A public hearing Wednesday on a state audit that found the Hawaii Tourism Authority suffered from “lax oversight (and) deficient internal controls” turned into a debate about whether the state’s record-setting tourism performance should override concerns about how the marketing agency operates.

The audit, released last week, recommended lawmakers consider additional oversight for HTA. The state agency, with an annual budget of $108 million generated from a tax on hotel rooms, is responsible for marketing Hawaii as a tourist destination.

HTA President and CEO George Szigeti told lawmakers that the agency helped Hawaii bring in a record 9.4 million visitors last year, who spent $16.8 billion and generated nearly $2 billion in taxes — “at a time when you were looking for money.”

The HTA reported Wednesday that yet another record was set in January when tourists spent $1.69 billion in the state.

The audit faulted HTA for not following state procurement and contracting practices, not limiting administrative spending, and for reimbursing executives for extravagant travel expenses that were not in compliance with state regulations.

Sen. Laura Thielen (D, Kailua-Waimanalo) said HTA has a “the end justifies the means” mentality.

State Auditor Les Kondo, who spoke at the hearing, questioned whether HTA can claim credit for the current tourism boom.

“Frankly, I’m not sure we can or maybe even HTA can determine how much of their efforts have increased tourism or spending,” Kondo said.

Thielen questioned how much tourism has actually grown when inflation is factored in.

“Isn’t it true when you account for inflation that tourism doesn’t receive more than it did in 1988, our peak year?” she said.

The audit specifically pointed to HTA’s lax oversight of contracts involving the Hawaii Visitors and Convention Bureau, AEG Management HHC LLC and Expedia. According to the audit, HTA also shifted $2 million in expenses previously classified as administrative to other budget lines to meet a reduced statutory limit.

The Senate Committee on Economic Development, Tourism and Technology and the House Committee on Tourism convened Wednesday’s informational briefing to address the audit’s recommendations. The briefing went on for more than three hours.

“The finding is that HTA is not accountable,” Kondo said. “Does HTA have the ability to allow first-class airfare when you and I don’t get to travel first class? Do they have the ability to allow HTA or AEG representatives to dine at Morimoto or Alan Wong’s? I would suggest to you that is an abuse of that discretion, that is a waste of state dollars.”

HTA vigorously defended itself with an 18-page response to the audit.

Rep. Isaac Choy (D, Manoa-Punahou) and Rep. Gene Ward (R, Hawaii Kai-Kalama Valley) spoke in support of the HTA.

Ward questioned whether any “deviant behavior” that HTA might have done was “way out of line” when compared with similar agencies in comparable destinations.

“How much money did they hit the taxpayer up by not doing what you said that they didn’t do?” Ward asked Kondo.

HTA said AEG, manager of the Hawai‘i Convention Center, has agreed to reimburse irregular expenses.

Brad Gessner, senior vice president of AEG Facilities, said AEG has saved Hawaii millions of dollars since taking over the convention center from SMG, which averaged $2.9 million in annual losses.

“We lost money in the first two years and posted profits during the last two years,” Gessner said.

Kondo said he did not have plans to rehash the audit other than to return to HTA within a couple of years to follow up on the agency’s progress in meeting the report’s recommendations.