SENATE BILL NO. 194 "An Act creating the Alaska Tourism Marketing Board and relating to tourism marketing." 9:32:22 AM SENATOR LESIL MCGUIRE, explained SB 194. She referred to the Sponsor Statement (copy on file). SB 194 creates a structure for marketing by the State of Alaska and develops a funding intent formula that can be supported by the legislature, the administration, and the private sector, so that tourism marketing is professionally led and managed. The Alaska tourism board would be created in statute and comprised of a minimum of twenty one members. Eighteen of those would be recommended by ATIA, one member of the board from the Department of Commerce, Community and Economic Development, one member would be appointed from the House, and one member appointed from the Senate. Tourism continues to be a growing, renewable industry that is the second largest employer in the state. Over 1.9 million visitors came to Alaska from October 2012- September 2013 spending over 1.8 billion dollars. This bill is an important step in continuing the growth of one of our most important industries. Senator McGuire noted that tourism in Alaska was a statewide issue. The marketing for a tourist across the state varied area to area, and there were different categories for each tourist. Senator McGuire noted that there was a zero fiscal note, because there was money that was already allocated to cover the cost of tourism marketing in the state. Senator McGuire outlined the sections of the bill. Section 1 addressed the purposes of the board, which stated that expansion and growth of the state's visitor industry will benefit all of Alaska. She stated that the TAPS revenue was declining, and the benefits for increasing new development were still unknown. She stressed that Alaska must continue to diversify its economy. She shared that the board would help to increase the number of job opportunities and training for Alaskans. Section 2 formalized the relationship between Department of Commerce, Community and Economic Development (DCCED) and the board. She stated that there were different governors with different emphases over the years. The section's intent was to ensure that the board would stay intact through perpetuity. Section 3 set up the board. There would be at least three nominees submitted by Alaska Travel Industry Association (ATIA), because there was an effort to not politicize the board. The board's focus would be tourism marketing for Alaska. The board would meet at least twice a year. She looked at page 4, which addressed the rotation of terms to reflect some institutional knowledge. There would be six members who would serve three terms; six members serving two terms; and six members serving for one term. 9:39:34 AM Co-Chair Meyer stated that the committee was apprehensive about creating new boards and commissions. He felt that this board seemed to be different, and that the tourism industry should be exploited. He wondered if the sponsor would be amenable for a sunset date and allow the board to be audited. Senator McGuire replied in the affirmative. Co-Chair Meyer looked at page 4, and noted there were 21 members, and wondered what would happen to the other three. Senator McGuire explained that those three members would follow their appointment. Co-Chair Meyer noted that he was unsure about the commissioner appointments. Senator McGuire stated that the DCCED commissioner or their designee should be a constant presence on the board. Co-Chair Meyer queried the effective date. Senator McGuire responded that the effective date would be based on whether the industry would want an immediate effective date. Co-Chair Kelly looked at Section 3, and appreciated the value of elected individuals in choosing appointed individuals. 9:44:28 AM Senator Olson felt that a large board would result in a cumbersome work, and work may be slowed down because of so many personalities. Senator McGuire replied that there was often an exclusion of one region or a type of tourism operator. She felt that including all aspects of the industry was essential to the functioning of the board. Senator Hoffman looked at page 2, line 31, and noted that 18 members would represent different regions of the state. He wondered if there could be an additional language that specifies, "including, but not limited to, the Arctic, the Interior, the Southcentral, Southeast, and Southwest." Senator McGuire replied that she would love to include that specification. Senator Bishop would like some assurance that the 18 members held some smaller operators as well. Senator McGuire replied that the intent was to include some smaller businesses, and many letters of support indicated similar requests for inclusion on the board. 9:49:10 AM Vice-Chair Fairclough looked at page 3, line 16, and noted the requirement for a quorum. She wondered if that would create a challenge depending on travel. She felt that the quorum may be hard to reach, because of the large number of members and possible conflicts or constraints. Senator McGuire replied that she was open to the change in language related to quorum requirements. Senator McGuire explained that travel and per diem were only paid for the two legislative members and the commissioner. BILL PEDLAR, CHAIR, GOVERNMENT RELATIONS COMMITTEE, ALASKA TRAVEL INDUSTRY ASSOCIATION, introduced himself. He testified in support of SB 194, and remarked that diversity in the travel industry made the industry very strong. He felt that the marketing board should represent that diversity. He stressed that the industry was careful to not get too specific. He remarked that achieving a quorum had never been a problem. He felt that the size of the board allowed for a wide range of inputs and values related to Alaska tourism. Senator Olson queried the Mr. Pedlar's opinion on inserting a sunset into the legislation. Mr. Pedlar responded that that it was good business to include a sunset date, because everything deserves to be reviewed. 9:55:43 AM Senator Olson queried a fair number of years to determine the effectiveness of the board. Mr. Pedlar replied that a five or six year window would be prudent. He stated that marketing had a cumulative effect. Vice-Chair Fairclough remarked that there was sometimes hesitation in setting the sunset date too far ahead initially, in order to prevent bad habits. She wanted to ensure public participation, meeting notification, and handling the investment properly. She supported a sooner sunset date of the board. She furthered that there were different ways of establishing quorums on boards, and remarked that legislative members may need to address state business of greater priority. She wondered if a quorum may be met by requiring at least one member of each region attending the meeting, rather than basing a quorum on a majority of participants. Mr. Pedlar replied that nine voting members attending would be fine for a quorum. He furthered that he had been involved in cooperative marketing in his career, and had never had an issue in establishing a quorum. He stressed that the industry members would pay their own way to attend the meetings, which indicated a high level of commitment. 10:00:32 AM ROBBIE GRAHAM, ASSISTANT COMMISSIONER, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,(DCCED) stressed that it was important to recognize the collaboration with the state and the travel industry. She shared that there was a recent, formal collaboration through a Memorandum of Understanding (MOU) that was signed in FY 12 and reiterated in FY 13. She felt that she and the DCCED commissioner were uniquely qualified to implement the program based on their experiences in the tourism industry. She stated that the tourism marketing program was in the Division of Economic Development, and she pointed out the expertise of the leaders of those programs. Ms. Graham highlighted some of the accomplishments of the tourism industry marketing program. She stated that summer visitation had reached similar numbers to 2007 and 2008 at 1.96 million visitors. The annual conversion rate was 12 percent, and pointed out that over a four year period there was 30 percent conversion rate. The state had generated 16 million through the public relations program and Alaska tourism promotions were recently published in the New York Times and other broadcast and social media. She stated that there was a cultural tourism program, and focused on Northwest Alaska. There was a movement to take the program statewide in the next years. There were international efforts that were enacted to enhance the 2014 season. CHRIS PELOSO, ATTORNEY, DEPARTMENT OF LAW, JUNEAU, explained some technical problems with the bill. He looked at page 2, line 30, which read, "four members from ATIA." He stated that traditionally bills did not highlight a specific organization. He looked at language in AS 43.98.040 which involved a similar organization. That statute stated that "the members be nominated from the leading nonprofit trade association." He felt that specifying a specific organization runs the risk of invalidating the statute, if the organization is dissolved at any time. He also looked at page 3, line 9, Section 3 which gave power to appoint members of the board to a private organization and only gave the governor a form a veto of the recommendations. He felt that it was an unconstitutional limitation of the governor's authority. Under the Alaska Constitution, the governor was the only appointing authority, unless expressly addressed in the constitution itself. The legislature could no more provide to the governor to share power with an agency created by it than it can share the power itself. He suggested that the ability to appoint members solely rested with the governor. 10:08:21 AM Vice-Chair Fairclough requested amended language. Mr. Wilson suggested that the language read, "have the governor appoint members." Co-Chair Meyer wondered if Ms. Martin agreed with the perspective of Mr. Peloso. HILARY MARTIN, LEGISLATIVE LEGAL SERVICES, JUNEAU (via teleconference), replied that naming the organization was a decision that the legislature should make. She understood the concern regarding changing the statute, if ATIA were dissolved. She felt that there was no clear answer regarding submitting a list of requested individuals for the governor to choose from. Senator Dunleavy asked if boards existed with the similar processes outlined in the legislation. Ms. Martin asked for clarity of the question. Senator Dunleavy asked if the governor traditionally appointed individuals based on a list of recommendations. Ms. Martin replied that she believed that there were other boards that submitted lists, but she could not name those boards. Co-Chair Meyer encouraged the sponsor to work with the Department of Law to ensure the constitutionality of the legislation. Senator McGuire replied that she was unaware of the opinion of the Department of Law. She announced that Legislative Legal had approved the draft, and was willing to amend the language to the leading nonprofit in the industry. Regarding to the appointments, she was willing to say that the list was recommendations. She stressed that the recommendations must be submitted by the public to ensure transparency. SB 194 was HEARD and HELD in committee for further consideration. 10:16:05 AM AT EASE 10:17:28 AM RECONVENED 10:17:48 AM RECESS 5:14:52 PM RECONVENED