HOUSE BILL NO. 147 "An Act relating to matching funds in state tourism marketing contracts with trade associations." 3:53:04 PM At-ease. 3:53:47 PM Representative Gara asked about the private industry match versus the state match. He wondered where the $2.5 million that came from the non-cruise ship portion of private industry goes. He questioned how much money goes into the match fund for the advertising campaign. BRETT CARLSON, VICE CHAIR, ALASKA TRAVEL INDUSTRY ASSOCIATION (ATIA), addressed Representative Gara's questions. The $2 million private sector portion goes into the fund and is traded for "value", such as an ad or a chance to participate in a media road show. Representative Gara summarized that ATIA charges a business for access to advertising, as a value match. He asked where the $.5 million came from. Mr. Carlson replied, "$2 million in non- cruise pay to play, and then $.5 million comes from what industry calls DMO's, Destination Marketing Organizations, which would be one of three things, generally." Larger cities would have a convention and visitors' bureau, some smaller cities would have chambers, and a few cities might have a department of the city. 3:58:57 PM Vice Chair Stoltze drew attention to a letter by Chip Thoma (copy on file.) Co-Chair Meyer asked about the 90/10 split. He said he is not so sure that the cruise ship contribution is going to go away. He voiced concern about ATIA's belief that without that contribution only $2 million could be raised. He thought that ATIA was hoping that the state would contribute $20 million because ATIA proposes to raise $2 million. He thought a $20 million request was high. He wondered what would happen if the current state contribution of $8 million is kept. Mr. Carlson emphasized that this legislation has no bearing on the actual amount of legislative appropriation. ATIA does not believe that state government should appropriate money back that ATIA is not putting in. He explained how the fund would grow. The bill would allow ATIA to match appropriated funds. If the bill does not pass, ATIA has no access to the funds. Co-Chair Meyer agreed that $5 million of the car rental tax is tourism related and could go to ATIA. He pointed out that it is uncertain how much money will be obtained from the cruise ship initiative. He thought it was premature to ask for additional money at this time. He suggested other splits. 4:04:28 PM Co-Chair Meyer asked if ATIA would support a statewide bed tax or sales tax. Mr. Carlson explained that the hope is that other forms of revenue would be available in the future. He stressed that the discussion on the funding level could take place another time. At stake now is the match. Co-Chair Meyer asked if the cruise ship industry contributed money this year. Mr. Carlson reported that that funding will be lost beginning July 1. 4:07:19 PM Representative Kelly pointed out that action needs to be taken at this time. The bill in its current form would require a match of $800,000. He spoke in support of the bill with an amendment. Representative Thomas asked if the cruise ship industry has bailed. Mr. Carlson said that their funding cannot be counted on in FY 08. Representative Thomas asked about car rental tax money going only to tourism marketing. He preferred to allocate it for independent travel. He reported that he voted against the cruise ship head tax. He said he does not know what the cruise ship head tax money can be used for. 4:11:24 PM Representative Gara summarized that this bill is a policy call based on a guess about the cruise industry. The independent tourism industry benefits if the cruise industry does not contribute. He questioned why $2 million for pay to play and $.5 million of DMO contributions last year translates to only a total of $2 million this year. He questioned why private industry's donation shouldn't be larger this year than last. Mr. Carlson responded that the 10/90 legislation looks to the future to raise money for a state marketing program. He opined that a match from the private sector makes sense. He explained that currently $500,000 comes from DMO's, which should be used locally. Long-term, a voluntary tax won't work. Representative Gara was not convinced it was $2.5 million last year. He brought up that in Alaska tourism businesses don't pay a state sales, income, or corporate tax. He suggested a 3 to 1 ratio. Co-Chair Meyer agreed. 4:17:04 PM Mr. Carlson related that 38 states have no private sector match. Of the 11 state that do, Alaska's small industry contributes $5 million, which is just below California. HB 147 was heard and HELD in Committee for further consideration. 4:18:26 PM