Legislature(1999 - 2000)

04/15/1999 01:40 PM Senate L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
         SENATE LABOR AND COMMERCE COMMITTEE                                                                                    
                    April 15, 1999                                                                                              
                      1:40 p.m.                                                                                                 
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Senator Jerry Mackie, Chairman                                                                                                  
Senator Tim Kelly, Vice Chairman                                                                                                
Senator Dave Donley                                                                                                             
Senator Loren Leman                                                                                                             
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
All Members Present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
SENATE BILL NO. 78                                                                                                              
"An Act relating to the use and prescription of pharmaceutical                                                                  
agents in the practice of optometry."                                                                                           
                                                                                                                                
     -MOVED OUT OF COMMITTEE                                                                                                    
                                                                                                                                
SENATE BILL NO. 121                                                                                                             
"An Act levying and providing for the collection and administration                                                             
of excise taxes on the provision of overnight accommodations and                                                                
authorizing disposition of estimated receipts from those taxes; and                                                             
providing for an effective date."                                                                                               
                                                                                                                                
     -HEARD AND HELD                                                                                                            
                                                                                                                                
HOUSE BILL NO. 122                                                                                                              
"An Act excluding buildings used primarily for office space from                                                                
the Housing Project and Public Building Assistance Act, restricting                                                             
state ownership of buildings used primarily for office space, and                                                               
providing for the disposal of state ownership interests in certain                                                              
state buildings used primarily for office space; and providing for                                                              
an effective date."                                                                                                             
                                                                                                                                
     - BILL POSTPONED                                                                                                           
                                                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
                                                                                                                                
SB 78 - No previous action to consider.                                                                                         
                                                                                                                                
SB 121 - No previous action to consider.                                                                                        
                                                                                                                                
HB 122 - No previous action to consider.                                                                                        
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
Senator Kim Elton                                                                                                               
State Capitol Bldg.                                                                                                             
Juneau, AK 99811                                                                                                                
POSITION STATEMENT: Sponsor of SB 121 and SB 122.                                                                               
                                                                                                                                
Mr. Jeff Gonnason                                                                                                               
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Commented on SB 78.                                                                                         
                                                                                                                                
Mr. Duane Epton                                                                                                                 
Alaska Publishers Representatives                                                                                               
POSITION STATEMENT: Commented on SB 121.                                                                                        
                                                                                                                                
Mr. Steve Behnke                                                                                                                
Alaska Wilderness Recreation and Tourism Association                                                                            
P.O. Box 22827                                                                                                                  
Juneau, AK 99801                                                                                                                
POSITION STATEMENT: Supported SB 121.                                                                                           
                                                                                                                                
Ms. Tina Lindgren, Executive Director                                                                                           
Alaska Visitors Association                                                                                                     
2525 C St #400                                                                                                                  
Anchorage, AK 99515                                                                                                             
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
Mr. Bill Elander                                                                                                                
Anchorage Convention and Visitors Bureau                                                                                        
524 W. 4th Ave.                                                                                                                 
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
Ms. Debra Schnabel                                                                                                              
Haines, AK 99827                                                                                                                
POSITION STATEMENT: Supported SB 121.                                                                                           
                                                                                                                                
Ms. Sheila Romero, Executive Director                                                                                           
Fairbanks Convention and Visitors Bureau                                                                                        
550 1st Ave.                                                                                                                    
Fairbanks, AK 99701                                                                                                             
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
Mr. Bill Bubbell                                                                                                                
Pump House Restaurant                                                                                                           
P.O. Box 80545                                                                                                                  
Fairbanks, AK 99708                                                                                                             
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
Mr. Brett Carlson                                                                                                               
North Alaska Tours                                                                                                              
P.O. Box 82991                                                                                                                  
Fairbanks, AK 99708                                                                                                             
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
Mrs. Carol Neeley                                                                                                               
Carol'S B&B                                                                                                                     
P.O. Box 88                                                                                                                     
Glennallen, AK 99588                                                                                                            
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
Mr. Brad Kriner, Vice President                                                                                                 
American Village of Alaska                                                                                                      
P.O. Box 329                                                                                                                    
Glennallen, AK 99588                                                                                                            
POSITION STATEMENT: Commented on SB 121.                                                                                        
                                                                                                                                
Mr. Michael J. Warburton                                                                                                        
Ocean Shores Motel                                                                                                              
3500 Crittendon                                                                                                                 
Homer, AK 99603                                                                                                                 
POSITION STATEMENT: Commented on SB 121                                                                                         
                                                                                                                                
Ms. Wanetta Ayers, Manager                                                                                                      
Tourism Program and Development                                                                                                 
Afognak Native Corporation                                                                                                      
215 Mission Rd.                                                                                                                 
Kodiak, AK 99615                                                                                                                
POSITION STATEMENT: Supported SB 121.                                                                                           
                                                                                                                                
Mr. Bill Arpino                                                                                                                 
P.O. Box 111                                                                                                                    
Tok, AK 99780                                                                                                                   
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
Ms. Donna Bernhardt                                                                                                             
P.O. Box 61                                                                                                                     
Tok, AK 99780                                                                                                                   
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
                                                                                                                                
Ms. Nancy Lethcoe, Executive Director                                                                                           
Valdez Convention and Visitors Bureau                                                                                           
P.O. Box 1313                                                                                                                   
Valdez, AK 99686                                                                                                                
POSITION STATEMENT: Supported SB 121.                                                                                           
                                                                                                                                
Ms. Lisa Vonbargan                                                                                                              
Valdez Visitors and Convention Bureau                                                                                           
P.O. Box 1603                                                                                                                   
Valdez, AK 99686                                                                                                                
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
Ms. Kathy Hedges                                                                                                                
P.O. Box 73440                                                                                                                  
Fairbanks, AK 99707                                                                                                             
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
Mr. Matt Atkinson                                                                                                               
North Alaska Tours                                                                                                              
P.O. Box 82991                                                                                                                  
Fairbanks, AK 99708                                                                                                             
POSITION STATEMENT: Opposed SB 121.                                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-13, SIDE A                                                                                                              
                                                                                                                                
Number 001                                                                                                                      
                                                                                                                                
               SB 78-USE OF DRUGS BY OPTOMETRISTS                                                                               
CHAIRMAN MACKIE called the Senate Labor and Commerce Committee                                                                  
meeting to order at 1:40 p.m. and announced SB 78 to be up for                                                                  
consideration.                                                                                                                  
                                                                                                                                
MR. DAVE GRAY, Staff to Senate Labor and Commerce Committee, said                                                               
that optometry is a primary health care profession that examines,                                                               
diagnoses, and treats disorders of the human eye and its appendages                                                             
utilizing diagnostic and therapeutic medications, methods, and                                                                  
procedures in accordance with professional training in competency.                                                              
Historically, medical doctors have enjoyed unlimited legislative                                                                
trust in their scope of practice.  However, the methods and                                                                     
procedures used by other limited license health care professionals,                                                             
such as optometrists, dentists, podiatrists, nurse practitioners,                                                               
and others, are determined in regulation by their respective state                                                              
boards.  In the past, Alaska's doctors of optometry have had their                                                              
scope of practice unduly restricted by outdated state statutes.                                                                 
For every new advance in technology, optometry has had to return to                                                             
the legislature to revise these statutes in order to practice at                                                                
the highest standard of care.  In 1988, the statutes were updated                                                               
to allow optometrists to use diagnostic drugs.  The Alaska                                                                      
Legislature was the last of the 50 states to pass this law.  In                                                                 
1992, the prescribing of therapeutic drugs to treat eye diseases                                                                
was authorized and Alaska was the 32nd state to pass such                                                                       
legislation.  However, due to a compromise, only topical                                                                        
medications were included at that time.  Currently, all 50 states                                                               
authorize optometrists to prescribe drugs; 34 allow oral systemic                                                               
drugs and 16 states, including Alaska, further restrict to topical                                                              
drugs only.  One state authorizes the use of lasers by                                                                          
optometrists.                                                                                                                   
                                                                                                                                
Last session, a bill was introduced and heard that would expand the                                                             
scope of optometry to include all medications for the eye, as well                                                              
as the use of lasers and limited surgical procedures for qualified                                                              
optometrists.  This bill, SB 78, only allows qualified optometrists                                                             
to prescribe and use medications related to the eye and for                                                                     
emergency anaphylaxis.  This change will allow optometrists to                                                                  
practice at the currently accepted standard of care.  It will                                                                   
provide Alaskans with improved access to quality, cost effective                                                                
eye care.                                                                                                                       
                                                                                                                                
CATHERINE REARDON, Director of the Division of Occupational                                                                     
Licensing, Department of Commerce and Economic Development, stated                                                              
the Division has not taken a position on SB 78 at this time.  She                                                               
noted after the Alaska Medical Board meeting tomorrow, she may have                                                             
a position to relay to future committees.  However she is concerned                                                             
that the Optometry Board and Alaska Medical Board may have                                                                      
conflicting opinions.  Therefore, she prefers to delay taking a                                                                 
position on the legislation until both boards make their positions                                                              
known.                                                                                                                          
                                                                                                                                
Number 92                                                                                                                       
                                                                                                                                
DR. JEFF GONNASON made the following comments via teleconference.                                                               
He has been a licensed optometrist in the State of Alaska since                                                                 
1976 and was the president of the Alaska State Board of Examiners                                                               
and Optometry during a previous Administration.  The professions of                                                             
dentistry and optometry have expanded their scopes of practice over                                                             
the years as technology and methods of treatment became available.                                                              
Aside from 35 states, Guam and Washington, D.C. also allow                                                                      
optometrists to prescribe oral or systemic drugs. MR. GONESON said                                                              
SB 78 allows optometrists to work to the full extent of their                                                                   
training.                                                                                                                       
                                                                                                                                
MR. GONNASON said optometrists are trained in the same manner as                                                                
dentists and, like a dentist, he would like to be able to                                                                       
administer necessary drugs including antibiotics, pain medication                                                               
and other oral drugs. He noted this bill does not include a request                                                             
to allow the use of lasers or do limited surgery.                                                                               
                                                                                                                                
Number 159                                                                                                                      
                                                                                                                                
SENATOR LEMAN asked if this bill would allow optometrists to                                                                    
prescribe or recommend marijuana. He asked what position the Board                                                              
of Optometrists has taken on the use of marijuana to treat                                                                      
glaucoma. MR. GONNASON replied that studies have shown marijuana                                                                
does lower pressure in glaucoma patients, but only when taken in                                                                
high doses. Since other modern drugs do not cause side effects and                                                              
are more effective, the Board has resolved that the use of                                                                      
marijuana is unnecessary. MR. GONESON assured SENATOR LEMAN that,                                                               
"No one is interested in prescribing marijuana for the treatment of                                                             
glaucoma . . . "                                                                                                                
                                                                                                                                
MR. BARRY CHRISTENSEN, a pharmacist from Ketchikan and the                                                                      
Legislative Chair of the Alaska Pharmaceutical Association (APA),                                                               
said the APA has not taken a stand on this bill, but does have two                                                              
concerns about the bill. First, they are concerned that there is                                                                
currently no listing of optometrists who can prescribe drugs, which                                                             
makes it difficult for pharmacists to process prescriptions.                                                                    
Second, pharmacists are not familiar with the training and                                                                      
education optometrists receive on drugs and drug interactions. The                                                              
addition of oral drugs prescribed by optometrists makes this an                                                                 
issue of concern to the APA.                                                                                                    
                                                                                                                                
SENATOR MACKIE clarified that the APA is concerned that pharmacists                                                             
may be put in the position of issuing drugs prescribed by                                                                       
optometrists without the regulations in place allowing them to do                                                               
so. MR. CHRISTENSEN affirmed that was one concern, the other being                                                              
the necessity of a list of optometrists able to prescribe drugs.                                                                
                                                                                                                                
SENATOR MACKIE asked MS. CATHERINE REARDON how regulations might                                                                
alleviate MR. CHRISTENSEN'S concerns. MS. REARDON replied the Board                                                             
gives particular endorsements for those optometrists with the                                                                   
training and ability to prescribe drugs. She said the division has                                                              
this information and can provide it to whomever requests it.                                                                    
                                                                                                                                
Number 290                                                                                                                      
                                                                                                                                
SENATOR LEMAN moved to report SB 78 from committee with individual                                                              
recommendations. Without objection, SB 78 moved from committee with                                                             
individual recommendations.                                                                                                     
                                                                                                                                
            SB 121-EXCISE TAXES ON TRANSIENT LODGING                                                                            
                                                                                                                                
CHAIRMAN MACKIE announced SB 121 to be up for consideration.                                                                    
                                                                                                                                
Number 296                                                                                                                      
                                                                                                                                
SENATOR ELTON, sponsor, assured everyone that Democrats don't like                                                              
taxes, although SB 121 is a tax bill.  The purpose of the bill is                                                               
simply to create a stable stream of revenue for tourism marketing                                                               
and increase the amount of revenue available for tourism.  He said                                                              
his background is in generic marketing and believes that good                                                                   
marketing requires steady effort over time and to do that, you need                                                             
a stable stream of revenues.  One of the advantages of this source                                                              
of revenue is that it is exportable.  It is a tax on the visitor                                                                
who comes to Alaska.                                                                                                            
                                                                                                                                
This is a relatively common tax and the major difference between                                                                
this approach and the bed tax and the New Millennium Plan is that                                                               
this is not voluntary in nature.  It does not count on the                                                                      
continued good will of the legislature to appropriate four or five                                                              
million dollars per year or the continued voluntary participation                                                               
by others in the industry, especially the destination marketing                                                                 
organizations.  Alaska currently ranks about 29th among states in                                                               
the amount of money they spend for international marketing.  As a                                                               
result, Senator Elton thought we were losing market share                                                                       
especially in the that component that is most important to Alaska,                                                              
the independent visitor who has more dollars that rebound through                                                               
more of the economic sector of Alaska.                                                                                          
                                                                                                                                
Basically, SB 121 provides for a transient room tax (bed tax) to be                                                             
applied to hotels and B&B's at the rate of 2% per night per room -                                                              
May 1 - September 30.  This tax is only applied to stays of less                                                                
than 30 days.  The effective date is January 1, 2000.  Twenty five                                                              
percent of the revenues collected through this hotel tax would be                                                               
remitted back to the community in which they are collected. It is                                                               
collected by local governments and where there is no local                                                                      
government, it would be collected by the State of Alaska.  The                                                                  
State would not remit the 25 percent; it would stay with the State.                                                             
                                                                                                                                
The second element is a $2 per night, per person tax on wilderness                                                              
camps, lodges, and all-inclusive tours.  The flat rate is because                                                               
the package sales don't delineate between how much you are paying                                                               
for the cot, the bed, the guide, or other experiences.  It has the                                                              
same effective date.                                                                                                            
                                                                                                                                
CHAIRMAN MACKIE asked if the $2 tax was involved when there is                                                                  
lodging.                                                                                                                        
                                                                                                                                
SENATOR ELTON explained this would apply to the all-inclusive                                                                   
packages that involve overnight stays.  Some of those involve a                                                                 
sleeping bag and a tent next to a river and some of them are in                                                                 
fairly ornate wilderness lodges.                                                                                                
                                                                                                                                
CHAIRMAN MACKIE asked if it only involved lodging.                                                                              
                                                                                                                                
SENATOR ELTON responded that it would only assess those people who                                                              
are part of a package when it extends overnight and it is applied                                                               
only seasonally and by the local government when there is one and                                                               
by the state, if there is not.                                                                                                  
                                                                                                                                
SENATOR ELTON said The third element of this plan is a passenger                                                                
ship berth tax which is a flat fee of $3 per night per person and                                                               
the flat fee is for the same reason that you can't establish a                                                                  
percentage fee for remote packages.  It's difficult to separate out                                                             
the component of how much the berth is worth on a cruise ship.  It                                                              
has the effective date of January 1, 2000.  Twenty-five percent of                                                              
the revenues collected from this would be shared back to the                                                                    
community.  Because the cruise ships are moving the assessment is                                                               
per night, but the 25% remittance back to the community is based on                                                             
the number of passengers that land in the community over the                                                                    
season.  An additional element precludes a community from                                                                       
establishing a fee like this on the cruise ship industry.  It is a                                                              
tax that is exclusively for the State of Alaska.                                                                                
                                                                                                                                
The revenues expected for the "bed tax" in FY00 are projected to be                                                             
$1.2 million; FY01 about $4.2 million; FY02 about $4.5 million.                                                                 
                                                                                                                                
CHAIRMAN MACKIE asked why the amounts are different.                                                                            
                                                                                                                                
SENATOR ELTON said the first year is because half of the year is                                                                
gone when it starts.  In other years, any growth would be                                                                       
predicated on growth in the industry.  There is no estimated                                                                    
revenue on the wilderness camps and lodges, because there is no                                                                 
experience.  The berth component should provide $2.6 million in                                                                 
FY00; $9.4 million in FY01; and $9.8 million in FY02.  The total                                                                
estimated revenues from these sources would be about $4 million in                                                              
FY00; $13.7 million in FY01; and a revenue stream under full                                                                    
implementation of about $14.5 million.  He reiterated that 25% of                                                               
the fees are remitted to local governments which would leave a                                                                  
revenue stream of about $10.6 million for generic tourism                                                                       
marketing.  There is an additional provision in the bill that                                                                   
provides that 2% of the receipts would be available for matching                                                                
grants for communities and nonprofits.  They can apply for that                                                                 
amount of money and would be about $250,000 - $300,000 for tourism                                                              
planning or mitigation purposes.                                                                                                
                                                                                                                                
CHAIRMAN MACKIE said SB 121 directs a revenue source back to the                                                                
state and the municipalities which the Millennium Plan doesn't do                                                               
and asked what effect Senator Elton thought it would have on the                                                                
Plan.                                                                                                                           
                                                                                                                                
SENATOR ELTON said he was invited to the AVA "fly-in" and had                                                                   
discussions from mild to fairly heated.                                                                                         
                                                                                                                                
CHAIRMAN MACKIE said he was concerned with competition between                                                                  
plans.  He personally supported the Millennium Plan because it was                                                              
a way to have industry contribute.  SB 121 was attractive because                                                               
it provided revenues back to the state and would increase the                                                                   
marketing capabilities of Alaska.  He didn't know if the Millennium                                                             
Plan would fall apart if this were put in place.                                                                                
                                                                                                                                
SENATOR ELTON answered that discussion on that topic has been if                                                                
you're going to tax to provide a steady stream of revenue for                                                                   
generic tourism marketing, why are you applying it only on the                                                                  
hotel/hospitality portion of the industry and not on airlines,                                                                  
restaurants, and rental cars, etc. - a legitimate question.  Some                                                               
of those tax points are more difficult to get to and this is a                                                                  
relatively easy way to get to some of the tax points.                                                                           
                                                                                                                                
The major difference between SB 121 and the way the Millennium Plan                                                             
looks to finance generic marketing is that under this approach,                                                                 
industry doesn't pay.  Under the Millennium Plan, industry pays.                                                                
The State pays $4 million; industry pays through contributions                                                                  
through destination marketing organizations or local visitors and                                                               
conventions bureaus.  Industry pays because of the voluntary                                                                    
contribution from the cruise ship industry.  They are not statutory                                                             
or forced payments, part of his concern.  When times get tough, the                                                             
business may have to make a decision on whether they spend what is                                                              
left of their profits voluntarily in this manner or  whether they                                                               
do their own marketing.  This is easier on the industry because it                                                              
is exported to the visitor.                                                                                                     
                                                                                                                                
CHAIRMAN MACKIE asked if the heated discussions were mostly about                                                               
how he was focusing on the cruise ships and hotels to pay for all                                                               
marketing in the State which more than hotels and cruise ships                                                                  
companies benefit from.                                                                                                         
                                                                                                                                
SENATOR ELTON agreed that was one of them.                                                                                      
                                                                                                                                
CHAIRMAN MACKIE asked what their reaction has been as to whether                                                                
they would have "to eat the cost" or have a cost "that could be                                                                 
passed on to the customer without creating problems."                                                                           
                                                                                                                                
SENATOR ELTON responded that that is a good question and he didn't                                                              
have a perfect answer.  He has been told that this is unnecessarily                                                             
burdensome upon industry and the passenger.  His response is, "Of                                                               
course it does. That's what taxes do, but it's not a tax on the                                                                 
business; it's a tax on the visitor."  Also, if we look at how                                                                  
other jurisdictions do this, for example Bermuda, which has an $8                                                               
per night fee, far more burdensome.  He didn't think that cruise                                                                
ships would step up and say, "Tax us or our clients."  This is not                                                              
a foreign concept.                                                                                                              
                                                                                                                                
Another discussion concerned what would make the State do the right                                                             
thing by reappropriating these dollars, since they cannot be                                                                    
dedicated.  Senator Elton's response to the industry is that in                                                                 
areas, through the budget, the State has always acted in good faith                                                             
to reappropriate dollars for the purposes they have been collected.                                                             
The most obvious example is the Alaska Seafood Marketing                                                                        
Association (ASMI).  The legislature has always reappropriated the                                                              
dollars collected under the three different forms of ASMI taxation.                                                             
Another example are the regional aquaculture association fees that                                                              
are collected and remitted.                                                                                                     
                                                                                                                                
Number 495                                                                                                                      
                                                                                                                                
CHAIRMAN MACKIE asked what is the average stay of a passenger on a                                                              
cruise ship in Alaska.                                                                                                          
                                                                                                                                
SENATOR ELTON said he thought it was five days.                                                                                 
                                                                                                                                
CHAIRMAN MACKIE said that would work out to $15 per person and                                                                  
asked how the cruise ship company would calculate time in different                                                             
ports.                                                                                                                          
                                                                                                                                
SENATOR ELTON responded that was another issue of concern from the                                                              
industry, but it isn't any more burdensome than a hotel trying to                                                               
keep track of how many guests they have.  It is calculated on an                                                                
evening basis.                                                                                                                  
                                                                                                                                
SENATOR HOFFMAN asked if they didn't have to pay, if they are not                                                               
docked.                                                                                                                         
                                                                                                                                
SENATOR ELTON said they do have to pay if they are in Alaskan                                                                   
waters.                                                                                                                         
                                                                                                                                
SENATOR HOFFMAN asked which community got the 25 percent.                                                                       
                                                                                                                                
SENATOR ELTON replied this is the complicated part of the bill,                                                                 
because that would be an undue requirement on the cruise ship.  The                                                             
collection is based on the number of nights; the remittance is                                                                  
based on the number of passengers that arrive in each of the                                                                    
communities that cruise ship goes to.  The remittance is based on                                                               
how many passengers from one ship for that trip landed in each of                                                               
the communities, a relatively complicated formula which would be                                                                
unduly burdensome on industry to keep records.                                                                                  
                                                                                                                                
Number 533                                                                                                                      
                                                                                                                                
SENATOR LEMAN applauded him for advancing this legislation that                                                                 
conceptually makes sense.  He agreed with leveling out funding for                                                              
an important segment of the industry.                                                                                           
                                                                                                                                
SENATOR ELTON emphasized that SB 122 was integral to SB 121.  The                                                               
revenue portion is predicated on the adopting of the structural                                                                 
portion.                                                                                                                        
                                                                                                                                
MR. DUANE EPTON, Alaska Publishers Representatives, said they are                                                               
an independent marketing firm dealing with publications like Alaska                                                             
Airlines Magazine and the Marine Highway Schedule.  He has talked                                                               
to a lot of small businesses across Alaska and he has found that                                                                
the biggest thing they have mentioned is that they need an                                                                      
opportunity or a vehicle to get involved.  This is where the                                                                    
Millennium Plan comes in.                                                                                                       
                                                                                                                                
TAPE 13, SIDE B                                                                                                                 
Number 590                                                                                                                      
                                                                                                                                
He thought they would be truly responsive in supporting it.  As to                                                              
the taxation the concern is how can you take a tax that is not                                                                  
dedicated and know that it's going to continue on to support the                                                                
industry.  Number two, the clock is running out and there is some                                                               
momentum from the industry; and thirdly, taxation is only a fall                                                                
back position.  The New Millennium Plan is on the table and there                                                               
is a lot of support for it.  About 90 percent of their business                                                                 
over the last fourteen years has been tourism based and he has a                                                                
vested interest in seeing tourism businesses continue.                                                                          
                                                                                                                                
MR. STEVE BEHNKE, Executive Director, Alaska Wilderness Recreation                                                              
and Tourism Association, supported the AVA effort to create a new                                                               
approach to increasing industry's share of tourism marketing.  They                                                             
support the compromise that has been worked out.  He said the                                                                   
stability in tourism marketing that Senator Elton's plan would                                                                  
accomplish is pretty appealing, but it is equally obvious that the                                                              
idea of tourism taxes hasn't gotten much discussion yet.  The New                                                               
Millennium Plan has been around for a few years and is a known                                                                  
quantity.                                                                                                                       
                                                                                                                                
They did an E-mail poll of their members on the tax bill and from                                                               
a 25 percent response they got an pretty even split.  He thought it                                                             
was worth giving the cooperative consolidated approach a try,                                                                   
especially if industry couldn't raise the dollars to stop the                                                                   
downward slide.                                                                                                                 
                                                                                                                                
MR. BEHNKE said if there are any taxes on tourism, he strongly                                                                  
urged considering Senator Elton's approach.                                                                                     
                                                                                                                                
SENATOR HOFFMAN asked if he had a comment on percentages in the                                                                 
legislation.                                                                                                                    
                                                                                                                                
MR. BEHNKE answered that they just think the concept is important.                                                              
                                                                                                                                
MS. TINA LINDGREN, Executive Director, Alaska Visitors Association,                                                             
said they appreciate the sponsor's intent, but they don't agree                                                                 
with it.  The Legislature gave them a charge and since 1992, they                                                               
have studied a variety of taxation methods and have come up with                                                                
the New Millennium Plan.  There has been a lot of input and                                                                     
surveys.  They have looked at general sales tax, seasonal taxes,                                                                
targeted taxes, and they believe their plan can gain the most                                                                   
support from the widest number of businesses.                                                                                   
                                                                                                                                
She pointed out that SB 121 is a form of self taxation, but not                                                                 
everyone participates, because entire segments of the industry                                                                  
won't pay at all for just visiting friends and relatives.  Industry                                                             
is not opposed to taxes and agrees it should pay its fair share.                                                                
As a state, we pay few taxes and the tourism industry is no more                                                                
anxious to be a target of taxes than the rest of us.                                                                            
                                                                                                                                
Since Alaska doesn't have a statewide tax system at present, SB 121                                                             
would create two additional problems.  One is in requiring a new                                                                
administrative system and its inherent operating costs and to                                                                   
insure compliance.  It will also create an additional burden on                                                                 
business which must maintain separate records, set up new reports,                                                              
and make tax payments.  It would hit the small businesses                                                                       
specifically.                                                                                                                   
                                                                                                                                
SB 121 and SB 122 are counter to the industry's funding plan                                                                    
proposal and they, therefore, oppose the package.                                                                               
                                                                                                                                
Number 462                                                                                                                      
                                                                                                                                
CHAIRMAN MACKIE told Ms. Lindgren that he liked a few things in SB
121; one is that it creates a funding mechanism for the local                                                                   
municipalities and, more importantly, it tries to establish some                                                                
sort of funding to continue tourism marketing.  He asked if there                                                               
were some things in Senator Elton's plan that she could see that                                                                
could directly contribute to the State and the municipalities.  He                                                              
said the Millennium Plan did not address how local municipalities                                                               
and the State could raise money for their share.                                                                                
                                                                                                                                
MS. LINDGREN responded that they recognize the difficulties, but                                                                
have been asked by the communities not to address how they raise                                                                
funds, because they are all funded so differently now.  Most have                                                               
bed taxes that they raise funds with and in some cases all of that                                                              
money is used to fund their Convention and Visitors Bureaus.                                                                    
Imposing another bed tax on a statewide level only to return it to                                                              
the community doesn't make a lot of sense.                                                                                      
                                                                                                                                
MS. LINDGREN thought passage of these bills would jeopardize the                                                                
Millennium Plan since that was based on voluntary contribution and                                                              
if people are being forced to pay, she didn't think the other would                                                             
survive.                                                                                                                        
                                                                                                                                
MR. BILL ELANDER, Anchorage Convention and Visitors Bureau, said                                                                
his thoughts were parallel with Ms. Lindgren's.  He appreciated the                                                             
author's efforts, but if the bills passed, he didn't see how the                                                                
Millennium Plan could survive.  "There is risk in anything we do."                                                              
he said.                                                                                                                        
                                                                                                                                
Number 392                                                                                                                      
                                                                                                                                
MS. DEBRA SCHNABEL, Haines, thanked Senator Elton for having the                                                                
courage to introduce this bill.  She is a supporter of taxes and                                                                
the owner of a lodge in a wilderness area.  Her visitors would not                                                              
be offended and would be very willing to pay to the industry and                                                                
state.  She thought people she has met from the cruise ships would                                                              
be very willing to pay $3 per day for the opportunity to visit this                                                             
great state.                                                                                                                    
                                                                                                                                
MS. SHEILA ROMERO, Executive Director, Fairbanks Convention and                                                                 
Visitors Bureau, said there were two major differences between SB
121 and SB 107.  One is the visitor industry's plan and one is not.                                                             
Her organization supports SB 107.                                                                                               
                                                                                                                                
MR. BILL BUBBEL, Pump House Restaurant, testified that the                                                                      
legislature asked industry to come up with a plan to help marketing                                                             
tourism and they have done that with the New Millennium Plan.  He                                                               
is concerned about the disposition of the receipts in SB 121,                                                                   
because it authorizes the legislature to use the remaining tax                                                                  
revenues, but it doesn't mandate them.  He was on the committee                                                                 
that initiated the bed tax in Fairbanks and it started out as a 90%                                                             
marketing/10% city revenue sharing.  That has changed to 65%                                                                    
marketing/35% city.  They have to fight on a yearly basis for their                                                             
share.  He was concerned that during the hard times the local                                                                   
industry might not come up with the funds, but neither would the                                                                
State.                                                                                                                          
                                                                                                                                
MR. BRETT CARLSON, North Alaska Tours, said for two years the                                                                   
visitor industry joined together to search for a solution or plan                                                               
that would accomplish two things: to reverse decline in destination                                                             
funding and marketing in Alaska and restore the growth rate of                                                                  
visitor arrivals to Alaska.  The result of two years of hard work                                                               
is the New Millennium Plan.  It is not perfect, but it is                                                                       
acceptable to everyone.  It creates efficiencies by consolidating                                                               
HTMC and DOT into one marketing organization, it restores funding                                                               
up to a $10 million level over three years, it reduces state                                                                    
funding from $5.3 to $4 million dollars, it triples the private                                                                 
industry contribution, and it gives the industry a chance to see if                                                             
they can raise funds voluntarily to support cooperative marketing                                                               
across the state.  He encouraged them to support the legislation                                                                
that represents industry consensus - the New Millennium Plan.                                                                   
                                                                                                                                
MS. CAROL NEELY, Carol's Bed and Breakfast, said she was concerned                                                              
about how taxes would get back to unorganized boroughs.                                                                         
                                                                                                                                
SENATOR MACKIE commented that the money would go to the State and                                                               
asked her if she had a problem with that.                                                                                       
                                                                                                                                
MS. NEELY replied that she did have a problem with that because,                                                                
then it would go straight to State coffers and wouldn't go back to                                                              
the community.                                                                                                                  
                                                                                                                                
MR. BRAD KRINER, Vice President, American Village of Alaska, said                                                               
he runs a hotel which is basically their bread and butter four                                                                  
months out of the year.  He is not opposed to a tax, but he wanted                                                              
clarification on who would really be paying it.  He deals with all-                                                             
inclusive tour companies and he wanted to know if he has to pay the                                                             
tax when the people stay in his hotel or does the customer pay.  He                                                             
was also concerned that the smaller tour companies would want price                                                             
breaks.  Basically, he needed clarification on who would pay and                                                                
how the unorganized boroughs would receive economic consideration.                                                              
                                                                                                                                
MR. MICHAEL WARBURTON, Ocean Shores Motel, commented that the                                                                   
sponsor statement of SB 121 said the tax will be exported to the                                                                
visitor, but in his business and two other hotels that he knows of,                                                             
half their clients are Alaskans.  He also didn't think the tax was                                                              
an even distribution, because historically the bed tax was deemed                                                               
fair because everyone who came to town rented a room.  In Homer,                                                                
possibly half the guests are in RV's and don't rent rooms.  People                                                              
who have hotels are already paying a disproportionate amount of tax                                                             
because their sales tax is capped at $500.  So someone can book a                                                               
$2000 boat charter and only pay $27.50 in tax.  For a hotel, the                                                                
tax is per room per night.  If this tax is added, they will be                                                                  
carrying even more of the load.  Since this is to be a seasonal                                                                 
tax, he suggested looking at a one percent across the board sales                                                               
tax for the summer on groceries.                                                                                                
                                                                                                                                
MS. WANETTA AYERS, Afognak Native Corporation, supported SB 121 and                                                             
SB 122 specifically because of the industry stabilization plan and                                                              
also because the Tourism Development Marketing Council, as                                                                      
outlined, addressed some of the funding and structural elements                                                                 
that have been a concern in other proposals to reorganize the                                                                   
State's tourism marketing program.  She said even if they pass the                                                              
New Millennium Plan, who can say if the State of Alaska will have                                                               
four or five million to put into it in the future.                                                                              
                                                                                                                                
MS. AYERS thought it was better to find a way the State and                                                                     
visitors could work together to ensure a reliable source of tourism                                                             
development funding. She related her experience as Executive                                                                    
Director of a Convention and Visitors Bureau in Washington state                                                                
where their tourism industry was going through the same thing.                                                                  
Four of the five largest hotels in the community were in Chapter                                                                
11; there was an ineffective and underfunded marketing program and                                                              
people didn't know what to do.  A bed tax was proposed and many                                                                 
businesses objected, especially those already in trouble.                                                                       
Ultimately, the fear over doing nothing or continuing doing what                                                                
hadn't worked in the past led to the decision to support the tax.                                                               
Within two years of its implementation, the local marketing budget                                                              
had increased from just over $100,000 to nearly three quarters of                                                               
a million dollars a year.  Within five years, all of the hotel                                                                  
properties had stabilized either through reorganization or market                                                               
growth.                                                                                                                         
                                                                                                                                
Imagine what could happen in Alaska with a reliable source of                                                                   
funding for destination marketing.  There is a symbiotic                                                                        
relationship between big and small business in the visitor                                                                      
industry, but there is some difference of opinion and this should                                                               
come as no surprise, because big business will continue to spend                                                                
many millions of dollars on their own proprietary advertising and                                                               
promotion even if the State does nothing.  They will essentially                                                                
have the same market they have always.  Small businesses will                                                                   
continue to do their independent promotional efforts as well.                                                                   
However, small businesses are much more dependent on generic                                                                    
destination marketing that should be done on a state level.                                                                     
Without an effective marketing program, small businesses can never                                                              
hope to achieve an effective market reach.                                                                                      
                                                                                                                                
MS. AYERS said she believes the state would act in good faith to                                                                
collect and use the funds for the intended purpose.  She thought                                                                
there was room for compromise between SB 121 and SB 107 that would                                                              
create a win/win situation for the state, the industry, and for                                                                 
Alaskans.                                                                                                                       
                                                                                                                                
MR. BILL ARPINO, Tok businessman, said he favored the Millennium                                                                
Plan and said the proposed tax isn't really a tourism tax, because                                                              
it affects any rural Alaskan who might go into Anchorage or                                                                     
Fairbanks or any city where this tax would be imposed.  He said                                                                 
that Tok doesn't have an organized city government and he thought                                                               
there would be problems administering it.  There was no taxing                                                                  
authority set up to collect it.  Enforcing it would also be                                                                     
difficult.  This tax unfairly targets a disproportionate number of                                                              
businesses in the visitor industry rather than an overall tax on                                                                
the visitor industry.                                                                                                           
                                                                                                                                
MR. ARPINO said he couldn't see any way people in an unorganized                                                                
borough would benefit from it.  He said years ago, they had a gross                                                             
receipts business tax that was easy to enforce and verify; it was                                                               
also across the board.                                                                                                          
                                                                                                                                
MS. DONNA BERNHARDT, Winter Cabin Bed and Breakfast, supported Mr.                                                              
Arpino's comments.  She emphasized the fact that Tok is in the                                                                  
unorganized borough and, therefore, they wouldn't benefit, even if                                                              
this tax bill goes through.  She didn't think that was fair.                                                                    
                                                                                                                                
MS. NANCY LETHCOE, Alaskan Wilderness Sailing and Kayaking, said                                                                
they support the AVA's efforts with the New Millennium Plan, but                                                                
have very grave concerns about the stability of the funding portion                                                             
of it.  She thanked Senator Elton for introducing the bill and                                                                  
wished it could have been considered earlier in the legislative                                                                 
process.  She thought the industry should support the state through                                                             
some type of taxation.  She trusted that most of the money from                                                                 
this type of program would go back to tourism, but she wouldn't                                                                 
mind if some of it went to support state highway patrol, for                                                                    
instance, and things that are affected by tourism.  She is                                                                      
concerned about the fairness of the tax as she felt that people                                                                 
overnighting in RV parks should have a way of contributing.  She                                                                
liked the way this proposal didn't take money out of the community,                                                             
but brought it back in to it.  She supported reliable funding for                                                               
a tourism program.                                                                                                              
                                                                                                                                
MS. LISA VONBARGAN, Executive Director, Valdez Convention and                                                                   
Visitors Bureau, supported the New Millennium Plan.  Under SB 121,                                                              
her community would receive $80,000 to $100,000 per year, which                                                                 
they would love to have, but they have grave concerns about the way                                                             
and on whom this tax would be levied.  It is only levied on certain                                                             
sections of the industry.                                                                                                       
                                                                                                                                
In Valdez, they have just fought that battle.  They currently have                                                              
a public accommodations tax that is only levied upon hotels, B&B's,                                                             
and other overnight accommodations in the area.  The bed tax is not                                                             
producing enough to match the amount of expenditures for the                                                                    
program they have built for their local and regional marketing.                                                                 
They are trying to come up with new ways to support themselves.                                                                 
The most recent suggestion was that they extend the bed tax to                                                                  
include RV parks and campgrounds.  The argument that comes up with                                                              
this approach is that it just puts a Band-Aid on something that                                                                 
needs a tourniquet.  All sectors of the industry need to pay their                                                              
fair share for generic marketing of the state.  SB 121 does not do                                                              
that.                                                                                                                           
                                                                                                                                
Number 121                                                                                                                      
                                                                                                                                
MS. KATHY HEDGES, Chena Hot Springs Resort, opposed SB 121 and SB
122 and one of the big reasons is that there is already a plan that                                                             
has the support of the industry and the administration and the                                                                  
proposed tax is not fair to all segments of industry.                                                                           
                                                                                                                                
MR. MATT ATKINSON, North Alaska Tours, opposed SB 121 and SB 122,                                                               
because they seem to run counter to the New Millennium Plan.  He                                                                
said a lot of work has gone into the Plan.  One of the concerns                                                                 
with the Plan was small business representation and the current                                                                 
plan deals with that by having "one member, one vote."                                                                          
                                                                                                                                
TAPE 14, SIDE A                                                                                                                 
Number 001                                                                                                                      
                                                                                                                                
He said regarding the dedication issue, that it appears that                                                                    
industry has more faith in itself than the legislature to direct                                                                
funds towards marketing.                                                                                                        
                                                                                                                                
CHAIRMAN MACKIE thanked everyone for their testimony and said they                                                              
would hold another hearing on this issue at a later date.                                                                       
                                                                                                                                
CHAIRMAN MACKIE adjourned the meeting at 3:17 p.m.                                                                              

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