HTA emerges from legislative crosshairs in fight for funds

Mar. 31—It appears that all three carryover bills to upend HTA from last year have died, including House Bill 1375, Senate Bill 1522 and its companion House Bill 1376.

The Hawaii Tourism Authority is poised for a comeback in the state Legislature and in all likelihood will emerge this session with a recurring lump sum budget—that's no small feat for an agency that endured cutbacks, organizational changes, and the threat of defunding over the last several sessions and returned this year with the looming threat of carryover bills calling for its repeal.

It appears that all three carryover bills to upend HTA from last year have died, including House Bill 1375, Senate Bill 1522 and its companion House Bill 1376. Each bill sought to repeal the HTA and establish some sort of a destination management office within the state Department of Business, Economic Development and Tourism.

The agency, now, is looking to emerge from this Legislative session with the most support that it has had in years.

House Speaker Scott Saiki (D, Ala Moana-Kakaako-Downtown ) told the Honolulu Star-­Advertiser on Friday that the House has approved a $60 million recurring lump sum budget for HTA.

"There seems to have been a cooling off period between the Legislature and the HTA. There have also been some changes at HTA that have led to increased deliberation and communication with the Legislature. So all of these factors made a difference, " Saiki said. "I support an autonomous HTA."

Saiki said by proposing a recurring budget for HTA, lawmakers are ensuring that the agency's funding will continue without specific legislative approval.

"Recurring provides more certainty for the agency, knowing that their funding would not be decided on a year by year basis. It gives them more ability for longer-­range vision, work and planning, " Saiki said. "The message is that we are cautiously optimistic that the HTA is headed in a positive direction and that the HTA is being more accountable for its work."

HTA board Chair Mufi Hannemann told the Star-Advertiser on Friday that he was told that the Senate Committee on Ways and Means, referred to as WAM, also has passed a $63 million recurring budget for HTA, opening the door for HTA to get more funding than it has over the last couple of years.

HTA's budget still has more approval steps to go. It is slated to go to a full Senate floor vote this week, and then will advance to the conference committee where House and Senate negotiators will settle on a final amount.

HTA had been seeking $69 million for fiscal year 2025, which is up from the $60 million that it received for fiscal year 2024 and was approved in Gov. Josh Green's administrative budget for fiscal year 2025. While it's unlikely HTA will get its full request, Hannemann said he hoped legislative conferees will consider appropriating more than $60 million, which will allow HTA to continue increasing its focus on destination management, sporting events and workforce development.

"I am appreciative of Gov. Josh Green and the Legislature, especially House Speaker Scott Saiki and of WAM Chairperson Sen. Donovan Dela Cruz, for their support and responsiveness, " Hannemann said. "To go from two years of being defunded and attempts to being eliminated, and now to come out with recurring funding in the budget by the legislative branch and also no more talk of us being eliminated—this is great news for HTA and the industry."

HTA's current reality appears to be a big pivot from the start of the session, when HTA was tracking some 135 tourism bills.

Hannemann said HTA is in support of the major remaining tourism bills, such as Senate Bill 3364, which would amend HTA's powers and duties to bring its statutory mandate into alignment with the work it has been doing in regenerative tourism and destination management.

Another bill, Senate Bill 3006, which HTA supports, would allow the agency to sell or lease naming rights of the Hawai 'i Convention Center facility.

HTA also has supported House Bill 2563, the so-called visitor mobile app, which is still in play. The bill, introduced by Rep. Sean Quinlan (D, Waialua-Haleiwa-­Punaluu ), House Tourism Committee chair, would require HTA "to develop and publish, through a contract with a third party, a mobile application that includes all online application processes, including the collection of any applicable reservation fees, to acquire a reservation to conduct recreational and commercial activities in the State that are regulated by or under the jurisdiction of a state or county agency."

Agency at risk HTA's been on a roller coaster ride since it was created in 1998 with broad support to help the tourism industry overcome a seven-­year slump after the Japan bubble burst. HTA made strides in growing visitor arrivals ; however, dissatisfaction began to creep in when visitor arrivals hit a record 10.4 million in 2019.

Many lawmakers, especially those representing districts that were popular with tourists or where the greatest neighborhood spread of vacation rentals had occurred, faced intense community pressure to manage tourism impacts.

In recent years, HTA has pivoted from a singular focus on marketing and branding to a mission that puts more emphasis on natural resources, the community and growing tourism through visitor spending rather than arrivals.

But until now, those actions had not been enough to appease lawmakers, especially after a scathing 2018 audit, mounting cries of overtourism, constant HTA board and leadership changes, and highly publicized problems with procurement in 2022 and 2023.

Lawmakers trimmed HTA's budget to $79 million from $82 million in 2018, the same year that the agency received a negative HTA state audit that said it suffered from "lax oversight (and ) deficient internal controls."

Then, in 2021, HTA experienced major changes after legislators overrode Gov. David Ige's veto of House Bill 862, which took away the tourism agency's dedicated funding source and cut its annual budget to $60 million from $79 million. It also took away HTA's procurement exemption, a move that required HTA to get state approval for procured contracts and purchases.

In 2022, HTA found itself in legislative crosshairs again when state House and Senate conferees left HTA funding out of House Bill 1600 when approving their final version of the state's $17 billion supplemental budget for the upcoming fiscal year.

Ige vetoed House Bill 1147—the eleventh-­hour solution that state legislators cobbled together at the end of the session to save the agency's $60 million annual budget. Ige made HTA whole with federal funding ; however, his veto meant that HTA's budget was no longer recurring, and that meant the agency had to seek funding from year to year.

In 2023, HTA's procurement difficulties, which ended in two protests over its largest contract, the U.S. tourism contract, drew the ire of lawmakers. HTA was left without funding last year when lawmakers couldn't agree on HB 1375, which contained the only funding for the agency. The bill made it all the way to the end-of-session conference committee and stalled as House Draft 3, which would have created the Office of Tourism and Destination Management within DBEDT to take over HTA functions.

Sen. Lynn DeCoite (D, Hana-East and Upcountry Maui-Molokai-Lanai-­Kahoolawe ), chair of the Senate Committee on Energy, Economic Development and Tourism, referred to as EET, did not immediately respond to a request for comment on her current views regarding whether HTA should stay autonomous, as well as its funding and staffing requests.

However, Sen. Glenn Wakai (D, Kalihi-Salt Lake-Pearl Harbor ), majority floor leader and EET vice chair, said WAM is recommending a $63 million lump sum budget for HTA, which finds itself in a dramatically different place with the Legislature than it has over the last several years.

"For the past three years, they have been fighting with legislative, " Wakai said. "They've been defunded, received little funding, now they are back to some level of confidence that they will exist."

Sen. Sharon Moriwaki (D, Kakaako-McCully-Waikiki ) said the Senate's intent is for HTA's funding to be recurring.

New leadership Wakai said HTA's efforts to reorganize into more of a tourism management company rather than a marketing company has improved its image as have recent leadership changes.

"They aren't the lightning rod that they once were, " Wakai said. "Also (former HTA president and CEO ) John De Fries is out and (former HTA board Chair ) George Kam is gone. There's a new set of sheriffs. That's a dramatic change that has given lawmakers some level of confidence that they are moving in the right direction and should be rewarded."

Quinlan praised new HTA leadership additions, including Hannemann ; Daniel Naho 'opi 'i, HTA chief administrative officer and interim president and CEO ; and HTA Vice President of Finance Isaac Choy.

"The team has really gotten HTA in much better shape and moving in the right direction. There's a lot more confidence in the organization and in the people we have in place compared to two years ago. We've made significant progress, but look, as the representative for the North Shore, I still think we have a ways to go. We do a good job managing flows of money and collecting (transient accommodations taxes ). What we don't do a good job of yet is managing flows of people."

Quinlan said he is hopeful that the missing link could be solved by the visitor mobile app bill.

"HTA has been trying really hard for a decade to do destination management, but they don't really have the statutes, they didn't really have the resources, they can't tell the counties what to do, " he said. "The visitor mobile app gives us the ability to be ground up instead of top down. (It provides an opportunity ) for communities to come to HTA, to come to the government and say, 'We need help.'"