Call to Order and Roll Call
The 1st meeting of the Tourism and Development Subcommittee was held on Monday, July 27, 2015, at<MeetTime> 9:00 AM, at the EKU Center for the Arts, Richmond. Representative Rita Smart, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Chris Girdler, Co-Chair; Representative Rita Smart, Co-Chair; Senator Johnny Ray Turner, Representatives James Kay, Jerry T. Miller, and Jill York.
Guest Legislators: Senator Jared Carpenter.
Citizen Members: Carolyn Mounce, Eric Summe, Grayson Smith, and Mary Quinn Ramer.
Guests: Michael Benson, President, Eastern Kentucky University; Bob Stewart, Cabinet Secretary, and Lori Meadows, Executive Director, Kentucky Arts Council, Tourism, Arts and Heritage Cabinet; Belle Jackson, Executive Director, Berea Tourism; Steven Connelly, Mayor, City of Berea; and Hank Phillips, President and Chief Executive Officer, Kentucky Travel Industry Association.
LRC Staff: John Buckner, Committee Staff Administrator; Louis DiBiase, and Dawn Johnson.
Tourism and Creative Industries
Eastern Kentucky University President Michael Benson welcomed the committee to the Center for the Arts. The facility plays an important role in the cultural life at both the university and in the local community. The wide variety, quality, and number of performances offered at the center provide opportunities that would not exist but for the venue offered by the Center for the Arts. He thanked members of the legislature for their help in funding the construction and operation of the center.
Tourism, Arts, and Heritage Secretary Bob Stewart addressed the committee and emphasized the importance of the tourism industry to Kentucky’s economy. Tourism ranks first or second in all southern states in regard to economic impact, and yet too often it is not given a priority among public decision makers. In Kentucky, tourism spending increased 4.4 person in all regions, with a $13.1 billion economic impact, which generated $1.37 billion in state and local taxes, and created 180,000 jobs.
Secretary Steward said that tourism in a very competitive venture, with virtually all states competing for leisure spending. As such, marketing Kentucky’s vacation destinations is vital for increasing out-of-state spending. In addition to questions surrounding advertising, other questions must be answered, such as why our state parks continue to lose money and what can be done to reverse the trend, what is the future of the Kentucky Fair and Exposition Center, how can historic preservation tax credits be used to enhance local economic development, and how do the arts fit into Kentucky’s overall tourism appeal. He said that he looks forward to working with the committee to help answer these and other pressing questions.
Lori Meadows, Executive Director, Kentucky Arts Council, gave a presentation about the creative industries in Kentucky, which is broadly defined as an industry that includes all individuals and companies whose services and products originate in artistic, cultural, creative, authentic or aesthetic content. According to the US Bureau of Economic Analysis, the arts and culture sectors’ 2011 contributions to the US gross domestic product was $504 billion, and that figure increased by 4.2 percent in 2012.
In 2013, the Kentucky Arts Council commissioned the Kentucky Creative Industry Report, which was released in December 2014, and was the first study of its kind to focus on the economics of creative industries in the Commonwealth. The study used various labor market information, employment data, wage and salary measures, and survey data drawn from visual and performing artists, media, and design. The study found that the creative industry has a direct employment of over 60,000 Kentuckians, 36,000 indirect jobs, and nearly 12,000 direct creative jobs in non-creative enterprises. In total, 2.5 percent of Kentucky’s employment is in the creative industries, with an average annual wage of $34,299.
Ms. Meadows discussed “creative convergence,” which is a term given to reflect the ways in which creative industries intersect with other business sectors such as tourism, culinary arts, manufacturing, and technology. To enhance this relationship, the Kentucky Arts Council is exploring ways to enhance training, create strategic partnerships, and generate industry recognition. Recommendations were made, which include supporting the expansion of the University of Kentucky’s cooperative extension efforts in fine arts programs, encouraging businesses and workforce development training opportunities that support creative industries, coordinating statewide and regional endeavors to enhance community and economic development, and using creative resources to assist schools in implementing the National Core Arts Standards in the K-12 school system.
Mayor Steven Connelly, Berea, and Belle Jackson, Berea Tourism Association discussed the importance of arts-related tourism to their community. Both agreed that arts and crafts-related tourism has been important to Berea for well over half a century, and that continuing to build on its historical foundation is critical for the community. Drawing from lessons learned by other communities, Berea has created an annual “Festival of Learnshops,” which is a festival of creative workshops, lasting anywhere from two hours to two days, in a wide variety of disciplines such as glass and beadwork, wood turning, storytelling, and music. The festival draws thousands of participants from across the nation, and provides an enormous boost to the local economy. Mayor Connelly and Ms. Jackson discussed how each community should endeavor to find particular niches that can be developed, and how arts-related tourism is an important part of a community’s overall economic profile.
Hank Phillips, President and CEO of the Kentucky Travel Industry Association, provided an overview of the association and its mission. KTIA is a trade association composed of some 800 members whose businesses span the spectrum of the travel and tourism industry. KTIA’s services to the industry are divided into four primary areas, which are advocacy, education, information and business development.
Mr. Phillips said that the travel and tourism industry had a $13.1 billion economic impact in Kentucky in 2014, directly supporting 179,000 jobs and generating $1.37 billion in local and state tax revenue. The industry is composed of 54 diverse categories of businesses and organizations, small and large, operating in every area of the state. Tourism can be seen as an export industry, buy buyers (tourists) come to Kentucky to make purchases and then leave with products and memories.
The tourism industry faces certain difficulties, such as an insufficient level of consumer awareness by the traveling public and prospective visitors of the experiences and tourism opportunities available in Kentucky. Low awareness leads to depressed demand, which results in productivity not reaching its full potential. The limited awareness problem results from the next issue, which is far too few tourism marketing funds. One fact illustrates this issue: in 2013, Kentucky was last among southeastern states in the amount of state tourism advertising funds. This is compounded by the diversion of existing dedicated tourism marketing funds. During the last budget session of the legislature, the governor recommended and the legislature concurred in sweeping $9 million in statewide transient room tax monies and placing those statutorily dedicated tourism marketing funds in the General Fund budget. Currently, the Kentucky League of Cities is proposing that another key source of local tourism marketing funds, the restaurant tax, that up to 75 percent of those funds be removed from the local tourism commissions and be provided to the city governments, an action that would have an absolutely devastating impact on over 40 tourism commissions receiving them.
Mr. Phillips said that the KTIA is asking for help with “Connect, Protect, and Collect.” By “connect,” he said that help is sought to connect with the tourism industry and learn more about its contributions and importance and in turn taking that message to your colleagues in the legislature. The “protect” is to protect scarce existing tourism marketing funds from diversion to other purposes. By “collect,” the KTIA is asking legislators to use their influence and actions to insure that the statewide transient room taxes are fully collected and submitted both by traditional hotels and the rapidly emerging AirBnB type operations.
There being no further business, the meeting adjourned at 11:00 AM.