Homer Alaska - Business

Story last updated at 9:06 PM on Wednesday, March 9, 2011

Tourism industry balks at paying bigger share of marketing budget



By Pat Forgey
Morris News Service - Alaska

The state's tourist-dependent businesses are up in arms over legislative plans for the industry to pay for more of its own marketing.

"When I heard the state wants the tourism industry to go from paying $2.7 million to $9.3 million I just laughed. They just don't have that kind of money," said Fred Reeder, a former Sitka mayor who works in the tourist industry there.

But some legislators are saying they are the ones who should be offended, as the industry is going back on a promise to raise more of its own money to fund the Alaska Travel Industry Association's marketing efforts.

"I was insulted," said Rep. Bill Thomas, R-Haines, co-chairman of the House Finance Committee, which has been hearing complaints from around the state.

Three years ago the state increased its share of tourist marketing from 50 percent to 70 percent for three years, giving the industry a window to come up with additional money.

Tourism businesses around the state, however, say going back to the old 50-50 ratio would be too hard on them in difficult times.

Such an increase would drive his ATIA dues to from $500 to $1,500, said John McConnochie, an owner of Cycle Alaska tours in Juneau.

"When you add that to belonging to the Juneau Convention and Visitors Bureau and the chamber of commerce, something's got to give, to be quite honest," he said.

"This match or increase is actually a tax on small businesses," McConnochie said.

McConnochie and dozens of others in the tourism businesses last week testified to the House Finance Committee, seeking to head off the pending increase.

Thomas said that's a hike the businesses earlier agreed to, and is already written in state law.

ATIA leaders have acknowledged that to him personally, Thomas said, but aren't conveying that to their members.

"I want to set the record straight," he said.

Reeder, who works for Cruise Line Agencies of Alaska, is a board member of ATIA.

He told the Legislature the industry was already struggling.

"They need help to rebuild this industry, not drive another nail in the coffin," he told Thomas and the House Finance Committee this week.

Other members of the ATIA board include representatives of Princess and Holland America lines, as well as Juneau's TEMSCO Helicopters.

ATIA Executive Director Ron Peck disputed Thomas' contention they had not used the three-year period during which the state picked up 70 percent of marketing costs to develop new revenue sources.

ATIA proposed giving businesses a tax credit in exchange for ATIA contributions, but the Legislature didn't agree, Peck said.

"That did not appeal to them," he said.

This year ATIA has another proposal, that the association be credited with a share of the taxes paid by visitors and tourists, such as the vehicle rental tax or cruise ship head tax.

"Let's identify a portion of that in a model that works for the Legislature and the tourism industry," Peck said.

While Gov. Sean Parnell proposed in his budget that the state continue to pay 70 percent of the ATIA marketing cost, the House Finance Committee has cut that out of the budget.

Thomas' fellow House Finance co-chairman Bill Stoltze, R-Chugiak, said the cut troubled him.

Stoltze didn't have a different proposal, however

"I'm still trying to figure out a better solution," he said.

Peck didn't like it either, and said there was no way his members could afford to pay more than the $2.7 million they currently contribute.

Thomas said it was not up to him.

"I have nothing to do with it, it's the law and the law is going back to what the ATIA agreed to," he said.

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