HB 136 - ABOLISH TOURISM MARKETING COUNCIL Number 0087 CHAIRMAN ROKEBERG announced the committee's first order of business is HB 136, "An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date." Reopening the public hearing on HB 136, the chairman questioned whether Dave Carp via teleconference in Anchorage or Steve Behnke in Juneau wished to testify. Both gentlemen indicated they preferred to listen only. There being no one else interested in testifying, the public hearing on HB 136 was closed. Chairman Rokeberg commented some amendments new to the chairman have been circulated, as well as the new fiscal note. Number 0259 CHAIRMAN ROKEBERG called a brief at-ease at 3:26 p.m. The committee came back to order at 3:27 p.m. CHAIRMAN ROKEBERG welcomed Representative Beth Kerttula to the committee and also recognized the presence of Joe Balash, staff to the bill sponsor, Representative Therriault. Number 0287 JOE BALASH, Legislative Secretary to Representative Therriault, Alaska State Legislature, identified himself to the committee. CHAIRMAN ROKEBERG confirmed Representative Cissna would like the chairman to mark the amendments for discussion. The chairman proceeded to mark the amendments as follows: 1-LS0616\K.1, Cook, 4/12/99 as Amendment 1; 1-LS0616\K.2, Cook, 4/12/99 as Amendment 2; 1-LS0616\K.3, Cook, 4/12/99 as Amendment 3. Number 0342 REPRESENTATIVE CISSNA made a motion to adopt Amendment 1, labeled 1-LS0616\K.1, Cook, 4/12/99, which read as follows: Page 2, line 23, following "Purposes": Insert "; report" Page 3, following line 15: Insert a new bill section to read: "* Sec. 5. AS 44.33.119 is amended by adding a new subsection to read: (b) The Department of Commerce and Economic Development shall conduct an evaluation of the performance of each contract entered into under AS 44.33.125(a) and determine the extent to which the marketing campaign accomplished the purposes set out in (a) of this section and the extent to which the marketing campaign benefited the economy of the state as a whole. On or before March 1 of each fiscal year, the department shall submit to the legislature and the governor a copy of its evaluation, together with a recommendation regarding the amount of state funding that should be provided for a contract under AS 44.33.125(a) for the next fiscal year." Renumber the following bill sections accordingly. Page 7, line 21: Delete "Sections 1 - 7, 9, and 10" Insert "Sections 1 - 8, 10, and 11" Page 7. line 22: Delete "Section 8" Insert "Section 9" [punctuation per provided amendment copy] REPRESENTATIVE HARRIS objected. REPRESENTATIVE CISSNA indicated Amendment 1 would insert a new bill section that would amend AS 44.33.119 by adding a new subsection. She pointed out that the Department of Commerce and Economic Development (DCED) would be required to evaluate the performance under the issues discussed in Section 8, AS 44.33.125(a), on page 7 of the proposed Version K committee substitute (CS). This addresses a number of issues that need to be covered, including that the campaign may promote distinct segments of tourism and all the various types of tourism the amendment should cover. While discussing Amendment 1, Representative Cissna recognized a problem and asked to amend the amendment. In response to the chairman's request for explanation, Representative Cissna clarified, "What we're talking about here is the -- determining the extent to which the marketing campaign accomplishes the purposes set out in (a) of this section and the extent to which the marketing campaign benefitted the economy of the state as a whole. Thinking in terms of the fact that ... there needs to be a benefit to the entire industry and since it -- as testimony has been brought up, there are many, many factions in the tourism industry and we need to ... arrive at a balance so that the people of the state and the communities of the state are truly served ... in this venture." Representative Cissna identified the word "campaign" as the amendment's problem, referring to Amendment 1's language, "determine the extent to which the marketing campaign accomplished". She indicated "campaign" is a non-word in statutory language and should be replaced with "contract" which does have statutory definitions. In response to the chairman's comment, Representative Cissna made a motion to adopt an amendment to Amendment 1 to replace "campaign" with "contract" in all instances "campaign" appears in subsection (b) of Amendment 1. Number 0620 REPRESENTATIVE HALCRO objected. He pointed out that the legal department had thoroughly gone through this. The House Special Committee on Economic Development and Tourism (EDT) subcommittee had examined this because of the consistency issue. Representative Halcro indicated the language had been discussed with Tamara Cook, Director, Division of Legal and Research Services, Legislative Affairs Agency. Representative Halcro thought Ms. Cook would have brought forth concerns if there was a problem. He understood that all the inconsistencies had been addressed. Number 0686 CHAIRMAN ROKEBERG called a brief at-ease at 3:33 p.m. at Representative Cissna's request. The committee came back to order at 3:35 p.m. REPRESENTATIVE CISSNA withdrew the amendment to Amendment 1. She pointed out that this is the state's money and, as such, it is inappropriate for the money to be allocated without an evaluation mechanism. Amendment 1 spoke to that. CHAIRMAN ROKEBERG requested that Ms. Fay and Ms. Lindgren both speak to this issue. Number 0737 GINNY FAY, Legislative Liaison and Acting Director of the Division of Tourism, Department of Commerce and Economic Development, came forward. Ms. Fay thought she understood the intent of Amendment 1, but indicated she felt the department's request for funds through the budget process each year provided some mechanism. She indicated the department would basically only ask for something it thinks is being used well. Ms. Fay pointed out that Amendment 1 would require a report of what has happened in a fiscal year (FY) before that fiscal year is complete. She was unsure as to whether this would be necessary to ensure that evaluation is occurring. Ms. Fay stated, "We get grilled by OMB [Office of Management and Budget, Office of the Governor] and by you all [the Alaska State Legislature] every single year, and then we'll be grilling them [the qualified trade association?], so ... I think this process will be ongoing without this, and I am just concerned about the time frames - whether or not we could effectively accomplish what you're doing with this additional step." Number 0836 TINA LINDGREN, Executive Director, Alaska Visitors Association (AVA), came forward. While appreciating the intent of the amendment, she believes the issue is already covered under the language on page 3, line 30 [Section 5, subsection (b)(7)], "(b) The Alaska division of tourism shall ... (7) administer and evaluate the tourism marketing contract program under AS 44.33.125;". Ms. Lindgren also agreed with Ms. Fay that this is being done before the fiscal year and through the budget process. In Ms. Lindgren's opinion, more funds could always be used. REPRESENTATIVE CISSNA made a motion to withdraw Amendment 1. CHAIRMAN ROKEBERG noted Amendment 1 had been removed. Number 0968 REPRESENTATIVE CISSNA made a motion to adopt Amendment 2, labeled 1-LS0616\K.2, Cook, 4/12/99, which read as follows: Page 4, line 18, following "department.": Insert "The department may approve the marketing campaign plan only if it determines that the campaign fulfills each of the purposes listed in AS 44.33.119." REPRESENTATIVE HALCRO objected. REPRESENTATIVE CISSNA explained the purpose of Amendment 2 is that the guiding principle of the contract promotes tourism in Alaska. This would avoid ambiguity with regard to the intent of the bill. Number 1039 REPRESENTATIVE HALCRO stated this is a good piece of legislation. Under AS 44.33.119 there are seven clear goals that the QTA [qualified trade association] will have. He questioned what would happen if tourism decreased through no fault of the QTA. Representative Halcro felt Amendment 2 was unnecessary. CHAIRMAN ROKEBERG requested that Ms. Fay and Ms. Lindgren comment on Amendment 2. REPRESENTATIVE BRICE indicated that Amendment 2 might be redundant to the statute in general. If the purposes of the contract are under AS 44.33.119, and with AS 44.33.125(a), which states that before the contract is executed the plan must be approved by the department, it seems that the department may only approve the marketing plan if it determines the campaign fulfills each of AS 44.33.119's listed purposes. Amendment 2 would seem to restate what is already stated. Number 1179 MS. FAY believes that AS 44.33.119 states the purpose of the Division of Tourism. That does not explicitly pertain to purposes of the contract. Ms. Fay indicated that Amendment 2 would assert that the department cannot approve the developed plan unless the plan fulfills the purposes section. Ms. Fay expressed concern with the language, "each of the purposes", on line 2 of Amendment 2 because there could be situations in which the contract could not fulfill all the purposes. CHAIRMAN ROKEBERG commented it was clear to him that Amendment 2 would require each purpose of the specifying purposes clause to be met, therefore obligating the entire contract. The chairman noted, "If it didn't meet all those purposes and if you have restricted money, you couldn't even do it." He asked if Representative Cissna wished to speak to the objections. Number 1282 REPRESENTATIVE CISSNA emphasized one of the problems is having bills moved through the committee process in a hurried manner. She believes that it would be an appropriate amendment to Amendment 2 if the language was changed to "fulfills purposes listed in AS 44.33.119". MS. LINDGREN noted that the DCED has a broader goal than the marketing contract. The broader goal of the department will decide, in part, what goals the marketing council will fulfill. Additionally, the department does planning, advocacy, and has other roles. These purposes are for the Division of Tourism; Ms. Lindgren believes it ties the division's hands if the marketing part is required to fulfill the identical goals. Ms. Lindgren thinks the department can better identify which goals should be fulfilled and which will be done by advocacy and planning. CHAIRMAN ROKEBERG asked if there was further discussion of Amendment 2. Number 1370 REPRESENTATIVE CISSNA indicated there is concern that a private organization will operate very differently than the state, and does not have the same requirement to serve all the people of the state. She further indicated this duty of the state to serve all Alaskans and the use of state money are the reasons for the department's involvement. As long as state money is being utilized, the department has the special role of ensuring there is uniformity to the degree possible in terms of serving the people - the tourism industries of the state. Representative Cissna agreed that there would be some marketing programs which would want to head towards one market because it is very diverse. She indicated, however, the importance that this is an entirely new program with a group not yet in existence. Representative Cissna noted that this is an effort to clarify the new entity as much as possible. In response to the chairman's comment regarding procedure, Representative Cissna moved that Amendment 2 be amended by deleting "each of the". Amendment 2 as amended would read as follows: Page 4, line 18, following "department.": Insert "The department may approve the marketing campaign plan only if it determines that the campaign fulfills purposes listed in AS 44.33.119." REPRESENTATIVE HALCRO objected to the amendment to Amendment 2. A roll call vote was taken. Representatives Rokeberg, Sanders, Harris, Brice and Cissna voted in favor of the amendment to Amendment 2. Representative Halcro voted against it. Representative Murkowski was not present. Therefore, the amendment to Amendment 2 was adopted by a vote of 5-1. CHAIRMAN ROKEBERG clarified that Amendment 2 as amended was now before the committee. A roll call vote was taken. Representative Cissna voted in favor of Amendment 2 as amended. Representatives Rokeberg, Halcro, Sanders, Harris and Brice voted against it. Representative Murkowski was not present. Therefore, Amendment 2 as amended failed to be adopted by a vote of 1-5. Number 1567 REPRESENTATIVE CISSNA made a motion to adopt Amendment 3, 1-LS0616\K.3, Cook, 4/12/99 which read as follows: Page 4, line 6: Delete "campaign" Insert "contract" REPRESENTATIVE HARRIS objected to the motion to adopt Amendment 3. REPRESENTATIVE CISSNA stated the change is necessary because "campaign" is more ambiguous than "contract" in that sentence. CHAIRMAN ROKEBERG noted he wished to hear from Ms. Fay of the department and Ms. Lindgren. MS. FAY responded that the department could not support Amendment 3 since this is a critical component of the DCED's agreement with the AVA. MS. LINDGREN agreed. REPRESENTATIVE HALCRO suggested that the language not be changed, indicating it had been a point of contention which was resolved by the acceptance of "campaign". A roll call vote was taken. Representative Cissna voted in favor of adopting Amendment 3. Representatives Rokeberg, Halcro, Sanders, Harris and Brice voted against it. Representative Murkowski was not present. Therefore, Amendment 3 failed to be adopted by a vote of 1-5. Number 1684 CHAIRMAN ROKEBERG called a brief at-ease at 3:53 p.m. The committee came back to order at 3:54 p.m. CHAIRMAN ROKEBERG noted Ms. Fay had been speaking about the fiscal note. Number 1689 MS. FAY explained that the fiscal note eliminates the three ATMC [Alaska Tourism Marketing Council] positions and transfers the personal services and travel to the contractual line. What is now program receipts of the ATMC is moved off-budget because they will no longer be collecting the industry match. CHAIRMAN ROKEBERG inquired as to how the $20,000 was placed in FY 2000. MS. FAY clarified that the $20,000 is the feasibility study required by the Division of Personnel, Department of Administration. There would be a net loss of six positions: three in the Division of Tourism's Tourism Inquiries Section and three in the ATMC. Ms. Fay indicated this work would be contracted out. CHAIRMAN ROKEBERG asked if the deletions are in the budget. MS. FAY explained that the deletions would be a result of HB 136. Article 13 of the "GGU Agreement" requires an analysis before a state position can be contracted out. This cost would be covered by the $20,000 and the analysis would be done in the year 2000 prior to the effective date. Number 1755 CHAIRMAN ROKEBERG asked if there are no other decrements because those have been deleted in the budget document itself and are not part of this fiscal note. The chairman indicated it was his understanding from the bill sponsor, Representative Therriault [Co-Chairman, House Finance Standing Committee], that money was being added back into the fiscal note for this program. MR. BALASH clarified the fiscal note does not reflect that aspect of the budget process. MS. FAY pointed out that a fiscal note is prepared according to the specifications of the bill without accounting for what is occurring in another area. CHAIRMAN ROKEBERG confirmed the committee had an understanding of this. He indicated he had had communication from the bill sponsor, and referred to Mr. Balash. MR. BALASH stated that both the division and the ATMC would be funded through the fiscal note. Their entire budget would be reflected in a later fiscal note. Number 1812 REPRESENTATIVE CISSNA made a motion to adopt Amendment 4, a handwritten amendment, which read as follows: page 3, Line 30 (7) administer and evaluate the tourism marketing contract program under AS 44.33.125, and forward the evaluation to the legislature; REPRESENTATIVE HALCRO objected. REPRESENTATIVE CISSNA explained the amendment would add the language ", and forward the evaluation to the legislature" to subsection (7) on page 3, line 30. The purpose would be to further expand the evaluation process. REPRESENTATIVE BRICE asked why the legislature would want this evaluation outside of the purview in the budget and this committee. Many items are contracted out in Alaska, and Representative Brice does not think the evaluation of those contracts are sent to the legislature. CHAIRMAN ROKEBERG indicated the legislature had passed a bill a few years ago which restricted the number of reports issued to the legislature. REPRESENTATIVE BRICE stated the legislature chooses which reports it wants to receive. His question is: Why would the legislature want to justify having this evaluation sent to it? REPRESENTATIVE CISSNA indicated that bringing a private entity into a state program is unusual and it is reasonable to provide as much oversight as possible initially. This will obviously grow away from the state and the state's management. Representative Cissna mentioned the legislative audit process ["budget and audit report"] and indicated she believes it is reasonable to require the evaluation to be forwarded to the legislature, at least temporarily. Number 1944 REPRESENTATIVE BETH KERTTULA informed the committee that the EDT subcommittee did not have much of an opportunity to work on HB 136. She emphasized that reporting the evaluation to the legislature is one of the smallest things that could be required. There will be a new contract, without any contract provisions in legislation. She indicated the need to see an evaluation, at least after the first couple of years. REPRESENTATIVE HARRIS said this seems redundant because if the Division of Tourism is already going to evaluate the program, the legislature has access to that information. He believes that if there is a concern someone would notify the legislature or the legislature would make the effort to find out itself. REPRESENTATIVE HALCRO said he appreciates and understands the intent of the amendment. However, DCED will still be very involved with requesting money from the legislature each year and justifying how that money is spent. Representative Halcro expressed full confidence that Ms. Fay would bring forth any problems with the QTA. He noted this is an agreement that was worked out between the department and the industry. Additionally, if there is a small segment of the tourism market which is not being addressed, Representative Halcro thinks this will be brought to attention of specific legislators, the department or the QTA. He indicated he feels Amendment 4 is unnecessary because there are ample checks and balances, including the yearly request for funding. Number 2038 REPRESENTATIVE CISSNA indicated the state is facing serious economic problems and emphasized that tourism is Alaska's second largest employer. She acknowledged Representative Halcro's significant work on the legislation but she noted the legislation never came back to the House Special Committee on Economic Development and Tourism. Representative Cissna commented the current committee had a short amount of time on Friday [April 9, 1999] to review the legislation; the fiscal note has just been received. Representative Cissna recognized that the legislature could review the reports at any time but she indicated problems might be missed. She commented this is a reasonable request with such a large project. REPRESENTATIVE HALCRO maintained his objection. A roll call vote was taken. Representatives Cissna voted in favor of the adoption of Amendment 4. Representatives Rokeberg, Halcro, Sanders, Harris and Brice voted against the adoption of Amendment 4. Representative Murkowski was not present. Therefore, Amendment 4 failed by a vote of 1-5. CHAIRMAN ROKEBERG confirmed there were no further amendments or discussion on HB 136. Number 2145 REPRESENTATIVE HALCRO made a motion to move CSHB 136, Version K, out of committee with individual recommendations and the attached fiscal note dated 4/12/99. REPRESENTATIVE CISSNA objected. A roll call vote was taken. Representatives Rokeberg, Brice, Sanders, Harris and Halcro voted in favor of moving CSHB 136. Representative Cissna voted against moving CSHB 136. Representative Murkowski was not present. Therefore, CSHB 136(L&C) moved out of the House Labor and Commerce Standing Committee by a vote of 5-1. CHAIRMAN ROKEBERG pointed out he had received no calls over the weekend from anyone regarding HB 136. He noted he had been happy to hold the legislation at Representative Kerttula's request. The chairman indicated he appreciated the work on the legislation. Number 2226 REPRESENTATIVE CISSNA thanked the chairman for his comment. She recalled the committee had met until about 6:30 p.m. on Friday, after Legislative Legal Services had left for the weekend. Amendments were in to Legislative Legal Services by 8:00 a.m. this morning. REPRESENTATIVE KERTTULA noted she has received contacts in opposition to HB 136 that she will forward to the House Finance Standing Committee. [CSHB 136(L&C) MOVED OUT OF COMMITTEE]