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." DARWIN PETERSON, aide to Senator John Torgerson explained the changes made in the proposed CS before committee members. Many of the items conformed to changes made by the House Finance Committee to the companion bill. Some of the changes were as follows: Language was deleted that stated, "The tourism related contract awarded under AS 44.33.125(b) to a qualified trade association with the right of first refusal or subcontract by a qualified trade association." This was conforming changes to those made in the House version. Language was inserted to clarify the location of a visitor center in Tok, Alaska. Co-Chair John Torgerson said the intent was to ensure the location of the only state- operated visitor center. Direction was given as to what kind of research could be conducted in relation to tourism. This provision was not included in the House bill. Section 15 was amended to provide for marketing operations. Instead of stating that the procedures were to be directed by the department, the language gave the direction. This also conformed to the House changes. Language was inserted to read "or fails to accept the offer within a reasonable time" and related to the contracting of services. This was not contained in the House bill but was inserted here to show the Legislature's intent to the trade association. Co-Chair John Torgerson clarified this was to avoid contract delay. Clarification was given to allow the use of the state seal and other logos. The use of mailing lists and other data received as part of the contractual services was also stipulated. Conforming technical changes were made to apply to the substantive amendments. Senator Sean Parnell offered a motion to adopt the CS Version "I" as a Workdraft. Senator Al Adams objected. He wanted the sponsor to testify as to whether or not he agreed with the changes. SENATOR JERRY MACKIE, sponsor of the bill, stated he supported the changes. Many of the changes were technical and cleaned up the language. Senator Al Adams removed his objection and Version "I" was adopted. GINNY FAY, Legislative Liaison, Department of Commerce and Economic Development testified. Although she had not had an opportunity to review the CS, she felt the changes were fine. Senator Al Adams asked if new fiscal notes would be prepared. Co-Chair John Torgerson said the committee would draft fiscal notes to reflect the changes. Senator Jerry Mackie stated the changes wouldn't change the fiscal notes. Co-Chair John Torgerson concurred but noted he wanted to address the personnel services component of the note. Ginny Fay noted there should be an updated fiscal note. The department had found a mistake and submitted a revised fiscal note. NANCY LETHCOE testified via teleconference from Valdez in support of the bill. The committee began addressing the fiscal notes. Co-Chair John Torgerson noted he had requested that the department provide a breakdown. A House Finance Committee fiscal note would also be considered for this bill. Senator Jerry Mackie spoke to the fiscal notes. He supported the fiscal notes submitted to the committee with the Senate Resources committee substitute. He spoke to the location of staff positions, which were agreed upon with the department. These actually showed a reduction. Co-Chair John Torgerson said the biggest concern was with the personnel services line. Ginny Fay pointed out a misunderstanding in one of the fiscal notes. The House Finance Committee fiscal note was based on the millenium plan and was in error. She shared the same confusion that the reductions weren't happening more rapidly. She detailed the situation and showed how the latest fiscal note corrected the error. JOE BALASH, Staff to Representative Gene Therriault came to the table at the request of the co-chair. He was asked if the budget would be increased with the HFC fiscal note. He clarified that numbers the previous witness referred to were general funds only and the long-range discussion would address that. He detailed the fiscal information. There was discussion between Ginny Fay and Joe Balash on the matter. Co-Chair John Torgerson understood that the project development and the project assistance portions would not be funded through the department. There would be fewer positions funded. Senator Jerry Mackie affirmed. There was discussion as the differences of the number of positions requested in the various fiscal notes. Senator Jerry Mackie supported the existence of the Division of Tourism. It provided important functions. However, he noted that if many of the functions were removed, the same number of positions could not be justified. He spoke to the general budget situation. He was trying to be realistic. Co-Chair John Torgerson asked if the personnel services line totaled $890,400. Ginny Fay stated there would be a reduction from 16 staff to nine. Joe Balash countered that was not correct. There was a $100,000 difference in the personnel services line and $20,000 in the contract line for FY00. Co-Chair John Torgerson was inclined to recommend the committee adopts the HFC fiscal note. Senator Jerry Mackie asked the department to defend their argument that they needed to maintain the same level of staffing in light of the intent to scale down the division. Ginny Fay responded that the fundamental difference was that currently there was no staff in either the ATMC or the Division of Tourism to directly do marketing functions. It was contracted out and overseen by staff. If the bill passed, there would not actually be a privatization of marketing but rather a consolidation of marketing. Staff would be reduced in both agencies and the Division of Tourism would be required to oversee a contracting level that was four times greater that the present. Co-Chair John Torgerson was not convinced. Senator Loren Leman agreed with Co-Chair John Torgerson's assumptions on the first year, but looked at the second year and suggested merging the numbers of the two fiscal notes as the amount was higher in the house fiscal note than the division requested. Joe Balash commented on the contractual line item saying that the funding would be to fund initial contract services. After the initial contracts were made, fewer funds would be needed to oversee the contractors. Senator Jerry Mackie said the $200,000 was for tourism related research and had been provided for in the committee substitute. Senator Randy Phillips made a motion to direct the co-chair to write a new fiscal note similar to the house version and work out the details later. Senator Al Adams objected and spoke to his objection. By having the co-chair draft the new fiscal note, the remainder of the committee would not know the amount and allocation of funds between the personnel services and contractual services components. Co- Chair John Torgerson said he would write the fiscal note using the direction of the discussion held in this hearing. Senator Loren Leman did not have a problem granting the co- chair authority to write the fiscal note. He had concerns with the additional spending allowed in the second year. He didn't believe sufficient savings were presented. The motion to create a new fiscal note adopted by a vote of 6-2-2. Senator Loren Leman and Senator Al Adams voted against the motion. Senator Dave Donley and Senator Sean Parnell were absent. Senator Randy Phillips offered a motion to report CS SB 107 (FIN) out of committee with the new fiscal note. There was no objection and it was so ordered. [Pause]