HB 420-TOURISM MARKETING CONTRACTS  CHAIRMAN MACKIE announced HB 420 to be up for consideration. MR. JOE BALASH, aide to Representative Therriault, said HB 420 makes some adjustments to a piece of legislation that passed last year (SB 107). HB 420 will require DCED to contract with a qualified trade association on or before May of each fiscal year. Under the current law, most negotiating would be occurring during June and July, the peak months of the tourism season. To make that change, new transition language had to be included in HB 420. CHAIRMAN MACKIE announced that a Senate Labor and Commerce CS was drafted. SENATOR LEMAN moved to adopt Version H as the Senate Labor and Commerce committee substitute to HB 420. There were no objections and it was so ordered. MR. BALASH highlighted the changes in the Senate Labor and Commerce CS. He said the contract date is changed from August to April 1 in Sections 1 and 2. In Section 3, the transition language directs DCED to identify and issue its central components for the contract by May 1 for the FY01 contract. The qualified trade association (QTA) would then put together a marketing campaign plan and submit that to DCED by June 15. The format and detail of the marketing campaign plan should be similar to DCED's FY00 action plan, which was the best they could come up with. The contracts should be signed by July 1. This addresses the concerns DCED had with other versions of this legislation. In future years the transition steps are not part of the legislation. SENATOR MACKIE asked when the central components will have to be issued by. MR. BALASH replied by May 1. CHAIRMAN MACKIE asked if the contract must be signed by July 1. MR. BALASH said that is correct. CHAIRMAN MACKIE asked about future years. MR. BALASH replied that in future years the transition steps will not apply. CHAIRMAN MACKIE asked what will happen next year in terms of the deadline. MR. BALASH answered that the deadline is April 1, 2001 for a contract to be entered into for FY02. Number 1712 SENATOR LEMAN noted that the effective date failed in the House. He asked if the new transition language covers the challenges so that if this version passes the Senate, it will pass the House. MR. BALASH said his understanding of why the effective date failed is that DCED and members of the minority felt that May 1 for the current negotiations is too soon. That date was then pushed to July 1, which DCED staff said would be acceptable. MS. GINNY FAY, Deputy Director of the Division of Tourism, had not seen the committee substitute but, after a quick review, said she did not see a problem with the deadlines. This year DCED actually gave the QTAs the essential components during the second week of February. She thought that DCED would give the components to the qualifying associations earlier next year. She noted DCED always hoped to have a contract signed by July 1 and that the Legislature chose the August 1 date. MS. ANN CAMPBELL, Chair of the Alaska Travel Association (ATA), stated support for the committee substitute. She said that April 1 is an important date for them and she thought they could work with the June 15 deadline to get the campaign to DCED in time to sign the contracts by July 1. CHAIRMAN MACKIE asked if she could comment on the whole process of meeting with DCED. He said his understanding is that the industry's membership drive is going very well. MS. CAMPBELL responded that it is a little early, but that things seem to be working well regarding new members. The ATA has some fundamental differences with the DCED in terms of the level of detail that has to go into marketing plans and contracts and fundamental differences in terms of decision making. She did not know how long the process will really take. The ATA has agreed to some of the "big picture" goals for the program but how long it will take to grind out the details of the contract remains to be seen. ATA is committed to having its marketing plan ready by June 15. SENATOR MACKIE asked Ms. Fay if she saw any major obstacles that might cause a problem regarding the contract. MS. FAY answered that the ATA has had the components and goals for two months. They have been meeting to discuss how to measure success. She did not think DCED could move forward to put together a contract until she sees a marketing plan, which will take time. That is what she is waiting for. SENATOR MACKIE asked if she thought that could be accomplished under the time line in the bill. MS. FAY said it is a pretty tight time line. She commented the June 15 deadline to submit a marketing plan will give DCED two weeks for review which is very tight. She stated she would like the deadline for the marketing plans to be earlier to give DCED more time, especially since the components were provided in February. CHAIRMAN MACKIE said he was the prime sponsor of the legislation last year and it was clearly the intent of the legislature to turn over the marketing to this group. He hoped that DCED is not trying to exercise all the controls it had before and that it will allow the group to do the marketing. MS. FAY stated it is the Legislature's prerogative. She reiterated that it is a short amount of time given the level of importance of the issue. CHAIRMAN MACKIE asked, in terms of the makeup of the organization, how she felt about the concerns DCED had about the small tour operators. MS. FAY said that the sectors had been represented, although there were comments that rural Alaska hadn't been represented. SENATOR LEMAN asked what a more reasonable time frame would be to review the plan and prepare the contract. MS. FAY replied that she hoped to see a marketing plan before June 15. She suggested June 1. SENATOR LEMAN thought more time would be reasonable and suggested rolling the other dates back. CHAIRMAN MACKIE commented that the transition dates were changed because of the concerns DCED had about not being able to meet the original deadlines. He said the industry and trade groups will write the marketing contract and do the marketing. If one believes DCED will be doing that, the bill should not have been introduced in the first place. He asked Ms. Campbell to comment on the fact that she requested the CS to accommodate concerns DCED had with meeting the original deadlines. MR. BALASH said that is correct and explained the June 15 date was given as a yardstick and the May 1 deadline was offered to give the QTA six weeks to finalize a marketing plan together after the components are determined. The ATA's hope was that the QTA membership at large could comment on this which is why the longer period of time was thought to be beneficial to the small business owners. CHAIRMAN MACKIE said his understanding was that there has been a huge response in terms of the membership wanting to be part of it but there is still a significant portion of the potential membership that first wants to see what the marketing contract will look like. He pointed out they are having to build support within the potential membership and craft a contract that is acceptable to the State based on the essential components. TAPE 00-14, SIDE B  Number 2400 MS. FAY said she is confused because although DCED already produced the essential components in early February, it appears to say they might have to be redone. MR. BALASH replied that he was under the impression there had been some negotiations between industry and the Department about what the components would be. The intent of the sponsor is to have the components finalized by May 1 and then to give the industry an opportunity to develop the marketing plan and allow their membership to see it and comment. CHAIRMAN MACKIE said if there are any other issues with the Department, the date certain of May 1 gives the QTA six weeks to put together a marketing plan and present it to its membership for approval. After that, there will be a couple of weeks to do the negotiating and sign the contract. MR. BALASH agreed with that. MS. FAY noted the ATA Board adopted the components given to it by DCED on February 17. She questioned whether this legislation undoes that process. CHAIRMAN MACKIE said it does not, it just provides two more weeks to address anything else that remains unresolved. He noted the marketing plan could be submitted much earlier than June 15 unless DCED comes up with more issues. MS. FAY said she just wanted to be clear about whether she is being asked to redo something she is already done because someone is not happy with what she has done. CHAIRMAN MACKIE said he is not aware of what she has given them and he has not asked. He pointed out if she feels she has given them all of the components then the May 1 deadline means nothing. He said everyone is interested in the same end result so it is not necessary to read things into the dates. SENATOR HOFFMAN asked how the time lines affect the signing of the contract as they relate to fundraising the matching funds required for the contract. Number 2216 MS. CAMPBELL replied that they are on track for raising the required 30% matching funds (around $2 million). The issue is when they will contribute the match to the program. Some of it will be raised in the spring and summer and some of it would be raised in the fall and winter. CHAIRMAN MACKIE said they will not get the dollars until they have the match, whether it is in installments or whatever they work out with the Department. He pointed out there are no set time lines because it takes time to raise that kind of money. SENATOR LEMAN moved to pass SCSHB 420(L&C) from committee with individual recommendations. There were no objections and it was so ordered.