HOUSE FINANCE COMMITTEE May 6, 1998 4:35 P.M. TAPE HFC 98 - 159, Side 1. TAPE HFC 98 - 159, Side 2. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 4:35 P.M. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Kohring Representative J. Davies Representative Martin Representative G. Davis Representative Moses Representative Grussendorf Representative Mulder Representative Foster was not present for the meeting. ALSO PRESENT Jeffrey Bush, Deputy Commissioner, Department of Commerce and Economic Development; Kristie Tibbles, Staff, Senator Drue Pearce; Anne Carpeneti, Assistant Attorney General, Department of Law; Tina Lindgren, Executive Director, Alaska Visitors Association, Anchorage; Alan Lemaster, (Testified via Teleconference), Gakona; Officer Glen Klinkhard, (Testified via Teleconference), Anchorage Police Department, Anchorage; David Lee, (Testified via Teleconference), Valdez. SUMMARY SB 323 An Act relating to sexual offenses, to those who commit sexual offenses, and to registration of sex offenders; amending Rule 6(r)(2), Alaska Rules of Criminal Procedure; and providing for an effective date. HCS CSSB 323 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal notes by the Department of Corrections and a zero note by the Department of Administration dated 3/12/98. SB 231 An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date. SB 231 was HELD in Committee for further consideration. SB 350 An Act relating to tourism; relating to grants for tourism marketing; eliminating the division of tourism and the Alaska Tourism Marketing Council; and providing for an effective date. HCS CS SB 350 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Commerce and Economic Development dated 5/2/98. SENATE BILL NO. 350 "An Act relating to tourism; relating to grants for tourism marketing; eliminating the division of tourism and the Alaska Tourism Marketing Council; and providing for an effective date." JEFFREY BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT explained that CS SB 350 (FIN) would provide an exemption from the procurement code for the tourism marketing contracts. He noted that a prior version of the legislation was HB 478. In the Senate Finance Committee, a comfortable compromise with the Alaska Visitors Association (AVA) and the Administration was worked out. Mr. Bush explained that the legislation would eliminate the Alaska Tourism Marketing Council and would provide marketing for Alaska tourism through private industry. This industry would be called a "qualified trade association" and would be responsible for broadly representing the tourism industry and which would include specific sectors listed within the bill. Mr. Bush noted that the legislation would provide marketing dollars, appropriated on an annual basis to the Division of Tourism. The Division must then define what the tourism- marketing program is. All funding would be placed on a contractual line in order to decide what should be matched. The bill requires a 30% match in the first year, that would escalate to a 60% private section match by the third year. Assuming that private industry contributes sixty cents on the dollar, would give them the right to represent any available program. Co-Chair Therriault asked if the language was always the "first right of refusal". Mr. Bush explained that language had been added in the Senate Finance Committee on Page 3, Lines 21-25. Co-Chair Therriault MOVED that the work draft 0-LS1695\P, Cook, 5/6/98, be the version before the Committee. Representative Martin OBJECTED. He stated that he did not "like" the title and questioned if the Alaska Tourism Marketing Council was being eliminated. Co-Chair Therriault commented that was the intent. Representative Martin noted that he disagreed with private industry receiving money from the State and then using it to benefit the small businessperson. A roll call vote was taken on the motion. IN FAVOR: Moses, J. Davies, G. Davis, Grussendorf, Kelly, Therriault OPPOSED: Kohring, Martin Representatives Foster, Mulder and Hanley were not present for the vote. The MOTION PASSED (6-2). In response to Co-Chair Therriault's concern, Mr. Bush explained, originally, the bill was structured so that it would take State money and put give it to the private sector for a match. There was concern within the Administration that some important elements would be removed from the program, in particular, that small business representation would be lost in the marketplace. Consequently, the bill was structured so that the State would define what elements must go into a tourism program. At this time, it has been established that entire amount is not provided up front, but that instead, the State retains enough control to define the elements necessary in a tourism program. Mr. Bush elaborated on the Alaska Visitors Association's perspective of the bill. The legislation would create an incentive for the trade association to make sure that all elements are represented in the industry. The only way to make money is to represent the entire piece of the industry. The income of the association would be dependent upon membership fees, dues and voluntary contributions. Representative Martin asked how the legislation would protect the small "mom and pop" type business enterprise. TINA LINDGREN, EXECUTIVE DIRECTOR, ALASKA VISITORS ASSOCIATION, ANCHORAGE, acknowledged that Representative Martin's concerns were shared throughout the industry. She cited that the proposed work draft was sent to 3,000 businesses around the State before it came before the Legislature. Many of those businesses shared the same concern, although, in the end, 85% requested that it be brought before the Legislature. Ms. Lindgren continued, pointing out that State funds for promotion and advertising are declining. The point of the legislation is addressed toward small business, because without increased marketing, they can not survive on their own. She added, the plan calls for Alaska Visitors Association to be dismantled. At that time, each business will be allowed one vote, so that everyone in the program will have equal power. Co-Chair Therriault asked who would control access to the information. Mr. Bush responded that at this time, it is written that the State and the trade association will jointly own the information. Co-Chair Therriault advised that there is a prohibition on using those funds for lobbying municipality or State agencies. Mr. Bush noted that there is a restriction included in the legislation which would limit access to the mailing lists. Ms. Lindgren pointed out that Section #8 repealed ATMC and purposes related to ATMC. Mr. Bush explained the difference between Sections #9 & #10; Section #9 adopts the substantive bill with a 30% match requirement effective July 1, 1999; Section #10 adopts an increase private industry match requirement from 30% to 60% effective July 1, 2001. Co-Chair Therriault asked if the FY99 budget would continue to operate at status quo. Mr. Bush replied that the fiscal note assumes the status quo budget, although,in fiscal year 2000, it would include adjustments to the match requirements. The note would eliminate personnel services from ATMC and the contractual difference would be the elimination of the program receipts. Representative J. Davies spoke to Amendment #1. [Copy on File]. He explained that the amendment would clarify the intent, implied in Section #(c). Mr. Bush stated that the only problem the State would have with the amendment would be inclusion of the 30% match requirement. He believed that there could be contracts with the qualified trade associations in which a match would not be feasible. Representative J. Davies offered a technical change to Amendment #1, placing a period after "contract" and deleting the material: "Provided that each contract be matched by 30% by the successful applicant". Mr. Bush believed such action would solve the problem. Representative J. Davies commented that the reason the language had been included was to stipulate the right of first refusal. Mr. Bush explained that there was a right of first refusal provided that there was a match for all contracts. If there is no match, then the contract is free to go to anyone else. Essentially, whenever a contract is entered into with the trade association, they will be required to match. Ms. Lindgren spoke to Amendment #1. The amendment would not preclude another contract. She noted for the record that AVA would not want to see this dilute the idea of putting the majority of destination marketing to a single contract with the State. Representative Mulder believed that the amendment would put the Director of Tourism in a strong position for marketing and dealing with the agency. Co-Chair Therriault advised that the proposed amendment would amend section (b), clarifying that the contract would be with a single trade association. He commented that the information specifies that there could be multiple contracts and that each agency has the first right of refusal. Mr. Bush interjected that there is no way that the Director of Tourism would have the power to "chop it up" and deny it to a trade association. Representative J. Davies MOVED to adopt the amended Amendment #1. There being NO OBJECTION, it was adopted. In response to concerns by Representative Martin, Mr. Bush remarked that the State has considered the possibility of the association not meeting the match. That concern will be addressed in the contract process to assure that the match money is there. Ms. Lendgren advised that AVA has had a contractual arrangement with the Department since 1989, and that meeting a match has never been an issue. She emphasized that the Department has a lot of leeway in writing the contract document and did not foresee that being a problem. DAVID LEE, (TESTIFIED VIA TELECONFERENCE), VALDEZ, testified in support of the legislation. He noted that there was tremendous interest for the bill in rural Alaska. He added that the most important aspect of the legislation for the rural area, would be the independent traveler and the international marketing. Mr. Lee wanted assurence that those efforts would continue to be supported. ALAN LEMASTER, (TESTIFIED VIA TELECONFERENCE), GAKONA, commented that he is a small business person who supports the bill 100%. Representative Mulder MOVED to report HCS CS SB 305 (FIN) out of Committee with individual recommendations and with the accompany fiscal note. There being NO OBJECTION, it was so ordered. HCS CS SB 350 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Commerce and Economic Development dated 5/2/98. (Tape Change HFC 98- 159, Side 2). SENATE BILL NO. 323 "An Act relating to sexual offenses, to those who commit sexual offenses, and to registration of sex offenders; amending Rule 6(r)(2), Alaska Rules of Criminal Procedure; and providing for an effective date." OFFICIER GLEN KLINKHARD, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE POLICE DEPARTMENT, ANCHORAGE, testified in support of the legislation. He commented that in the last year, the Anchorage Police Department has found many people participating in child pornography on Internet. The legislation has been written to address the experiences of the law enforcement and police officers throughout the State. Officer Klinkhard stressed that the penalties are not keeping up with the technology. Representative Martin questioned why the State should address a federal government responsibility. Mr. Klinkhard replied that many Alaskans and citizens of other states have realized that this is "child abuse" and that the penalties should be more severe. He pointed out that the proposed legislation would put Alaska in line with what is occurring throughout the rest of the country. The federal government is not willing or able to address all the cases which exist. Representative Martin asked if there were other states which do not have laws covering the distribution of child pornography. Mr. Klinkhard replied that most fall under the decency act which would range from a misdemeanor to a felony depending on the criteria. Representative Mulder reiterated that the proposed law would more clearly define the "intent to distribute" than what currently exists in federal law. Mr. Klinkhard agreed, pointing out that State law more clearly defines the difference between "for personal use" and "for distribution". Mr. Klinkhard noted that now there is access to large quantities, which are being traded. In summary, he stated that stopping child pornography in some cases has accomplished stopping sexual abuse of children. Representative Mulder spoke to the large number of pieces collected and the degree of "unbalance" that trends indicates. Mr. Klinkhard added, the larger the number of materials collected, often indicates that the "collecting" no longer brings "joy" for the perpetrator. Representative J. Davies inquired as to the prevention effort of child pornographic materials distributed on the Internet. Mr. Klinkhard remarked that officers now are trying to track the details of supply and demand. Representative G. Davis asked when "possession" would be classified as a felony. Mr. Klinkhard explained that the classification would change if a person was knowingly keeping and accumulating material. The unwritten rule is that more than 3 pieces of material must exist to show a jury. KRISTIE TIBBLES, STAFF, SENATOR DRUE PEARCE, commented that Senator Pearce had requested consideration of Amendment #3. [Copy on File]. The language of the amendment conforms to language contained in HB 375. Co-Chair Therriault MOVED to adopt Amendment #3. There being NO OBJECTION, it was adopted. ANNE CARPENETI, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, spoke to Amendment #2, previously adopted in Committee on Page 3, Line 2, the insertion of "knowingly", which describes the level of crime. Ms. Carpeneti pointed out that the substantive section already includes the "knowing" and would not be necessary in Section #7. The other statutory location of the language is AS 11.61.127, the Possession of Child Pornography. She stated that to place "knowingly" in that section was not helpful. Representative J. Davies stated that he would support changing it to a conceptual amendment and placing it in the proper section. Representative Kelly understood that possession equaled "knowingly". Ms. Carpeneti replied that was not necessarily true. Representative J. Davies indicated that he would be more comfortable including language to address that specific concern. Ms. Carpeneti recommended that the proper placement would be AS 11.61.127(a), a provision which is not included in the bill. Co-Chair Therriault MOVED to RESCIND action on Amendment Representative J. Davies WITHDREW Amendment #2. There being NO OBJECTION, it was withdrawn. Representative J. Davies MOVED the new version of Amendment new statute referenced by Ms. Carpeneti. There being NO OBJECTION, the amendment was adopted. Representative Martin MOVED to report HCS CS SB 323 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. HCS CS SB 323 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Corrections and a note by the Department of Administration dated 3/12/98. SENATE BILL NO. 231 "An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date." Co-Chair Hanley provided members with a copy of the proposed bill and amendments which were passed on the Senate floor. The spreadsheet provides a comparison of the slow track supplemental. He added that the latest draft of the reappropriation bill was available, as was a sectional analysis for that legislation. SB 231 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 5:50 P.M. H.F.C. 9 5/06/98 p.m.