CS FOR HOUSE BILL NO. 147(RLS) "An Act relating to matching funds and state money for state tourism marketing contracts with trade associations; and providing for an effective date." 10:15:34 AM PETE FELLMEN, STAFF, REPRESENTATIVE JOHN HARRIS, presented an overview of the bill. He reported that HB 147 is basically the same bill as SB 144, sponsored by Senator Lesil McGuire. The difference between the two bills is that the finance committee believed it prudent to limit the amount of funds that the Office of Economic Development could spend on tourism to $9 million. Mr. Fellman noted a sunset provision for 2011 to give the tourism industry an opportunity to grow and self finance the advertising. He reminded the Committee that state tourism generates $1.5 billion into the state's economy. He noted that for every $1 the state contributes, $1.68 in returned to the state. The economic boom from tourism flows throughout every region of Alaska and touches many individuals and businesses. Mr. Fellman disclosed that only nineteen other states require a private sector contribution. Only Florida and California have private section contributions more than Alaska. Alaska ranks thirty-six in the nation in public sector funding. 10:19:10 AM Senator Elton remained undecided on this approach because state marketing efforts, with seafood and tourism, usually require a market test. This market test asserts that the benefiting industry believes they are receiving enough value to contribute themselves at a certain level. His hesitation to this approach is that the industry is not contributing at the same level as before. 10:20:19 AM Mr. Fellman responded that when the cruise ship tax became part of the state statute, with cruise lines paying money directly to the state's budget, they withdrew $2 million that they had been investing in tourism. At one time Alaska was putting in $20 million for tourism marketing but that has since decreased. Senator Elton interjected that the cruise lines are not paying the tax directly but charging the head tax to the passengers. 10:22:05 AM Senator Olson inquired about the distribution level between urban and rural Alaska. 10:22:25 AM Mr. Fellman responded that there are a thousand tourism businesses in the ATIA (Alaska Travel Industry Association) and that money is distributed throughout the state depending on how much is contributed. A plan would be developed to disseminate the money throughout Alaska's various regions. 10:22:53 AM Co-Chair Stedman reviewed the one fiscal note for $9 million. 10:23:07 AM Co-Chair Hoffman noted he had similar concerns as Senator Elton and wondered if more participation by industry could be considered. He asked if the bill sponsor would consider a lesser amount than listed in the bill 10:24:07 AM Mr. Fellman responded that the present amount in the bill is about the limit that the tourism industry could support. The tourism industry will contribute $2.7 million to the marketing campaign and can not contribute more at this time. He remarked that if Alaska tourism begins to fall, then the amount businesses will be able to contribute will also decline. He stressed that it was important for Alaska to help this industry until they are able to support themselves. Co-Chair Hoffman questioned why is there the belief that the tourism industry is declining. He assumed Alaska tourism was growing. He remarked that the cruise line industry has grown tremendously in past years with tourists commenting that Alaska sells itself. 10:26:27 AM Senator Elton noted that it was hard for him to hear a response that that says the tourism industry can not afford more. He remarked that the tourism industry considers itself larger than the seafood industry but the marketing program for the seafood industry puts in twice a much as the tourism industry and receives only $1 million from the state. 10:27:36 AM Mr. Fellman responded that the fishing industry has received considerable money in the past to help develop the industry. He believed about $125 million has been invested in marketing to help the fishing industry develop. He noted that tourism was a renewable resource that will continue to generate income and grow. Tourism money benefits the entire state. 10:29:26 AM Senator Elton reported that as the former Executive Director of the Alaska Seafood Marketing Institute the seafood industry received approximately $4 million a year. He stressed there must be a market test and he did not believe it had been met. 10:30:23 AM BRETT CARLSON, VOLUNTEER CHAIR, ALASKA TRAVEL INDUSTRY ASSOCIATION testified via teleconference and spoke in support of the bill. He reminded the Committee that ATIA represents over one thousand businesses throughout Alaska. ATIA believed that the state can help Alaska travel businesses and nurture the private sector economy to contribute revenues to local and state government. Mr. Carlson stressed that Alaska's tourism marketing funding is broken. ATIA believes that this bill represents a fix. The $9 million fiscal note is less than the $9.5 million in funding that passed out of the Senate Finance Committee last session. It identifies a sustainable travel industry generated funding source for Alaska's tourism marketing program. 10:33:22 AM Co-Chair Hoffman revealed how proud he was that Alaska was leading the way in getting participation from industry and business and hoped other states would take that initiative. He judged it would be better to get more industry and business participation. 10:34:09 AM HB 147 was HEARD and HELD in Committee for further consideration.