SENATE LABOR AND COMMERCE COMMITTEE April 15, 1999 1:40 p.m. MEMBERS PRESENT Senator Jerry Mackie, Chairman Senator Tim Kelly, Vice Chairman Senator Dave Donley Senator Loren Leman Senator Lyman Hoffman MEMBERS ABSENT All Members Present COMMITTEE CALENDAR SENATE BILL NO. 78 "An Act relating to the use and prescription of pharmaceutical agents in the practice of optometry." -MOVED OUT OF COMMITTEE SENATE BILL NO. 121 "An Act levying and providing for the collection and administration of excise taxes on the provision of overnight accommodations and authorizing disposition of estimated receipts from those taxes; and providing for an effective date." -HEARD AND HELD HOUSE BILL NO. 122 "An Act excluding buildings used primarily for office space from the Housing Project and Public Building Assistance Act, restricting state ownership of buildings used primarily for office space, and providing for the disposal of state ownership interests in certain state buildings used primarily for office space; and providing for an effective date." - BILL POSTPONED PREVIOUS SENATE COMMITTEE ACTION SB 78 - No previous action to consider. SB 121 - No previous action to consider. HB 122 - No previous action to consider. WITNESS REGISTER Senator Kim Elton State Capitol Bldg. Juneau, AK 99811 POSITION STATEMENT: Sponsor of SB 121 and SB 122. Mr. Jeff Gonnason Anchorage, AK POSITION STATEMENT: Commented on SB 78. Mr. Duane Epton Alaska Publishers Representatives POSITION STATEMENT: Commented on SB 121. Mr. Steve Behnke Alaska Wilderness Recreation and Tourism Association P.O. Box 22827 Juneau, AK 99801 POSITION STATEMENT: Supported SB 121. Ms. Tina Lindgren, Executive Director Alaska Visitors Association 2525 C St #400 Anchorage, AK 99515 POSITION STATEMENT: Opposed SB 121. Mr. Bill Elander Anchorage Convention and Visitors Bureau 524 W. 4th Ave. Anchorage, AK 99501 POSITION STATEMENT: Opposed SB 121. Ms. Debra Schnabel Haines, AK 99827 POSITION STATEMENT: Supported SB 121. Ms. Sheila Romero, Executive Director Fairbanks Convention and Visitors Bureau 550 1st Ave. Fairbanks, AK 99701 POSITION STATEMENT: Opposed SB 121. Mr. Bill Bubbell Pump House Restaurant P.O. Box 80545 Fairbanks, AK 99708 POSITION STATEMENT: Opposed SB 121. Mr. Brett Carlson North Alaska Tours P.O. Box 82991 Fairbanks, AK 99708 POSITION STATEMENT: Opposed SB 121. Mrs. Carol Neeley Carol'S B&B P.O. Box 88 Glennallen, AK 99588 POSITION STATEMENT: Opposed SB 121. Mr. Brad Kriner, Vice President American Village of Alaska P.O. Box 329 Glennallen, AK 99588 POSITION STATEMENT: Commented on SB 121. Mr. Michael J. Warburton Ocean Shores Motel 3500 Crittendon Homer, AK 99603 POSITION STATEMENT: Commented on SB 121 Ms. Wanetta Ayers, Manager Tourism Program and Development Afognak Native Corporation 215 Mission Rd. Kodiak, AK 99615 POSITION STATEMENT: Supported SB 121. Mr. Bill Arpino P.O. Box 111 Tok, AK 99780 POSITION STATEMENT: Opposed SB 121. Ms. Donna Bernhardt P.O. Box 61 Tok, AK 99780 POSITION STATEMENT: Opposed SB 121. Ms. Nancy Lethcoe, Executive Director Valdez Convention and Visitors Bureau P.O. Box 1313 Valdez, AK 99686 POSITION STATEMENT: Supported SB 121. Ms. Lisa Vonbargan Valdez Visitors and Convention Bureau P.O. Box 1603 Valdez, AK 99686 POSITION STATEMENT: Opposed SB 121. Ms. Kathy Hedges P.O. Box 73440 Fairbanks, AK 99707 POSITION STATEMENT: Opposed SB 121. Mr. Matt Atkinson North Alaska Tours P.O. Box 82991 Fairbanks, AK 99708 POSITION STATEMENT: Opposed SB 121. ACTION NARRATIVE TAPE 99-13, SIDE A Number 001 SB 78-USE OF DRUGS BY OPTOMETRISTS CHAIRMAN MACKIE called the Senate Labor and Commerce Committee meeting to order at 1:40 p.m. and announced SB 78 to be up for consideration. MR. DAVE GRAY, Staff to Senate Labor and Commerce Committee, said that optometry is a primary health care profession that examines, diagnoses, and treats disorders of the human eye and its appendages utilizing diagnostic and therapeutic medications, methods, and procedures in accordance with professional training in competency. Historically, medical doctors have enjoyed unlimited legislative trust in their scope of practice. However, the methods and procedures used by other limited license health care professionals, such as optometrists, dentists, podiatrists, nurse practitioners, and others, are determined in regulation by their respective state boards. In the past, Alaska's doctors of optometry have had their scope of practice unduly restricted by outdated state statutes. For every new advance in technology, optometry has had to return to the legislature to revise these statutes in order to practice at the highest standard of care. In 1988, the statutes were updated to allow optometrists to use diagnostic drugs. The Alaska Legislature was the last of the 50 states to pass this law. In 1992, the prescribing of therapeutic drugs to treat eye diseases was authorized and Alaska was the 32nd state to pass such legislation. However, due to a compromise, only topical medications were included at that time. Currently, all 50 states authorize optometrists to prescribe drugs; 34 allow oral systemic drugs and 16 states, including Alaska, further restrict to topical drugs only. One state authorizes the use of lasers by optometrists. Last session, a bill was introduced and heard that would expand the scope of optometry to include all medications for the eye, as well as the use of lasers and limited surgical procedures for qualified optometrists. This bill, SB 78, only allows qualified optometrists to prescribe and use medications related to the eye and for emergency anaphylaxis. This change will allow optometrists to practice at the currently accepted standard of care. It will provide Alaskans with improved access to quality, cost effective eye care. CATHERINE REARDON, Director of the Division of Occupational Licensing, Department of Commerce and Economic Development, stated the Division has not taken a position on SB 78 at this time. She noted after the Alaska Medical Board meeting tomorrow, she may have a position to relay to future committees. However she is concerned that the Optometry Board and Alaska Medical Board may have conflicting opinions. Therefore, she prefers to delay taking a position on the legislation until both boards make their positions known. Number 92 DR. JEFF GONNASON made the following comments via teleconference. He has been a licensed optometrist in the State of Alaska since 1976 and was the president of the Alaska State Board of Examiners and Optometry during a previous Administration. The professions of dentistry and optometry have expanded their scopes of practice over the years as technology and methods of treatment became available. Aside from 35 states, Guam and Washington, D.C. also allow optometrists to prescribe oral or systemic drugs. MR. GONESON said SB 78 allows optometrists to work to the full extent of their training. MR. GONNASON said optometrists are trained in the same manner as dentists and, like a dentist, he would like to be able to administer necessary drugs including antibiotics, pain medication and other oral drugs. He noted this bill does not include a request to allow the use of lasers or do limited surgery. Number 159 SENATOR LEMAN asked if this bill would allow optometrists to prescribe or recommend marijuana. He asked what position the Board of Optometrists has taken on the use of marijuana to treat glaucoma. MR. GONNASON replied that studies have shown marijuana does lower pressure in glaucoma patients, but only when taken in high doses. Since other modern drugs do not cause side effects and are more effective, the Board has resolved that the use of marijuana is unnecessary. MR. GONESON assured SENATOR LEMAN that, "No one is interested in prescribing marijuana for the treatment of glaucoma . . . " MR. BARRY CHRISTENSEN, a pharmacist from Ketchikan and the Legislative Chair of the Alaska Pharmaceutical Association (APA), said the APA has not taken a stand on this bill, but does have two concerns about the bill. First, they are concerned that there is currently no listing of optometrists who can prescribe drugs, which makes it difficult for pharmacists to process prescriptions. Second, pharmacists are not familiar with the training and education optometrists receive on drugs and drug interactions. The addition of oral drugs prescribed by optometrists makes this an issue of concern to the APA. SENATOR MACKIE clarified that the APA is concerned that pharmacists may be put in the position of issuing drugs prescribed by optometrists without the regulations in place allowing them to do so. MR. CHRISTENSEN affirmed that was one concern, the other being the necessity of a list of optometrists able to prescribe drugs. SENATOR MACKIE asked MS. CATHERINE REARDON how regulations might alleviate MR. CHRISTENSEN'S concerns. MS. REARDON replied the Board gives particular endorsements for those optometrists with the training and ability to prescribe drugs. She said the division has this information and can provide it to whomever requests it. Number 290 SENATOR LEMAN moved to report SB 78 from committee with individual recommendations. Without objection, SB 78 moved from committee with individual recommendations. SB 121-EXCISE TAXES ON TRANSIENT LODGING CHAIRMAN MACKIE announced SB 121 to be up for consideration. Number 296 SENATOR ELTON, sponsor, assured everyone that Democrats don't like taxes, although SB 121 is a tax bill. The purpose of the bill is simply to create a stable stream of revenue for tourism marketing and increase the amount of revenue available for tourism. He said his background is in generic marketing and believes that good marketing requires steady effort over time and to do that, you need a stable stream of revenues. One of the advantages of this source of revenue is that it is exportable. It is a tax on the visitor who comes to Alaska. This is a relatively common tax and the major difference between this approach and the bed tax and the New Millennium Plan is that this is not voluntary in nature. It does not count on the continued good will of the legislature to appropriate four or five million dollars per year or the continued voluntary participation by others in the industry, especially the destination marketing organizations. Alaska currently ranks about 29th among states in the amount of money they spend for international marketing. As a result, Senator Elton thought we were losing market share especially in the that component that is most important to Alaska, the independent visitor who has more dollars that rebound through more of the economic sector of Alaska. Basically, SB 121 provides for a transient room tax (bed tax) to be applied to hotels and B&B's at the rate of 2% per night per room - May 1 - September 30. This tax is only applied to stays of less than 30 days. The effective date is January 1, 2000. Twenty five percent of the revenues collected through this hotel tax would be remitted back to the community in which they are collected. It is collected by local governments and where there is no local government, it would be collected by the State of Alaska. The State would not remit the 25 percent; it would stay with the State. The second element is a $2 per night, per person tax on wilderness camps, lodges, and all-inclusive tours. The flat rate is because the package sales don't delineate between how much you are paying for the cot, the bed, the guide, or other experiences. It has the same effective date. CHAIRMAN MACKIE asked if the $2 tax was involved when there is lodging. SENATOR ELTON explained this would apply to the all-inclusive packages that involve overnight stays. Some of those involve a sleeping bag and a tent next to a river and some of them are in fairly ornate wilderness lodges. CHAIRMAN MACKIE asked if it only involved lodging. SENATOR ELTON responded that it would only assess those people who are part of a package when it extends overnight and it is applied only seasonally and by the local government when there is one and by the state, if there is not. SENATOR ELTON said The third element of this plan is a passenger ship berth tax which is a flat fee of $3 per night per person and the flat fee is for the same reason that you can't establish a percentage fee for remote packages. It's difficult to separate out the component of how much the berth is worth on a cruise ship. It has the effective date of January 1, 2000. Twenty-five percent of the revenues collected from this would be shared back to the community. Because the cruise ships are moving the assessment is per night, but the 25% remittance back to the community is based on the number of passengers that land in the community over the season. An additional element precludes a community from establishing a fee like this on the cruise ship industry. It is a tax that is exclusively for the State of Alaska. The revenues expected for the "bed tax" in FY00 are projected to be $1.2 million; FY01 about $4.2 million; FY02 about $4.5 million. CHAIRMAN MACKIE asked why the amounts are different. SENATOR ELTON said the first year is because half of the year is gone when it starts. In other years, any growth would be predicated on growth in the industry. There is no estimated revenue on the wilderness camps and lodges, because there is no experience. The berth component should provide $2.6 million in FY00; $9.4 million in FY01; and $9.8 million in FY02. The total estimated revenues from these sources would be about $4 million in FY00; $13.7 million in FY01; and a revenue stream under full implementation of about $14.5 million. He reiterated that 25% of the fees are remitted to local governments which would leave a revenue stream of about $10.6 million for generic tourism marketing. There is an additional provision in the bill that provides that 2% of the receipts would be available for matching grants for communities and nonprofits. They can apply for that amount of money and would be about $250,000 - $300,000 for tourism planning or mitigation purposes. CHAIRMAN MACKIE said SB 121 directs a revenue source back to the state and the municipalities which the Millennium Plan doesn't do and asked what effect Senator Elton thought it would have on the Plan. SENATOR ELTON said he was invited to the AVA "fly-in" and had discussions from mild to fairly heated. CHAIRMAN MACKIE said he was concerned with competition between plans. He personally supported the Millennium Plan because it was a way to have industry contribute. SB 121 was attractive because it provided revenues back to the state and would increase the marketing capabilities of Alaska. He didn't know if the Millennium Plan would fall apart if this were put in place. SENATOR ELTON answered that discussion on that topic has been if you're going to tax to provide a steady stream of revenue for generic tourism marketing, why are you applying it only on the hotel/hospitality portion of the industry and not on airlines, restaurants, and rental cars, etc. - a legitimate question. Some of those tax points are more difficult to get to and this is a relatively easy way to get to some of the tax points. The major difference between SB 121 and the way the Millennium Plan looks to finance generic marketing is that under this approach, industry doesn't pay. Under the Millennium Plan, industry pays. The State pays $4 million; industry pays through contributions through destination marketing organizations or local visitors and conventions bureaus. Industry pays because of the voluntary contribution from the cruise ship industry. They are not statutory or forced payments, part of his concern. When times get tough, the business may have to make a decision on whether they spend what is left of their profits voluntarily in this manner or whether they do their own marketing. This is easier on the industry because it is exported to the visitor. CHAIRMAN MACKIE asked if the heated discussions were mostly about how he was focusing on the cruise ships and hotels to pay for all marketing in the State which more than hotels and cruise ships companies benefit from. SENATOR ELTON agreed that was one of them. CHAIRMAN MACKIE asked what their reaction has been as to whether they would have "to eat the cost" or have a cost "that could be passed on to the customer without creating problems." SENATOR ELTON responded that that is a good question and he didn't have a perfect answer. He has been told that this is unnecessarily burdensome upon industry and the passenger. His response is, "Of course it does. That's what taxes do, but it's not a tax on the business; it's a tax on the visitor." Also, if we look at how other jurisdictions do this, for example Bermuda, which has an $8 per night fee, far more burdensome. He didn't think that cruise ships would step up and say, "Tax us or our clients." This is not a foreign concept. Another discussion concerned what would make the State do the right thing by reappropriating these dollars, since they cannot be dedicated. Senator Elton's response to the industry is that in areas, through the budget, the State has always acted in good faith to reappropriate dollars for the purposes they have been collected. The most obvious example is the Alaska Seafood Marketing Association (ASMI). The legislature has always reappropriated the dollars collected under the three different forms of ASMI taxation. Another example are the regional aquaculture association fees that are collected and remitted. Number 495 CHAIRMAN MACKIE asked what is the average stay of a passenger on a cruise ship in Alaska. SENATOR ELTON said he thought it was five days. CHAIRMAN MACKIE said that would work out to $15 per person and asked how the cruise ship company would calculate time in different ports. SENATOR ELTON responded that was another issue of concern from the industry, but it isn't any more burdensome than a hotel trying to keep track of how many guests they have. It is calculated on an evening basis. SENATOR HOFFMAN asked if they didn't have to pay, if they are not docked. SENATOR ELTON said they do have to pay if they are in Alaskan waters. SENATOR HOFFMAN asked which community got the 25 percent. SENATOR ELTON replied this is the complicated part of the bill, because that would be an undue requirement on the cruise ship. The collection is based on the number of nights; the remittance is based on the number of passengers that arrive in each of the communities that cruise ship goes to. The remittance is based on how many passengers from one ship for that trip landed in each of the communities, a relatively complicated formula which would be unduly burdensome on industry to keep records. Number 533 SENATOR LEMAN applauded him for advancing this legislation that conceptually makes sense. He agreed with leveling out funding for an important segment of the industry. SENATOR ELTON emphasized that SB 122 was integral to SB 121. The revenue portion is predicated on the adopting of the structural portion. MR. DUANE EPTON, Alaska Publishers Representatives, said they are an independent marketing firm dealing with publications like Alaska Airlines Magazine and the Marine Highway Schedule. He has talked to a lot of small businesses across Alaska and he has found that the biggest thing they have mentioned is that they need an opportunity or a vehicle to get involved. This is where the Millennium Plan comes in. TAPE 13, SIDE B Number 590 He thought they would be truly responsive in supporting it. As to the taxation the concern is how can you take a tax that is not dedicated and know that it's going to continue on to support the industry. Number two, the clock is running out and there is some momentum from the industry; and thirdly, taxation is only a fall back position. The New Millennium Plan is on the table and there is a lot of support for it. About 90 percent of their business over the last fourteen years has been tourism based and he has a vested interest in seeing tourism businesses continue. MR. STEVE BEHNKE, Executive Director, Alaska Wilderness Recreation and Tourism Association, supported the AVA effort to create a new approach to increasing industry's share of tourism marketing. They support the compromise that has been worked out. He said the stability in tourism marketing that Senator Elton's plan would accomplish is pretty appealing, but it is equally obvious that the idea of tourism taxes hasn't gotten much discussion yet. The New Millennium Plan has been around for a few years and is a known quantity. They did an E-mail poll of their members on the tax bill and from a 25 percent response they got an pretty even split. He thought it was worth giving the cooperative consolidated approach a try, especially if industry couldn't raise the dollars to stop the downward slide. MR. BEHNKE said if there are any taxes on tourism, he strongly urged considering Senator Elton's approach. SENATOR HOFFMAN asked if he had a comment on percentages in the legislation. MR. BEHNKE answered that they just think the concept is important. MS. TINA LINDGREN, Executive Director, Alaska Visitors Association, said they appreciate the sponsor's intent, but they don't agree with it. The Legislature gave them a charge and since 1992, they have studied a variety of taxation methods and have come up with the New Millennium Plan. There has been a lot of input and surveys. They have looked at general sales tax, seasonal taxes, targeted taxes, and they believe their plan can gain the most support from the widest number of businesses. She pointed out that SB 121 is a form of self taxation, but not everyone participates, because entire segments of the industry won't pay at all for just visiting friends and relatives. Industry is not opposed to taxes and agrees it should pay its fair share. As a state, we pay few taxes and the tourism industry is no more anxious to be a target of taxes than the rest of us. Since Alaska doesn't have a statewide tax system at present, SB 121 would create two additional problems. One is in requiring a new administrative system and its inherent operating costs and to insure compliance. It will also create an additional burden on business which must maintain separate records, set up new reports, and make tax payments. It would hit the small businesses specifically. SB 121 and SB 122 are counter to the industry's funding plan proposal and they, therefore, oppose the package. Number 462 CHAIRMAN MACKIE told Ms. Lindgren that he liked a few things in SB 121; one is that it creates a funding mechanism for the local municipalities and, more importantly, it tries to establish some sort of funding to continue tourism marketing. He asked if there were some things in Senator Elton's plan that she could see that could directly contribute to the State and the municipalities. He said the Millennium Plan did not address how local municipalities and the State could raise money for their share. MS. LINDGREN responded that they recognize the difficulties, but have been asked by the communities not to address how they raise funds, because they are all funded so differently now. Most have bed taxes that they raise funds with and in some cases all of that money is used to fund their Convention and Visitors Bureaus. Imposing another bed tax on a statewide level only to return it to the community doesn't make a lot of sense. MS. LINDGREN thought passage of these bills would jeopardize the Millennium Plan since that was based on voluntary contribution and if people are being forced to pay, she didn't think the other would survive. MR. BILL ELANDER, Anchorage Convention and Visitors Bureau, said his thoughts were parallel with Ms. Lindgren's. He appreciated the author's efforts, but if the bills passed, he didn't see how the Millennium Plan could survive. "There is risk in anything we do." he said. Number 392 MS. DEBRA SCHNABEL, Haines, thanked Senator Elton for having the courage to introduce this bill. She is a supporter of taxes and the owner of a lodge in a wilderness area. Her visitors would not be offended and would be very willing to pay to the industry and state. She thought people she has met from the cruise ships would be very willing to pay $3 per day for the opportunity to visit this great state. MS. SHEILA ROMERO, Executive Director, Fairbanks Convention and Visitors Bureau, said there were two major differences between SB 121 and SB 107. One is the visitor industry's plan and one is not. Her organization supports SB 107. MR. BILL BUBBEL, Pump House Restaurant, testified that the legislature asked industry to come up with a plan to help marketing tourism and they have done that with the New Millennium Plan. He is concerned about the disposition of the receipts in SB 121, because it authorizes the legislature to use the remaining tax revenues, but it doesn't mandate them. He was on the committee that initiated the bed tax in Fairbanks and it started out as a 90% marketing/10% city revenue sharing. That has changed to 65% marketing/35% city. They have to fight on a yearly basis for their share. He was concerned that during the hard times the local industry might not come up with the funds, but neither would the State. MR. BRETT CARLSON, North Alaska Tours, said for two years the visitor industry joined together to search for a solution or plan that would accomplish two things: to reverse decline in destination funding and marketing in Alaska and restore the growth rate of visitor arrivals to Alaska. The result of two years of hard work is the New Millennium Plan. It is not perfect, but it is acceptable to everyone. It creates efficiencies by consolidating HTMC and DOT into one marketing organization, it restores funding up to a $10 million level over three years, it reduces state funding from $5.3 to $4 million dollars, it triples the private industry contribution, and it gives the industry a chance to see if they can raise funds voluntarily to support cooperative marketing across the state. He encouraged them to support the legislation that represents industry consensus - the New Millennium Plan. MS. CAROL NEELY, Carol's Bed and Breakfast, said she was concerned about how taxes would get back to unorganized boroughs. SENATOR MACKIE commented that the money would go to the State and asked her if she had a problem with that. MS. NEELY replied that she did have a problem with that because, then it would go straight to State coffers and wouldn't go back to the community. MR. BRAD KRINER, Vice President, American Village of Alaska, said he runs a hotel which is basically their bread and butter four months out of the year. He is not opposed to a tax, but he wanted clarification on who would really be paying it. He deals with all- inclusive tour companies and he wanted to know if he has to pay the tax when the people stay in his hotel or does the customer pay. He was also concerned that the smaller tour companies would want price breaks. Basically, he needed clarification on who would pay and how the unorganized boroughs would receive economic consideration. MR. MICHAEL WARBURTON, Ocean Shores Motel, commented that the sponsor statement of SB 121 said the tax will be exported to the visitor, but in his business and two other hotels that he knows of, half their clients are Alaskans. He also didn't think the tax was an even distribution, because historically the bed tax was deemed fair because everyone who came to town rented a room. In Homer, possibly half the guests are in RV's and don't rent rooms. People who have hotels are already paying a disproportionate amount of tax because their sales tax is capped at $500. So someone can book a $2000 boat charter and only pay $27.50 in tax. For a hotel, the tax is per room per night. If this tax is added, they will be carrying even more of the load. Since this is to be a seasonal tax, he suggested looking at a one percent across the board sales tax for the summer on groceries. MS. WANETTA AYERS, Afognak Native Corporation, supported SB 121 and SB 122 specifically because of the industry stabilization plan and also because the Tourism Development Marketing Council, as outlined, addressed some of the funding and structural elements that have been a concern in other proposals to reorganize the State's tourism marketing program. She said even if they pass the New Millennium Plan, who can say if the State of Alaska will have four or five million to put into it in the future. MS. AYERS thought it was better to find a way the State and visitors could work together to ensure a reliable source of tourism development funding. She related her experience as Executive Director of a Convention and Visitors Bureau in Washington state where their tourism industry was going through the same thing. Four of the five largest hotels in the community were in Chapter 11; there was an ineffective and underfunded marketing program and people didn't know what to do. A bed tax was proposed and many businesses objected, especially those already in trouble. Ultimately, the fear over doing nothing or continuing doing what hadn't worked in the past led to the decision to support the tax. Within two years of its implementation, the local marketing budget had increased from just over $100,000 to nearly three quarters of a million dollars a year. Within five years, all of the hotel properties had stabilized either through reorganization or market growth. Imagine what could happen in Alaska with a reliable source of funding for destination marketing. There is a symbiotic relationship between big and small business in the visitor industry, but there is some difference of opinion and this should come as no surprise, because big business will continue to spend many millions of dollars on their own proprietary advertising and promotion even if the State does nothing. They will essentially have the same market they have always. Small businesses will continue to do their independent promotional efforts as well. However, small businesses are much more dependent on generic destination marketing that should be done on a state level. Without an effective marketing program, small businesses can never hope to achieve an effective market reach. MS. AYERS said she believes the state would act in good faith to collect and use the funds for the intended purpose. She thought there was room for compromise between SB 121 and SB 107 that would create a win/win situation for the state, the industry, and for Alaskans. MR. BILL ARPINO, Tok businessman, said he favored the Millennium Plan and said the proposed tax isn't really a tourism tax, because it affects any rural Alaskan who might go into Anchorage or Fairbanks or any city where this tax would be imposed. He said that Tok doesn't have an organized city government and he thought there would be problems administering it. There was no taxing authority set up to collect it. Enforcing it would also be difficult. This tax unfairly targets a disproportionate number of businesses in the visitor industry rather than an overall tax on the visitor industry. MR. ARPINO said he couldn't see any way people in an unorganized borough would benefit from it. He said years ago, they had a gross receipts business tax that was easy to enforce and verify; it was also across the board. MS. DONNA BERNHARDT, Winter Cabin Bed and Breakfast, supported Mr. Arpino's comments. She emphasized the fact that Tok is in the unorganized borough and, therefore, they wouldn't benefit, even if this tax bill goes through. She didn't think that was fair. MS. NANCY LETHCOE, Alaskan Wilderness Sailing and Kayaking, said they support the AVA's efforts with the New Millennium Plan, but have very grave concerns about the stability of the funding portion of it. She thanked Senator Elton for introducing the bill and wished it could have been considered earlier in the legislative process. She thought the industry should support the state through some type of taxation. She trusted that most of the money from this type of program would go back to tourism, but she wouldn't mind if some of it went to support state highway patrol, for instance, and things that are affected by tourism. She is concerned about the fairness of the tax as she felt that people overnighting in RV parks should have a way of contributing. She liked the way this proposal didn't take money out of the community, but brought it back in to it. She supported reliable funding for a tourism program. MS. LISA VONBARGAN, Executive Director, Valdez Convention and Visitors Bureau, supported the New Millennium Plan. Under SB 121, her community would receive $80,000 to $100,000 per year, which they would love to have, but they have grave concerns about the way and on whom this tax would be levied. It is only levied on certain sections of the industry. In Valdez, they have just fought that battle. They currently have a public accommodations tax that is only levied upon hotels, B&B's, and other overnight accommodations in the area. The bed tax is not producing enough to match the amount of expenditures for the program they have built for their local and regional marketing. They are trying to come up with new ways to support themselves. The most recent suggestion was that they extend the bed tax to include RV parks and campgrounds. The argument that comes up with this approach is that it just puts a Band-Aid on something that needs a tourniquet. All sectors of the industry need to pay their fair share for generic marketing of the state. SB 121 does not do that. Number 121 MS. KATHY HEDGES, Chena Hot Springs Resort, opposed SB 121 and SB 122 and one of the big reasons is that there is already a plan that has the support of the industry and the administration and the proposed tax is not fair to all segments of industry. MR. MATT ATKINSON, North Alaska Tours, opposed SB 121 and SB 122, because they seem to run counter to the New Millennium Plan. He said a lot of work has gone into the Plan. One of the concerns with the Plan was small business representation and the current plan deals with that by having "one member, one vote." TAPE 14, SIDE A Number 001 He said regarding the dedication issue, that it appears that industry has more faith in itself than the legislature to direct funds towards marketing. CHAIRMAN MACKIE thanked everyone for their testimony and said they would hold another hearing on this issue at a later date. CHAIRMAN MACKIE adjourned the meeting at 3:17 p.m.