsure. In response to Chair Hughes, she said
Japan, Germany, and Korea are either feeder markets or a market
being developed.
REPRESENTATIVE GATTIS surmised the marketing is based on
existing air traffic.
11:44:58 AM
MS. PALMER said yes, although a lot is based on the division's
assessment of the interest in Alaska. Airlift is a very
important part of any economic development because of access; in
fact, Icelandair is coming into the state as a result of a
partnership among many agencies including the Ted Stevens
Anchorage International Airport. This new air carrier will
provide additional access twice a week to European markets
[slide 9]. Ms. Palmer, in response to Representative Drummond,
said there will be an inaugural celebration in May. She
addressed the topic of research, and noted that this is another
important part of economic development strategy along with
financing and marketing. The division commissions an economic
impact study to use as a measuring tool of what this sector
contributes to Alaska's economy. Data from the Alaska Visitor
Statistics Program and the economic impact study is designed to
help the industry make good business decisions and to help state
agencies make good policy decisions [slides 10 and 11].
11:49:26 AM
CHAIR HUGHES asked how often this data is used by business
owners.
MS. PALMER referred to her experience as a former convention and
visitor bureau president, and said that businesses need and use
this information and it is a highly anticipated item of
research. She restated a description of the Alaska Visitor
Statistics Program.
CHAIR HUGHES recalled that the state spends about $10 million on
marketing and asked how much the cruise industry, the airlines,
and the private sector spend on advertising travel to Alaska.
MS. MCCONKIE said she did not have hard figures at this time.
CHAIR HUGHES reflected it is important for constituents to know
what the private sector is spending.
REPRESENTATIVE DRUMMOND asked for examples of how [DED] has
reacted after learning something new from research.
11:53:03 AM
MS. PALMER said she did not have that historical information;
however, from her experience with the Alaska Travel Industry
Association she relayed that marketing data was always taken
into consideration when the private sector made marketing
choices and budget decisions; marketing data is also used to
look at international economic trends. In further response to
Representative Drummond, she said she worked for the Juneau
Convention and Visitors Bureau for 10 years, and has worked in
the tourism industry for 30 years.
11:55:01 AM
CHAIR HUGHES asked whether there are current trends visible in
the data that are going to cause adjustments in budget and
policy.
MS. PALMER advised the data is recent, and the division and the
private sector are in the process of reviewing the information.
CHAIR HUGHES expressed her interest in hearing about any
changes.
MS. PALMER continued to the division's economic strategy of
workforce development and highlighted programs designed to build
skills within the workforce, and to help those who are
interested in entering the tourism industry: AlaskaHost is
customer service training; CulturalHost is geared toward a
cultural market; and the AlaskaTour Guide Training "Train the
Trainer" is a program to help businesses prepare employees to be
tour guides [slide 12].
CHAIR HUGHES asked whether similar training is available through
the University of Alaska (UA) campuses or local schools.
MS. PALMER said this training program has been adopted by local
schools, for example, the AlaskaHost program is being offered in
Anchorage and through UA. This is a service provided to
businesses; in fact, the program "trains the trainer" so an
attendee can return and train other staff. In further response
to Representative Hughes, she said she would find out if the
state charges for participation.
MS. MCCONKIE said if the state offers training in a rural area
there is no charge, but to train a trainer, the fees are on a
case-by-case basis. In further response to Chair Hughes, she
confirmed that some cruise lines have incorporated the
AlaskaHost program into their training, as have other businesses
as well.
REPRESENTATIVE DRUMMOND stated that AlaskaHost training is
available at the King Career Center and at all of the Anchorage
high schools, and is utilized by the Alaska Railroad
Corporation.
12:00:56 PM
REPRESENTATIVE HIGGINS asked whether there is a training
component in the budget.
12:01:05 PM
MS. MCCONKIE explained the training budget is not part of the
tourism presentation, which only covers the tourism marketing
budget. The training function falls under DED's development
programs.
MS. PALMER turned attention to the Alaska Film Office, Film
Sector Development. To promote Alaska as a film destination,
the division conducts outreach with speaking engagements,
targeted contacts, and staff who field daily inquiries about
filming in Alaska. The division also attends film industry
trade shows and events such as the Association of Film
Commissioners International (AFCI) locations trade show. In
response to Chair Hughes, she said this trade show is located in
Southern California, and the division has attended for the past
two years. She observed that the process to raise awareness and
build a networking base takes repetition.
12:04:24 PM
REPRESENTATIVE PRUITT questioned why [the industry] is not aware
of Alaska and the film credits that are available.
12:05:40 PM
GLEN HAIGHT, Development Manager, Juneau Office, Development
Section, DED, DCCED, said the tax credit program needs to be
explained and members of the film industry benefit from talking
directly to state representatives about how to solve their
production problems. In response to Chair Hughes, he said he
had not attended a trade show and was unsure whether there are
misperceptions about Alaska.
REPRESENTATIVE HIGGINS asked how much actual work has come from
attending trade shows.
MS. PALMER expressed her belief that there is an effort to "tie
the results to the effort." This is very hard to track although
inquiries are made. Also, productions take a long period of
time and may come into development two to four years after the
first contact. She said she wished for a direct correlation
between the investment and the outcome, although repeated
contacts can be tracked back.
CHAIR HUGHES urged the division staff to always inquire as to
how a business heard about Alaska.
12:10:33 PM
MS. PALMER said she was unsure how the staff manages and tracks
"connections," and would ask.
REPRESENTATIVE HIGGINS acknowledged that the film tax credit is
new and he appreciated the division's efforts to "educate the
rest of the Lower 48."
REPRESENTATIVE DRUMMOND has observed that the public's attention
span is short. She asked whether Alaska was featured in the
film magazines shown on slide 14.
MS. PALMER said the division has placed advertisements in those
magazines. She then noted that the division is expanding its
marketing effort and has opened a request for proposal (RFP) to
contract for advice from a location expert in the film industry
[slide 14].
MS. PALMER referred to a chart of spending as a result of the
film program, and advised that the annual film program report is
due out in February. The chart represented productions that
qualified for tax credits and the amount that was spent per
fiscal year; for example, in fiscal year 2012 (FY 12), Alaska
resident wages were $5,713.981. Adding the spending categories
of in-state transportation, interstate transportation, location
and other fees, contract services, and food and lodging, reveals
the economic impact that productions bring [slide 15].
12:14:58 PM
CHAIR HUGHES asked for information on the tax credits that have
been paid.
MS. PALMER advised that tax credits approved/paid out are as
follows: FY 10 - $244,000; FY 11 - $6.2 million; FY 12 - $18.6
million; and FY 13 to date - $9.9 million. Over the course of
these years, the total is $35.1 million.
REPRESENTATIVE PRUITT observed the highest spending category for
tax credits is non-resident wages. He asked if the division has
seen that a new industry to support film production has
developed within the state, and whether the amount of Alaska
resident wages will surpass non-resident wages.
MS. PALMER said there is historical data on the types and number
of shows in production, and the number of shows has increased
from six in FY 09 to forty-two in FY 12. There have been
changes to the tax credit program and that effect is unknown at
this point, but up to now the trend is positive and growing.
She opined that developing a workforce base in Alaska
contributes to Alaska's attraction as a location. In fact, the
legislature appropriated funds so that the division and
Department of Labor & Workforce Development (DLWD) could work
together to provide resources for crew training programs and for
individuals to participate. As a result, there are a variety of
crew training programs available such as the Ketchikan Public
Utilities (KPU) Telecommunications class offered in the
Ketchikan school system [slide 16].
CHAIR HUGHES asked whether the graduates of these programs stay
in Alaska.
MS. PALMER said it is too early to know. In further response to
Chair Hughes, she deferred to the Alaska Workforce Investment
Board, DLWD, the question on whether there will be "tracking" of
the graduates.
REPRESENTATIVE TARR asked what is expected for FY 13.
MR. HAIGHT said there are productions that have been pre-
qualified.
REPRESENTATIVE HIGGINS recalled there was not a ready workforce
in the state a couple of years ago.
REPRESENTATIVE DRUMMOND said Anchorage has a number of film
production crews. She asked whether the value of wages is
pulled out of the other categories; for example, whether in-
state transportation represents only the cost of the use of
vehicles.
MR. HAIGHT explained that the food and lodging category is the
amount paid to the restaurant, caterer, or hotel, and would
include wages. The wages category represents spending for the
crew working on the film.
REPRESENTATIVE PRUITT asked whether production companies are
encouraged to hire Alaska businesses for support services
instead of bringing in outside entities.
12:25:46 PM
MS. PALMER advised the basis of the incentive program is to
encourage companies to take advantage of the tax credits to
increase profits. Additional assets such as local crews can
make productions more profitable.
REPRESENTATIVE PRUITT expressed his concern that Alaska
businesses are frustrated because the state pays tax credits to
a film production company that brings competitors and their
equipment into the state to provide a service that local
companies can provide.
REPRESENTATIVE GATTIS asked if tax credits are given to support
services such as caterers and others.
MS. PALMER understood that the incentive program is targeted at
production companies so they can be more economical. In further
response to Representative Gattis, she said a caterer is hired
by the production company and would not come into the state
independently, although it is possible a film production company
could have a caterer who is a fixture in its productions.
REPRESENTATIVE GATTIS surmised it is possible for a film
producer to have an all-inclusive production, including a
caterer, and receive film [tax] credits for all of the expenses.
MR. HAIGHT explained that any company receiving credits through
the production company must have an Alaska business license.
Although production companies package their expenses through the
application process, the expenses are carefully vetted by
Certified Public Accountants who follow stringent procedures
thus "the intent is to have the tax credit extended to Alaska
businesses." In further response to Representative Gattis, he
said there are several "checks" before an accountant can approve
expenses.
12:31:22 PM
CHAIR HUGHES inquired as to whether the state is prohibited from
requiring Alaska hire as part of the eligibility.
MR. HAIGHT advised he would give that question further review.
REPRESENTATIVE PRUITT recalled during interim there was
discussion on this topic, and he restated his concern.
CHAIR HUGHES asked whether the legislature considered putting
hiring restrictions on the program at the outset.
REPRESENTATIVE PRUITT suggested checking with the House Finance
Committee subcommittee chair who worked on the bill.
MS. PALMER reviewed the statute, noting that to qualify a person
also has to have maintained a place of business within Alaska
for the six months immediately preceding.
12:34:52 PM
REPRESENTATIVE HIGGINS opined the film industry will bring
support services into the state until it is proven that local
production companies can provide the services.
CHAIR HUGHES asked for information on the budget for the Alaska
Film Office.
MR. HAIGHT answered that the film office has one full-time
development specialist and one half-time administrative
assistant. Marketing expenses including publications, print
costs, and trade shows, are in the range of $15,000 to $20,000.
CHAIR HUGHES then asked what kind of film production studios are
in existence, and whether there has been investment in this type
of facility.
MR. HAIGHT advised that he visited a large green screen studio
in Anchorage. In further response to Chair Hughes, he said film
production companies have indicated there remains a lack of
basic infrastructure for the film industry.
REPRESENTATIVE PRUITT heard the mining community is concerned
that images created by film productions have caused an increased
scrutiny of mining practices in Alaska. He asked whether the
subject of a film production is taken into account if the state
is not shown in a positive light.
12:40:16 PM
MS. PALMER acknowledged that concern has been brought forward by
the Alaska Miners Association; however, the division does not
have a filter for the content of a production. Recent changes
to the program created a commission tasked to address the best
interests of Alaska. She opined it will be a challenge to
"police" the content of what is essentially entertainment.
CHAIR HUGHES expressed her hope that the film office will
integrate with other industries statewide.
12:43:09 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, Trade and Tourism
meeting was adjourned at 12:43 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DED Tourism and Film Overview Feb 7 2013 FINAL.pdf |
HEDT 2/7/2013 11:15:00 AM |