SENATE BILL NO. 107 "An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date." CS FOR SENATE BILL NO. 107(L&C) "An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date." SENATOR JERRY MACKIE was invited to join the committee. He explained the bill per his sponsor statement, which he read into the record. He said a new CS had been discussed but a draft had not been prepared nor been presented to the committee. According to the Senator, all marketing would be done under contract. They have worked closely with Representative Gene Therriault regarding this bill. It was his feeling that not only would ATMC go away but that there would be a reduction in personnel. A draft of House fiscal notes had been prepared with the assistance of Rep. Therriault and he asked permission for Representative Therriault's staff to address them. JOE BALASH, staff to Representative Therriault was invited to join the committee. He explained the House fiscal notes. Co-chair Torgerson asked if there had been a fiscal note from the department before the House made their own. Mr. Balash indicated they did, but after some changes at the first committee of referral. Co-chair Torgerson felt they were getting ahead of themselves in discussing the fiscal notes. (Drafted house fiscal notes were distributed to the committee.) Senator Mackie noted that he had just received the fiscal note from the department. Co-chair Torgerson advised that he had also only just received it. Senator Leman asked for further explanation from Senator Mackie regarding the department fiscal note as compared to the draft from the House. Senator Mackie explained the reduction after FY 01 and that it would be reduced down to $4.7 million by the year FY 03. Senator Wilken asked where the $7 million came from. Senator Mackie said it was in this year's budget. Senator Mackie said he had worked on these fiscal notes electively with Representative Therriault. He asked the committee to consider these drafted House fiscal notes along with those from the department. Co-chair Torgerson said he would rather finish discussion on the bill at this time and not deal with the fiscal notes. Senator Mackie asked for a Tourism Development FY 01 spreadsheet to be distributed to the committee. Co-chair Torgerson asked about section two of the bill. (There followed a brief pause on record.) Senator Mackie then directed the committee to section ten of the bill. Co-chair Torgerson said that was the section dealing with the effective date of the bill. Unidentified individual in the audience directed the committee to section nine of the bill, page seven. Senator Leman asked why was not a gradual transition proposed instead of such a big step? This would have helped in the budget. Senator Mackie said this was a matter for the department and ATMC. He did not really get into this matter. Co-chair Torgerson asked about the reduction for this year. Senator Mackie said it was about $300,000. Senator Wilken asked about the spreadsheet and APLIC? Senator Mackie indicated the department could explain this matter. The office is in Tok and a key component for RV's and others entering the State. With reference to the spreadsheet, Senator Mackie said this had been prepared by himself. Co-chair Torgerson asked about page three of the bill. Senator Mackie again indicated he would rather the department comment on this. It is just another matter of check and balance to monitor the best use of the industry both private and public. GINNY FAY, Legislative Liaison, Department of Commerce and Economic Development was invited to join the committee. She spoke to the Labor and Commerce version of the bill. However, she advised the committee that Tam Cook, Legal Services had prepared a new CS draft containing clean-up measures in it. There is still a lot of work to be done during the next transition year and they will have to work diligently on this bill. She explained the department's two fiscal notes for ATMC and Tourism Development. The premise they worked on for FY 01 and beyond is that they have transferred their personal services to the new trade association under their contractual line. Personal services were reduced. From there, they took the activities of ATMC and delegated them to contracts. The division will have the contractual oversight that ATMC now has. This transition should occur in FY 01. She explained that some duties will be shuffled and some may be diminished. The difference in their two fiscal notes is approximately $200,000, which was cut out. However, the department feels this funding is necessary. Co-chair Torgerson told Ms. Fay that he felt her testimony was contradictory to the testimony of the sponsor. He asked if some of this money was to fund the Tok Visitor Center. Ms. Fay said she did not have all the figures in front of her. She said there would be eleven positions total, with four of them at the Tok Visitor Center. Co- chair Torgerson asked her to review carefully the Tourism Development spreadsheet handed out by Senator Mackie. He asked her to explain "fixed costs". He then said he was not going to get into this matter any further. There is a contradiction between costs and positions. Further discussion will have to take place with the sponsor. Ms. Fay said the discussion has been primarily focused on tourism. However, there have been for instance, meetings with ambassadors, work at the national park services, and some other activities that have had nothing to do with tourism marketing. In addition, money from the Federal Department of Commerce has been received to help look at developing small business and tourism opportunities in rural Alaska. She further referred briefly to the draft fiscal note from the House and felt that all duties and functions have not been addressed. In response to Co- chair Torgerson she said it was her understanding that there would still be some positions left in ATMC. The fiscal note she presented this morning was only for the Division of Tourism. Co-chair Torgerson again reiterated that there was work that needed to be done on this bill. Senator Wilken called attention to the spreadsheet. He assumed these were loaded costs. Ms. Fay said she did not prepare the spreadsheet. She will have to consult with the sponsor who prepared the sheet. Senator Wilken asked about the nine employees. He felt the spreadsheet was "top loaded". JOE BALASH, staff to Representative Therriault was invited to rejoin the committee. He was asked to explain the "research" and "fixed costs" on the spreadsheet. He explained that it included rent at the Tok Visitor Center, telephone and communication costs costs to the commissioner's office among others. He also included a conversion study being conducted by ATMC. Co-chair Torgerson asked him to explain "grants". Ms. Fay interrupted saying this concerned the World Tourism Center. Mr. Balash asked that a Division of Tourism spreadsheet also be passed out to the committee. Senator Green asked what was the field of the positions. Ms. Fay said they dealt strictly with tourism. Co-chair Torgerson asked for a clarification of the "clean- up" language. Senator Mackie responded that Tam Cook was doing the clean up of the Labor and Commerce version of the bill. He said they were trying to deal with the House on this matter. Senator Mackie also referred to the nine positions; Ms. Fay said they were trying to keep the positions at eleven, of which three would be part-time. Ms. Fay further explained the Tourism Development spread sheet and said it should also have included "Marketing". Senator Wilken asked her to identify the positions listed. Due to poor copies of the Division of Tourism spread sheet she was unable to identify where these fell on the sheet. Senator Phillips asked what range the Development Specialist I was? Ms. Fay said it was either range 13 or 18 as it was difficult to read. Senator Green inquired about what standards the State was held to regarding monies held for the Division of Tourism bids. Ms. Fay said section three was the applicable section. (Tape number 88 switched to Side B at log number 595.) Senator Mackie continued his comments to the committee regarding marketing contracts. There were plenty of reasons for everyone to come to an agreement so money was not lost. Senator Green wondered if the department needed a fall back if something happened or if everything fell apart? Senator Mackie responded. There was plenty of incentive to get this going because they would be cut from the budget otherwise. Senator Green asked if there was a provision to prevent the ATMC to say they were not going to do anything during a particular year. Ms. Fay explained and said they would be forced to take care of marketing matters in house, which they do not do at this time. She referred the committee to section seven in response to a question from Co-chair Torgerson. He also pointed out section six, and she said there was an exception provided for under AS 44.33.125(h). Co-chair Torgerson asked if ATMC was in agreement with the right of refusal. Ms. Fay explained that they would always put time lines on proposals. In order to set up contracts there would be time requirements for all parties involved. He further referred to subsection (b) of section seven, right of refusal. They would have to wait a long time for legislative approval and that might not be acceptable, Ms. Fay explained. She said there were things they could not do even if asked by the Governor or Legislature. Co-chair Torgerson felt that "unless authorized by the Legislature" should be included language. Co-chair Torgerson continued on to page five, lines ten and eleven. He asked clarification of this language. Ms. Fay responded that the intent of this section was that they wanted to address situations that would cause them concern. She used as an example the M/V Malaspina. They received an emergency appropriation from the Department of Transportation to do marketing, covering this matter. Co- chair Torgerson said he did not disagree with her comments but felt that was not what the language he cited above referred to. Senator Mackie said he thought the language was correct and covered what they wanted. Co-chair Torgerson said he would work out more complete clarifying language. Ms. Fay referred the committee to lines nine through eleven. This language provided the flexibility for matching funds. Co-chair Torgerson said it was too flexible. He continued on to page six, line six. He said it was his understanding that materials also included logo. If a new logo were to be designed for the State and then the organization ceased to exist would the State still be able to use the logo? Ms. Fay explained that she did not envision using contractual services for such a matter. Co- chair Torgerson felt it needed to be further clarified anyway. Ms. Fay said the language reflected SB 350 of last year. Senator Mackie concurred that it was the same language of SB 350 last year. Co-chair Torgerson thanked Senator Mackie, Ms. Fay and Mr. Balash for assisting the committee. Senator Mackie said he hoped all remaining work on the bill could be finished in this committee. KEN DOLE, Alaska Visitors Association was invited to join the committee. He said he was available to answer any questions the committee may have. He said they reached agreement with the Administration regarding matching funds. STEVE BEHNKE, Alaska Wilderness, Recreation and Tourism Association was invited to join the committee. He explained his representation of small tourism organizations. They would be concerned with any cuts to the Division of Tourism. They were also concerned about over all levels of funding for tourism as this affects directly the smaller organizations in relationship to world tourism. They are losing out around the world. The current levels of funding are too low and they do not feel that they can survive with any more cuts. LISA VONBARGAN testified via teleconference from Valdez. She said there was a need to impress on everyone the fact of funding being diminished gradually. There was a great concern about where funding would come from to support the outlined activities. The role of the Division of Tourism was important in helping to advocate the smaller organizations. She emphasized that it was necessary to have the continued support and advocacy of ATMC. KATHY TARR testified via teleconference from Kenai. She noted her appreciation of the work by the Senate Finance Committee on this bill. She felt that the questions raised by the committee would eventually be answered. She also supported consolidation and the new millenium plan. SB 107 put the mechanism in place for development of the marketing plans. Co-chair Torgerson SET ASIDE SB 107 and said he would work with the sponsor for a new CS. He requested amendments be submitted to his office to be included in the new CS. Co-chair Torgerson took a brief at ease at 10:21 a.m. and reconvened the committee at 10:30 a.m. He called SB 52.