Gut-and-replace bill threatens Tourism Authority funding

·4 min read

Apr. 9—The Hawaii Tourism Authority, the agency responsible for leading tourism recovery across the islands, is at risk of losing funding again due to 11th-hour maneuvering at the state Legislature.

Some Hawaii senators have introduced a version of HB 862 () that guts the third section of a mostly aerospace bill and replaces it with a proposal to amend Section 201B-2 of the Hawaii Revised Statutes, which would make sweeping budgetary and other changes to HTA.

The Senate Ways and Means and the Senate Commerce and Consumer Protection committees are slated to hold a public hearing on the measure today at 10 :30 a.m. ( /hearingnotice ).

At the same time, the Senate has proposed cutting HTA's current appropriation in HB 200, the budget bill, to $48 million from $79 million.

If these actions move forward, they would cut HTA's current budget by more than 60 %. They would eliminate HTA's annual transient accommodations tax disbursement and force the agency to seek annual funding from state legislators.

HTA's new mandate would refocus the agency and its funds on its original marketing and branding functions, one of its four pillars, instead of prioritizing new pillars like Hawaiian culture, environment and the community. The change would be a significant turnaround from the agency's pivot toward more of a destination management role after Hawaii surpassed 10 million visitors and the impacts generated pushback from some pockets of the community and state Legislature.

HTA President and CEO John De Fries declined to be interviewed until after the hearing. However, he submitted testimony in strong opposition to the bill, which, he said, "takes a sledgehammer to HTA and three of its four strategic pillars (Hawaiian culture, natural resources, and community ), just as we launch our tourism recovery strategies that will help our devastated economy heal from the effects of the COVID-19 pandemic."

This latest attempt to cut HTA and make it less autonomous follows a tough period for the agency, which has struggled to find balance as tourism arrivals went from boom to a pandemic-related bust and only this spring have begun recovering.

Gov. David Ige issued an executive order earlier in the pandemic ceasing transient accommodations tax disbursements to HTA.

HTA in 2019 received $79 million in TAT funds and another $16.5 million for the Hawai 'i Convention Center. In fiscal year 2020 HTA received only the first four months of its TAT distribution and cut its fiscal budget in September to $48 million from $86 million and then down to $41 million in November.

Ige pledged his support for full restoration of HTA's TAT when he joined De Fries and the HTA board at a special meeting in February.

That was a relief for the agency, which had said that without a TAT infusion its funds would be down to just $10 million by June 30, the end of fiscal year 2021. But the Senate's latest push has once again made the agency's future unclear.

Sen. Glenn Wakai, chairman of the state Senate Committee on Energy, Economic Development and Tourism, said Thursday that he supported restoring some TAT to HTA. However, Wakai is among the senators championing a reduction in HTA's funding and calling for the agency to shift its core functions back to marketing and branding.

"The guts of what's in the bill are to remove three of the four pillars. We're taking away natural resources, responsibility for culture and community—there are other state agencies that can do this, " Wakai said. "HTA will be focused on branding and doing some research. We're going to go back to what they were originally established to do."

Wakai said the bill stems from a need to reduce the size of government and its budget, while making state agencies more efficient and more accountable to the public.

Earlier this year Wakai was critical of the way that HTA had spent its dwindling resources. For example, it cost HTA roughly $15, 614 on marketing for every visitor from Japan who flew into the state in April, which was the worst month of the pandemic-related tourism collapse.

Wakai also questioned HTA's decision to put another $250, 000 into the Center for Hawaiian Music and Dance at a time when resources are strained.

"It just goes back to us trying to hold HTA accountable for public dollars, " he said. "If the House sees that things are fine, then we'll negotiate that across the table. From the Senate's point of view, we want to at least have the discussion and shed some light on some of the spending practices of HTA."

De Fries said the proposed cuts and operational changes come at a time when tourism is at a critical juncture.

In fiscal year 2019 HTA helped bring $631 million in TAT collections to the state. But while tourism has enjoyed a spring break rebound, full recovery is still some years out.

State economist Eugene Tian said the Hawaii Council on Revenues in March estimated TAT for fiscal year 2020 at $560.6 million and at just $184.5 million for fiscal year 2021.

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