MINUTES SENATE FINANCE COMMITTEE April 13, 1999 9:06 AM TAPES SFC-99 #88, Sides A and CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 9:06 A.M. PRESENT In addition to Co-chair Torgerson, Senators Sean Parnell, Loren Leman, Gary Wilken, Al Adams, Pete Kelly and Lyda Green were present when the meeting was convened. Senator Randy Phillips arrived shortly thereafter. Also Attending: SENATOR JERRY MACKIE; JOE BALASH, staff to Representative Gene Therriault; GINNY FAY, Legislative Liaison, Department of Commerce and Economic Development; KEN DOLE, Alaska Visitors Association; STEVE BEHNKE, Alaska Wilderness, Recreation and Tourism Association; aides to committee members and other members of the Legislature. Attending via Teleconference: LISA VONBARGAN, Valdez; KATHY TARR, Kenai. SUMMARY INFORMATION Co-chair Torgerson called the meeting to order and said he would follow the order of the agenda. SENATE BILL NO. 107 "An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date." CS FOR SENATE BILL NO. 107(L&C) "An Act relating to tourism and tourism marketing; eliminating the Alaska Tourism Marketing Council; and providing for an effective date." SENATOR JERRY MACKIE was invited to join the committee. He explained the bill per his sponsor statement, which he read into the record. He said a new CS had been discussed but a draft had not been prepared nor been presented to the committee. According to the Senator, all marketing would be done under contract. They have worked closely with Representative Gene Therriault regarding this bill. It was his feeling that not only would ATMC go away but that there would be a reduction in personnel. A draft of House fiscal notes had been prepared with the assistance of Rep. Therriault and he asked permission for Representative Therriault's staff to address them. JOE BALASH, staff to Representative Therriault was invited to join the committee. He explained the House fiscal notes. Co-chair Torgerson asked if there had been a fiscal note from the department before the House made their own. Mr. Balash indicated they did, but after some changes at the first committee of referral. Co-chair Torgerson felt they were getting ahead of themselves in discussing the fiscal notes. (Drafted house fiscal notes were distributed to the committee.) Senator Mackie noted that he had just received the fiscal note from the department. Co-chair Torgerson advised that he had also only just received it. Senator Leman asked for further explanation from Senator Mackie regarding the department fiscal note as compared to the draft from the House. Senator Mackie explained the reduction after FY 01 and that it would be reduced down to $4.7 million by the year FY 03. Senator Wilken asked where the $7 million came from. Senator Mackie said it was in this year's budget. Senator Mackie said he had worked on these fiscal notes electively with Representative Therriault. He asked the committee to consider these drafted House fiscal notes along with those from the department. Co-chair Torgerson said he would rather finish discussion on the bill at this time and not deal with the fiscal notes. Senator Mackie asked for a Tourism Development FY 01 spreadsheet to be distributed to the committee. Co-chair Torgerson asked about section two of the bill. (There followed a brief pause on record.) Senator Mackie then directed the committee to section ten of the bill. Co-chair Torgerson said that was the section dealing with the effective date of the bill. Unidentified individual in the audience directed the committee to section nine of the bill, page seven. Senator Leman asked why was not a gradual transition proposed instead of such a big step? This would have helped in the budget. Senator Mackie said this was a matter for the department and ATMC. He did not really get into this matter. Co-chair Torgerson asked about the reduction for this year. Senator Mackie said it was about $300,000. Senator Wilken asked about the spreadsheet and APLIC? Senator Mackie indicated the department could explain this matter. The office is in Tok and a key component for RV's and others entering the State. With reference to the spreadsheet, Senator Mackie said this had been prepared by himself. Co-chair Torgerson asked about page three of the bill. Senator Mackie again indicated he would rather the department comment on this. It is just another matter of check and balance to monitor the best use of the industry both private and public. GINNY FAY, Legislative Liaison, Department of Commerce and Economic Development was invited to join the committee. She spoke to the Labor and Commerce version of the bill. However, she advised the committee that Tam Cook, Legal Services had prepared a new CS draft containing clean-up measures in it. There is still a lot of work to be done during the next transition year and they will have to work diligently on this bill. She explained the department's two fiscal notes for ATMC and Tourism Development. The premise they worked on for FY 01 and beyond is that they have transferred their personal services to the new trade association under their contractual line. Personal services were reduced. From there, they took the activities of ATMC and delegated them to contracts. The division will have the contractual oversight that ATMC now has. This transition should occur in FY 01. She explained that some duties will be shuffled and some may be diminished. The difference in their two fiscal notes is approximately $200,000, which was cut out. However, the department feels this funding is necessary. Co-chair Torgerson told Ms. Fay that he felt her testimony was contradictory to the testimony of the sponsor. He asked if some of this money was to fund the Tok Visitor Center. Ms. Fay said she did not have all the figures in front of her. She said there would be eleven positions total, with four of them at the Tok Visitor Center. Co- chair Torgerson asked her to review carefully the Tourism Development spreadsheet handed out by Senator Mackie. He asked her to explain "fixed costs". He then said he was not going to get into this matter any further. There is a contradiction between costs and positions. Further discussion will have to take place with the sponsor. Ms. Fay said the discussion has been primarily focused on tourism. However, there have been for instance, meetings with ambassadors, work at the national park services, and some other activities that have had nothing to do with tourism marketing. In addition, money from the Federal Department of Commerce has been received to help look at developing small business and tourism opportunities in rural Alaska. She further referred briefly to the draft fiscal note from the House and felt that all duties and functions have not been addressed. In response to Co- chair Torgerson she said it was her understanding that there would still be some positions left in ATMC. The fiscal note she presented this morning was only for the Division of Tourism. Co-chair Torgerson again reiterated that there was work that needed to be done on this bill. Senator Wilken called attention to the spreadsheet. He assumed these were loaded costs. Ms. Fay said she did not prepare the spreadsheet. She will have to consult with the sponsor who prepared the sheet. Senator Wilken asked about the nine employees. He felt the spreadsheet was "top loaded". JOE BALASH, staff to Representative Therriault was invited to rejoin the committee. He was asked to explain the "research" and "fixed costs" on the spreadsheet. He explained that it included rent at the Tok Visitor Center, telephone and communication costs costs to the commissioner's office among others. He also included a conversion study being conducted by ATMC. Co-chair Torgerson asked him to explain "grants". Ms. Fay interrupted saying this concerned the World Tourism Center. Mr. Balash asked that a Division of Tourism spreadsheet also be passed out to the committee. Senator Green asked what was the field of the positions. Ms. Fay said they dealt strictly with tourism. Co-chair Torgerson asked for a clarification of the "clean- up" language. Senator Mackie responded that Tam Cook was doing the clean up of the Labor and Commerce version of the bill. He said they were trying to deal with the House on this matter. Senator Mackie also referred to the nine positions; Ms. Fay said they were trying to keep the positions at eleven, of which three would be part-time. Ms. Fay further explained the Tourism Development spread sheet and said it should also have included "Marketing". Senator Wilken asked her to identify the positions listed. Due to poor copies of the Division of Tourism spread sheet she was unable to identify where these fell on the sheet. Senator Phillips asked what range the Development Specialist I was? Ms. Fay said it was either range 13 or 18 as it was difficult to read. Senator Green inquired about what standards the State was held to regarding monies held for the Division of Tourism bids. Ms. Fay said section three was the applicable section. (Tape number 88 switched to Side B at log number 595.) Senator Mackie continued his comments to the committee regarding marketing contracts. There were plenty of reasons for everyone to come to an agreement so money was not lost. Senator Green wondered if the department needed a fall back if something happened or if everything fell apart? Senator Mackie responded. There was plenty of incentive to get this going because they would be cut from the budget otherwise. Senator Green asked if there was a provision to prevent the ATMC to say they were not going to do anything during a particular year. Ms. Fay explained and said they would be forced to take care of marketing matters in house, which they do not do at this time. She referred the committee to section seven in response to a question from Co-chair Torgerson. He also pointed out section six, and she said there was an exception provided for under AS 44.33.125(h). Co-chair Torgerson asked if ATMC was in agreement with the right of refusal. Ms. Fay explained that they would always put time lines on proposals. In order to set up contracts there would be time requirements for all parties involved. He further referred to subsection (b) of section seven, right of refusal. They would have to wait a long time for legislative approval and that might not be acceptable, Ms. Fay explained. She said there were things they could not do even if asked by the Governor or Legislature. Co-chair Torgerson felt that "unless authorized by the Legislature" should be included language. Co-chair Torgerson continued on to page five, lines ten and eleven. He asked clarification of this language. Ms. Fay responded that the intent of this section was that they wanted to address situations that would cause them concern. She used as an example the M/V Malaspina. They received an emergency appropriation from the Department of Transportation to do marketing, covering this matter. Co- chair Torgerson said he did not disagree with her comments but felt that was not what the language he cited above referred to. Senator Mackie said he thought the language was correct and covered what they wanted. Co-chair Torgerson said he would work out more complete clarifying language. Ms. Fay referred the committee to lines nine through eleven. This language provided the flexibility for matching funds. Co-chair Torgerson said it was too flexible. He continued on to page six, line six. He said it was his understanding that materials also included logo. If a new logo were to be designed for the State and then the organization ceased to exist would the State still be able to use the logo? Ms. Fay explained that she did not envision using contractual services for such a matter. Co- chair Torgerson felt it needed to be further clarified anyway. Ms. Fay said the language reflected SB 350 of last year. Senator Mackie concurred that it was the same language of SB 350 last year. Co-chair Torgerson thanked Senator Mackie, Ms. Fay and Mr. Balash for assisting the committee. Senator Mackie said he hoped all remaining work on the bill could be finished in this committee. KEN DOLE, Alaska Visitors Association was invited to join the committee. He said he was available to answer any questions the committee may have. He said they reached agreement with the Administration regarding matching funds. STEVE BEHNKE, Alaska Wilderness, Recreation and Tourism Association was invited to join the committee. He explained his representation of small tourism organizations. They would be concerned with any cuts to the Division of Tourism. They were also concerned about over all levels of funding for tourism as this affects directly the smaller organizations in relationship to world tourism. They are losing out around the world. The current levels of funding are too low and they do not feel that they can survive with any more cuts. LISA VONBARGAN testified via teleconference from Valdez. She said there was a need to impress on everyone the fact of funding being diminished gradually. There was a great concern about where funding would come from to support the outlined activities. The role of the Division of Tourism was important in helping to advocate the smaller organizations. She emphasized that it was necessary to have the continued support and advocacy of ATMC. KATHY TARR testified via teleconference from Kenai. She noted her appreciation of the work by the Senate Finance Committee on this bill. She felt that the questions raised by the committee would eventually be answered. She also supported consolidation and the new millenium plan. SB 107 put the mechanism in place for development of the marketing plans. Co-chair Torgerson SET ASIDE SB 107 and said he would work with the sponsor for a new CS. He requested amendments be submitted to his office to be included in the new CS. Co-chair Torgerson took a brief at ease at 10:21 a.m. and reconvened the committee at 10:30 a.m. He called SB 52. SENATE BILL NO. 52 "An Act relating to competition in the provision of local exchange telephone service; and providing for an effective date." CS FOR SENATE BILL NO. 52(L&C) "An Act relating to competition in the provision of local exchange telephone service; and providing for an effective date." Senator Green MOVED Amendment #1. There was objection. Senator Green explained her amendment. She said there was concern regarding the quantity and quality of service. Senator P. Kelly indicated that his proposed amendment may address some of Senator Green's concerns. They are not deregulating. Senator Adams asked to hear the difference between the two amendments. Co-chair Torgerson said page two, line twenty- six was the only difference. Senator Adams said it was important that the difference be clarified. Senator P. Kelly referred the committee to page two, line nine. Senator Green and Senator Kelly had a brief discussion. "One cannot come in and cherry-pick under this bill," said Senator P. Kelly. "The entire area must be provided service." Senator Leman asked if an amendment to amendment #1 could be made on line 10 of deleting "shall" and inserting "may"? Senator Green advised the committee of this suggested change by Senator Leman. Senator Phillips briefly commented. He said that areas were different around the State. Senator Adams commented re the suggested language change by Senator Leman. Senator Leman clarified his suggested change. Senator Green requested a brief at ease. Co-chair Torgerson granted the request at approximately 10:45 a.m. Co-chair Torgerson reconvened the meeting. Senator Kelly retained his objection. Senator Green MOVED amendment to amendment #1 which would delete "shall" and insert "may" on line ten. WITHOUT OBJECTION it was ADOPTED. Senator Kelly advised however, that he still maintained his objection to amendment #1. By a roll call vote of 4 yeas (Torgerson, Adams, Green, Phillips) and 5 nays (Parnell, Donley, Leman, Wilken, P. Kelly) amendment #1 FAILED. Senator Kelly MOVED amendment #2. Co-chair Torgerson OJBECTED. Senator Kelly explained his amendment. Senator Adams asked for an explanation of line eight, page one of amendment #2. Senator Kelly responded. Senator Wilken questioned the two year date and why people would be more comfortable with this rather than four or six years. Senator Kelly commented. In actuality, the level of comfort will be for the utilities and perhaps not much of a comfort for the public. By a roll call vote of 6 yeas (Torgerson, Parnell, Donley, Leman, Wilken, P. Kelly) and 3 nays (Adams, Green, Phillips) amendment #2 was ADOPTED. (Tape #88, Side B was switched to Tape #89, Side A.) Senator P. Kelly commented again briefly on the bill. Senator Adams asked if APUC was on teleconference as there were some questions he wanted to ask. Co-chair Torgerson said they were not. Senator Adams said he opposed the bill but needed the answers as to what the position of APUC was regarding this bill. Specifically, he wanted to know what APUC felt about the telephone rates, and what was the effect of the bill regardless of where one lived in Alaska. Senator P. Kelly said APUC has been neutral on this bill. It is believed the competition will provide better service and lower rates. Senator Adams said it should not matter where one lived. The same rates and services should be provided for all. Co-chair Torgerson concurred. Senator Kelly MOVED CSSB 52(FIN). Senator Adams objected. Senator Green also voiced her frustrations and reliance on APUC. By a roll call vote of 6 yeas (Torgerson, Parnell, Donley, Leman, Wilken, P. Kelly) and 3 nays (Adams, Green, Phillips) CSSB 52(FIN) was REPORTED OUT with individual recommendations. New fiscal notes will be forthcoming from the Department of Commerce. Co-chair Torgerson reviewed the agenda for tomorrow regarding the Operating Budget. Senator Adams asked for the schedule for amendments. Senator Parnell said he hoped to have all amendments in his office by 5:00 p.m. on Friday. ADJOURNMENT Co-chair Torgerson adjourned the meeting at approximately 11:05 A.M. SFC-99 (1) 04/13/99