Legislature(1999 - 2000)
04/15/1999 01:40 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
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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