HOUSE BILL NO. 160 "An Act establishing and relating to the Alaska visitor industry investment fund; relating to matching funds for state tourism marketing contracts with qualified trade associations; and providing for an effective date." 9:57:35 AM REPRESENTATIVE BOB HERRON explained HB 160. He stated that the General Fund amount would not exceed $12 million regardless of the amount put forward by trade associations. The legislation would require a group within a qualified trade association to consist of three persons appointed by the governor, and six selected by the qualified trade association. The bill contained a limit for lobbying and repealed AS 44.33.125(d). 9:59:24 AM Co-Chair Stedman referred to page 3, line 9 of the legislation. He clarified that public access would not be excluded. Co-Chair Stedman referred to two fiscal notes attached to the bill. 10:00:50 AM SUSAN K. BELL, COMMISSIONER, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT explained that recently there had been a wane in visitors to the state. She said that over the last two years 5,000 jobs in the industry had been lost. She stated that the issue was statewide, and stressed that there were signs of recovery and that this was an important time not to back off the states marketing efforts. She felt that the bill was a piece of the strategy. She hoped the state would continue the investment at $16 million, which would take a combination of legislation and budget work. Co-Chair Stedman commented that the economy had recently emerged from a worldwide recession. He pointed out that there had been a retreat in the economy partially due to the issue of the cruise ship head tax. He felt that the two combined had had a significant impact in visitor decline. Ms. Bell responded that the 2009 independent markets were affected by the recession. She thought that changes in the tax regime and interactions with various markets had played a role. She stated industry research showed a cruise recovery, and there were slight increases on the horizon. She stressed increased marketing and the change in the dynamics with the industry would aid in recovery. 10:04:12 AM Co-Chair Hoffman wondered if there were any concerns regarding differences in the strategies related to marketing the seafood and the tourism industry. Ms. Bell replied that the seafood industry marketing was a model for the tourist industry. She said and appropriate tax structure, healthy state funding and communication with the market were all factors that had been incorporated. 10:05:26 AM PATTI MACKEY, PRESIDENT, KETCHIKAN VISITORS BUREAU, testified in support of HB 160. She stressed the importance of funding for tourism marketing. She pointed out that revenues had dropped and small business closures had occurred across the state. She felt that there should be a comprehensive marketing strategy in place. She stated that due to the FY 11 appropriation, the state achieved a substantial increase in visibility. Television spots were airing on 7 different networks, and magazine and internet advertising was significantly expanded. Maintaining the level of state funding was necessary to open the door to future growth and development. Co-Chair Stedman looked at the language of page 3, line 8, specifically referring to exclusions of funding lobbyists. He felt that the language was odd. Ms. Mackay remarked the language referring to lobbyists was not a n issue with the organization. Co-Chair Stedman clarified that the organization was comfortable not having paid lobbyists in the Capitol Building working for additional funding. Ms. Mackay replied that she was willing work with the legislation if it would result in a sustainable marketing program. 10:10:18 AM Senator Thomas understood that as long as the trade association was putting in 50 percent, the state could contribute up to $12 million. Representative Herron explained that the formula and assured the committee that the total contribution from the state would be $12 million regardless of the trigger or the formula combination. Co-Chair Stedman reiterated the question concerning paid lobbyists. He felt it was strange that a marketing entity would be barred by statue from hiring a paid lobbyist. Representative Herron responded that the provision had surfaced in the House Finance Committee CS, and had remained without debate. 10:12:32 AM Senator McGuire referred to discussions concerning changing the match once it exceeded $3 million. Representative Herron replied that the funding level in the department was $16 million of General Funds. Changing the transitional trigger might get closer to current year preferred funding levels. Senator McGuire wondered if he would be supportive of the concept. Representative Herron responded that he was supportive of the concept of the amendment and helping the industry. 10:14:35 AM Senator Ellis understood that the governor would appoint three cruise ship industry representatives to the marketing board of 9, whereas the current 32 member marketing board offered only three seats to the industry. He queried the dramatic increase of industry influence on the new marketing board. Representative Herron replied that there had been concern about such a dramatic change. He added that there was no requirement of significant financial input from the cruise interests. The hope was that there would be additional attention and possible additional financial contribution to a marketing campaign because of the new board structure. 10:16:52 AM Co-Chair Stedman pointed out that the industry would have one-third control of the board, regardless of their contribution. Representative Herron said that the scenario had been recognized. 10:17:28 AM HB 160 was HEARD and HELD in committee for further consideration. 10:17:40 AM AT EASE 10:17:59 AM RECONVENED 10:18:01 AM RECESS