HB 34-AK INNOVATION COUNCIL  [Contains discussion of HB 30.] 4:52:54 PM CO-CHAIR FIELDS announced that the final order of business would be HOUSE BILL NO. 34, "An Act establishing the Alaska Innovation Council; and relating to financial disclosures for members of the Alaska Innovation Council." 4:54:04 PM REPRESENTATIVE KY HOLLAND, Alaska State Legislature, as prime sponsor, presented HB 34. He shared that he has been involved in the Alaska entrepreneurial and innovation ecosystem for approximately 10 years. He stated that innovation is the center of the economy in the United States. He said that the U.S. economy has grown two-thirds since World War II, largely due to innovation and the evolution of technology. He stated the opportunity for innovation has resulted in the development of new businesses. He cited the creation of General Communications Incorporated (GCI) as an example of entrepreneurial innovation. REPRESENTATIVE HOLLAND asserted that the opportunity in Alaska is in diversifying the economy and investing in high-growth emerging sectors, such as mariculture, seafood technologies & logistics, et cetera. He explained that Alaska published a Comprehensive Economic Development Strategy (CEDS) in 2022 and highlighted goals including: cultivating growth sectors, supporting an entrepreneurial ecosystem, building & updating foundations, developing Alaska's workforce, building a resilient economy, and strengthening Alaska's economic engine. He emphasized that 89 percent of net job creation in Alaska over 10 years is generated from businesses that are less than five years old. He argued that Alaska's economy has been relatively stagnant for about 15 years, stating that the number of companies has been "relatively flat" and that the working population has decreased. REPRESENTATIVE HOLLAND referred to a PowerPoint presentation [hard copy included in committee file], to highlight the proposed provisions of HB 34. He drew attention to the fifth slide, which read as follows [original punctuation provided]: Creates a 19-member Alaska Innovation Council with representatives from government, industry, academia, labor, and investment sectors. Develops an annual Innovation & Economic Competitiveness Plan for the Governor and Legislature. Establishes an Innovation Index to benchmark Alaska's progress against national metrics. REPRESENTATIVE HOLLAND stated that HB 34 would be tied to the Department of Commerce, Community and Economic Development (DCCED) for the purpose of developing new businesses and allowing them to thrive. He referenced the Joint Legislative Seafood Task Force, the [2024] Sustainable Energy Task Force, and the Mariculture Task Force - all of which identify a need for innovation and growth acceleration of new businesses. REPRESENTATIVE HOLLAND shared that he drew inspiration for HB 34 from Calgary and Alberta, Canada, which utilized an "innovation council type of structure." He explained that Calgary's economy was heavily reliant on oil, gas, and mining approximately 15 years ago. He stated that Calgary, upon the realization that there was little growth in oil, gas, and mining, brought together a group of people with the aim of creating 1,000 new technology startups by 2030. He maintained that Calgary is still supporting their legacy economies [oil, gas, mining] in addition to developing data science, energy technologies, and healthcare technology. He further referenced innovation councils established in Utah and Washington. REPRESENTATIVE HOLLAND concluded by describing the outcomes of the proposed legislation, including job creation and business development. Additionally, he offered his hope that HB 34 would help to keep young people in Alaska and excite them regarding future prospects. Finally, he noted that HB 30 includes an entrepreneurship office and includes provisions for DCCED to support emerging entrepreneurial activities. He stated that HB 34 and HB 30 are complimentary and do not overlap with each other. 5:04:31 PM JACQUELINE SUMMERS, Executive Director, Health TIE, gave invited testimony during the hearing on HB 34. She explained that Health TIE is an Alaska-based healthcare innovative hub. She reported that Alaska has some of the highest healthcare costs in the country. She stated that, through work with startups both in and outside of Alaska, she has launched a series of pilot projects with new methods for addressing opioid use/treatment, independence for those with intellectual/developmental disabilities, those with traumatic brain injuries (TBIs), and senior care. She emphasized that there is a need for coordination of activities within the entrepreneurial ecosystem. She described challenges to connecting healthcare startups with local nonprofit organizations and social services. She concluded by offering strong support for HB 34. 5:06:32 PM LINDA JANES, Managing Director, gBETA, gener8tor, gave invited testimony during the hearing on HB 34. Since 2021, Ms. Janes stated, gBETA at gener8tor helped raise over $5.5 million to initiate 30 companies and sustain 91 jobs. She gave a list of the various industries she works with, including housing in rural communities, clean outdoor air technology, aviation weather monitoring, food preservation, industrial facilities, sustainable energy generation, oil and gas, and many more. She said that a strong support network is critical to success, especially in an "islanded place" like Alaska. A strong support network entails access to early capital, mentorships, exposure to like-minded entrepreneurs, and innovation-supported infrastructure. She offered her belief that HB 34 addresses the need [for a strong support network] by assembling a council of investors, entrepreneurs, and industry leaders who would advise on best practices, enhance commercialization efforts, promote capital formation in Alaska, and identify opportunities for action. MS. JANES opined that the cost attached to HB 34 should be looked at as an investment, not "throwing money away," and noted that the investment of time and money create returns. She argued that there is a false sense of security in Alaska and further stated that the demand for medical jobs is increasing, primarily due to the aging population in Alaska that is expected to peak in 2035. However, she argued that the long-term economic landscape shows an out-migration of young, working people due to a lack of "ongoing opportunities." Ms. Janes concluded that people in Alaska need to see the State of Alaska invest in long-term opportunities for the state. 5:10:10 PM CO-CHAIR FIELDS invited questions from committee members. 5:10:19 PM REPRESENTATIVE COULOMBE asked how the Alaska Small Business Development Center (ASBDC) is different from the proposed council. 5:10:58 PM REPRESENTATIVE HOLLAND answered that ASBDC provides a broad array of services, particularly for "bankable" local businesses or businesses that are eligible for a loan or are "bootstrap[ped]." He offered commentary that technology businesses and technology transfers require a different set of skills. He noted that Path to Prosperity [Business Competition] has been a successful program in Southeast Alaska (SEAK) in helping local entrepreneurs develop businesses, and programs like that would be complemented by ASBDC. He stated that ASBDC is one of many tools that aspiring entrepreneurs/businessowners can utilize for aid. He stated that in many cases, entrepreneurs need additional help with customer validation/discovery work. REPRESENTATIVE HOLLAND provided an example, stating that GBeta would help an aspiring entrepreneur with creating an investable business model, which might eventually lead to a small business opportunity that is "bankable" and thus could use help from the ASBDC. He stated that, throughout the country, it is common to see the entrepreneurial ecosystems feed into the SBDCs. 5:13:30 PM REPRESENTATIVE SADDLER remarked that HB 34 would create a 19- member council. He asked what would oblige the legislature or the administration to follow or implement the recommendations of the Alaska Innovation Council. REPRESENTATIVE HOLLAND explained that he did not intend to create required action in statute. He stated that the function of the Alaska Innovation Council would be advisory, and the Council could identify potential state action. REPRESENTATIVE SADDLER clarified that the function of the Alaska Innovation Council would be to generate advice. He asserted that the cost of the proposed legislation would be "significant" at $500,000. REPRESENTATIVE HOLLAND responded that the Alaska Innovation Council would be a "next step" in developing methodologies for implementing Alaska's 2022 CEDS, for example. He agreed with Representative Saddler, asserting that whether action is taken would be dependent on the will of the commissioners, the governor, and the legislature. He reiterated that HB 34 would not be "binding" but argued that Alaska "would have to go beyond plans on a shelf that are ignored." REPRESENTATIVE SADDLER asserted that he does not see how the advice would be taken into action with the voluntary model of the proposed legislation. REPRESENTATIVE HOLLAND gave an anecdotal response, stating that when starting a business, one typically writes a business plan. He added that enforcement of a business plan is not mandatory. He continued that, if a business plan is well thought out and given to the right people, people would commit time and resources towards action, such as getting said business afloat. He further noted that there is no end to business plans that have been thought out and never acted upon. He concluded by offering his hope that the legislature would pursue action recommendations of the proposed Alaska Innovation Council.