SENATE BILL NO. 350 "An Act relating to tourism; relating to grants for tourism marketing; eliminating the division of tourism and the Alaska Tourism Marketing Council; and providing for an effective date." CS FOR SENATE BILL NO. 350 "An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date." Senator Donley advised the committee there was a proposed CS in their files relating to this bill. He explained that there had been a work party relating to the bill and the new CS was due to a few technical changes that had to be made. He said a change in the title was noted in the new CS. Further, on page four, line eleven, the word "may" was deleted and "shall" was inserted. Senator Donley MOVED CSSB 350(FIN) "H" version as working document before the committee. Senator Pearce OBJECTED saying she would like to hear more about the change on page four. SUSAN BURKE, Esq., Law Firm of Gross and Burke was invited to join the committee. She briefly explained the title problems with the "F" version resulting in version "H" now before the committee. In working with the department on this legislation the Alaska Visitor's Association has really tried to accommodate as much as they could, some of the department's concerns. They would prefer "contracts" rather than "grants". However, AVA would rather the "grant" program. She said they wanted to provide the Legislature with flexibility to ultimately determine whether it would be a "grant" program or a "contract" program. Rather than having to deal with a title change problem in the event the Legislature ultimately concludes that "grant" is preferable to "contract" this technical title change would provide that flexibility. Regarding the issue of "shall" versus "may" she explained that under version "F" it referred to a grant program containing the "shall" language. In reading the amendments the committee adopted that day there was nothing in them that changed the original "shall" to "may". She also noted that an amendment adopted at the committee's last meeting to exempt contracts from the procurement code requirement so they did not have to go through sole source waivers did not get into either version "F" or "H". Since it had been adopted on record, it was just a matter of bringing it to the attention of the legislative Legal Services. The inclusion of this particular amendment was the reason the AVA was willing to change from "grant" to "contract". Section five, page four was new, 43.33.125 which describes the contract program and it has at least a thirty percent matching funds provision in it. Further on in the bill there is an amendment to the bill to raise that percentage to forty- percent minimum. She further noted that page five, line twenty-six the word "may" should conform to "shall". BOB ENGLEBRECHT, Past President, Alaska Visitors Association was invited to join the committee. He said the Legislature had made it clear that they wanted the industry to participate more in the funding of the marketing program and therefore, they had been working on a program to do just that. A "pay to play" program and many of the aspects of the bill are integral to being able to raise the industry match or contribution into marketing from the $1.5 million level up to $6 million. Initially they were in favor of a grants program, however, in working with the Department of Commerce they are now comfortable with the contract concept as it will work better for them and they will be able to negotiate with the Trade Association. He felt they needed some sort of assurance that they would have a contract with the State and it would be on a year to year basis. He explained the whole philosophy of moving the different facets of tourism marketing within the State into a single entity that can be more effective and coordinated in promoting the State of Alaska and also would provide a mechanism for raising the funding for the industry match. There were concerns regarding the amendment language that would allow for multiple smaller contracts that would disperse this effort. By consolidating everything into one place there would then be the best chance of being the most effective and making the best use of funds available to promote tourism. Senator Donley asked if the concerns were with the proposed CS or the amendment. Mr. Englebrecht indicated they were with the amendment. Senator Donley MOVED the proposed CS be amended on page five, line twenty-six changing "may" to "shall". WITHOUT OBJECTION it was ADOPTED. Senator Donley MOVED amended CSSB 350(FIN) "H" be adopted as working draft. Senator Pearce OBJECTED. (Tape #145, Side A switched to Side B.) Co-chair Sharp asked for roll call vote. By a roll call vote of 5 yeas (Sharp, Donley, Torgerson, Parnell, Phillips) and 1 nay (Pearce) it was ADOPTED. The absence of Senator Adams was noted. Susan Burke explained amendment 1(a) to the "F" version and that it had not been incorporated into the "H" version. Senator Donley noted that his staff said the amendment was not before them at the time. Senator Donley briefly reviewed the proposed CS and noted that it was in it. Senator Donley recalled that the amendment had been separated into two parts and his notes show that both parts 1(a) and 1(b) had passed and should have been incorporated into the "F" version and "H" version of the draft. Ms. Burke advised Senator Donley that amendment 1(b) was included in the "H" version on page four at line five. Senator Donley MOVED amendment 1(a) into the "H" version and WITHOUT OBJECTION it was ADOPTED. Senator Torgerson MOVED amendment #2. Senator Donley OJBECTED. Senator Torgerson explained that it incorporated into version "H" a series of repealers regarding existing statute. His concern was that if individuals were not a member of the Trade Organization information could be withheld not sold or not be given to them. Senator Donley asked Senator Torgerson to explain the effect of the brackets around [without discrimination]. Senator Torgerson said he assumed that it meant one did not have to be part of the Trade Organization. All one would have to do was be promoting Alaska tourism product or service and then would be eligible to purchase or lease the mail lists. He further noted a technical amendment on line nine, "list" should be "lists". Senator Donley further inquired if the brackets meant that clause was being deleted? Senator Torgerson said no and that the brackets should be ignored. Senator Donley spoke to his objection stating that the material should be available to the public, but he also felt people should not be able to get a free ride without paying membership dues. He felt that even though the materials should be available to everyone, they should have to pay as much as if they had participated as a member of the association, which paid for the development of the materials. Otherwise, no one will join and everyone will get the membership lists and free load off the dues paying members. Senator Torgerson said he did not disagree with this but due to the fact that public money was involved the materials should be available to Alaska residents. He felt it was not proper to have to belong to the association in order to have access to the membership lists. Senator Phillips suggested having members and non-members fee structures? That way the material would still be available to everyone, but to non-members at a slightly higher price. That would protect both parties' interests. Senator Torgerson did not disagree with that, however noted there was no fee structure within the bill. The Trade Organization would have to figure this out. Senator Parnell said he concurred with both Senator Torgerson and Senator Donley. He felt the lists needed to be provided because public money was involved and yet also understood that individuals were paying to be part of the membership organization. Senator Torgerson responded that was the reason he went back to existing statute. Senator Pearce asked if the language was presently in statute? Senator Torgerson noted it was AS 44.35.735. She noted with sympathy Senator Torgerson's outlook regarding the bill and the amendment (due to excess noise in committee room remainder of conversation is unintelligible.) Co-chair Sharp said that since the State was still going to continue putting sixty percent of the money into this organization he wanted to make sure the ones who choose not to join would still have access to the membership list. He also noted that he would not have objection to a surcharge but would object to a prohibitive surcharge. In response to Senator Pearce, Ms. Burke explained that the details of the bill would be graduated. It would start out in the next fiscal year at status quo, as it would take time to develop the kind of funding mechanisms that are contemplated in the plan. She said the legislation would provide in just three years time it would go up from the present match another ten percent. That was chosen because in three years time getting all the way to the reversed sixty/forty probably is not going to be possible. She did not think there had been any failure to disclose that, rather the graduated percentage of funding was set out in the plan provided the Legislature. Senator Pearce said she thought there was a commitment from the industry to go to sixty percent and agreed a time for transition should be allowed. She said it was human nature to not pay any more than one has to for any service. In response to Senator Pearce, Senator Torgerson said he did not believe ARDORS and other non-profits that receive monies from the Legislature have special legislation that would provide all the information and materials they generate are the sole property of that organization and are not subject to the "Freedom of Information Act" or the "Public Records Act". This goes beyond just giving money to a normal non- profit. Bob Englebrecht further responded to the amendment and the comments of Senator Pearce. He said the "pay to play" aspect of the program is integral to its success and the industry is committed to getting to the $6 million level. They hope to surpass that amount. He said there was no intention to exclude others from being able to utilize the lists. He felt language could be added that would clarify the specified fees. He said they wanted to set this plan up outside the normal procurement procedures because it would then give the industry a better ability to respond and do creative things with marketing. It would not diminish the industries' commitment, but would provide some greater flexibility for them to go beyond what the specific contract may be with the State. Senator Phillips suggested the words "to members and non- members" be inserted. Then a price structure could be figured out. Senator Parnell did not feel that would get to the issue. He agreed with Senator Torgerson that the list should be sold to all individuals upon request, but also would support language that would require a different fee structure so there would not be a disincentive to joining the qualified organization. Co-chair Sharp said they were being asked to contribute sixty percent, exempt them from the State procurement code, give them an exclusive contract and then not make the list available to anyone else. He has no problem with a higher cost as long as it was not a blackmail cost. Mr. Englebrecht said he had one more request not related to the amendment presently before the committee, however, felt it should be included. Perhaps another line be put in that the mailing lists would be provided to the State free of charge. He said the departments did not want to have to pay in addition to the contribution being made. Ms. Burke said the language of the present draft that said the qualified trade association shall provide to the department or division on request any materials that are produced or information that is gathered under the contract should cover that. It was never contemplated to charge the State. Senator Donley said the words "without discrimination" could be deleted because they prevent a different schedule of fees for non-paying non-members. Senator Donley MOVED to amend amendment #2 by deleting the words "without discrimination". Senator Torgerson OBJECTED. Senator Torgerson requested the department respond as to how this would work because it was existing language. He asked if there was a different pay structure for members and non- members of AVA or Alaska Tourism and Marketing? Mr. Englebrecht indicated there was no differential. He said it was central to what they were trying to accomplish in that people need to come in and participate in order to raise the extra funds that the Legislature has told them they were looking for. Perhaps language could be provided that would essentially deal with the request of Senator Donley. He further proposed language basically saying a non-paid participant in the trade association could access materials by including an amount equal to the qualified trade association participation fee. They were trying to participate in the "pay to play" program. Senator Torgerson indicated by the letters he was receiving that this bill did not have one hundred percent support. He thought it would be better to put into statute the functions that were available without membership and the ones that were the property of the organization only. However, he was trying not to get into all this. Mr. Englebrecht said currently the concept was to have people participate in this program. He felt they could come up with a way to accommodate those that do not want to buy into the whole agenda, however, they do need to pay at a level that is commensurate with what people who are participating in the program are paying. Otherwise the program would be completely undermined. Senator Torgerson said that without seeing this in writing he was going to continue his opposition to Senator Donley's amendment. Co-chair Sharp said he assumed that since the State was paying sixty percent of whatever the program was, he would not have a problem with others having to pay forty percent. Senator Torgerson said he concurred. Senator Parnell said that whether one was a paid member or not if there was access to the list then one was getting the benefit of the State's share. He said that one paying as a member was getting other services in addition to access to the list. He suggested they allow the organization to charge an additional surcharge to non-members that was equivalent to that portion paid by members for that benefit of having a list. In that manner both would be paying the same amount for the list, taking into account the membership fees. He noted the language was rather awkward at this point and said perhaps they could adopt Senator Donley's amendment, which deletes the words "without discrimination". He would then move an amendment to the amendment adding "that the purchase or lease price to an individual or business that is not a paid participant in the qualified trade association's marketing program may include an amount that takes into account the amount of participation fee attributable to members right of access to the list". He said they were working on specific language with Ms. Burke to accomplish this. Senator Torgerson said he liked the Co-chair's recommendation and would like to see that integrated into the bill that the cost may not exceed the cost of the private trade organization's share of the total production. In other words, that would come back to the sixty-forty split. He did not intend that an individual have to pay the membership fee in order to receive a five-dollar list. Senator Parnell concurred and did not feel that one should have to pay the membership fee because members received other benefits and services. Co-chair Sharp indicated at this time he was unwilling to have a vote on the amendment to the amendment until they could see it in writing. He felt the amendment at this time was complicated. Mr. Englebrecht briefly responded also noting complications with the structure. Co-chair Sharp asked a roll call vote be taken on Senator Donley's amendment to amendment #2, deleting the words "without discrimination". By a roll call vote of 4 yeas (Pearce, Donley, Parnell, Phillips) and 3 nays (Sharp, Torgerson, Adams) Senator Donley's amendment to amendment #2 was ADOPTED. Senator Parnell MOVED amendment to amendment #2 and asked the committee stand at ease while it was being copied. (The committee took a brief at ease and then reconvened.) Senator Parnell asked Ms. Burke to read the amendment 2(c) into the record. Ms. Burke noted that the amendment had been quickly written and may seem awkward but would be touched up by Legislative Legal. "The purchase or lease price to an individual or business that is not a paid participant in the qualified trade association's marketing program may include an amount that takes into account the amount of the qualified trade association's participation fee attributable to a member's right of access to the list." Senator Torgerson OBJECTED. (There followed a brief pause on record.) Senator Parnell indicated that this amendment would just be added where Senator Donley's amendment deleted "without discrimination". Senator Torgerson WITHDREW his objection. WITHOUT OBJECTION amendment #2(c) was ADOPTED. Senator Torgerson MOVED amendment #2. Senator Pearce WITHDREW her objection. Therefore, WITHOUT OBJECTION amendment #2 was ADOPTED. Co-chair Sharp SET ASIDE SB 350 at this time. He then called HB 261.