Fatal flaws abound in the drastically overhauled Senate Bill 775, relating to the transient accommodations tax (TAT) — but state lawmakers seem bent on ignoring them.
The bill’s most fundamental flaw? It runs afoul of a November Hawaii Supreme Court ruling that basically rejects the “gut and replace” lawmaking maneuver just used on SB 775, House Draft 1. The shifty maneuver strips the contents of a bill late in the legislative process and replaces it with new subject matter that evades full public vetting.
The new version of SB 775 aims to allot $60 million in TAT (aka hotel room tax) revenues to the Hawaii Tourism Authority for normal operations. It also would funnel another $30 million from the TAT for grants to be doled out by a newly created Natural Resource Management Commission under the HTA. The grants would go to nonprofits and local government agencies to address impacts to natural resources and to manage open-space resources.
All these changes are a far cry from the original
SB 775, which sought to adjust the TAT rate based on yearly visitor arrivals. It aimed to raise the current 10.25% TAT by 2% after years in which visitor arrivals exceeded 9 million, and to decrease the rate by 2% if arrivals fell below 8 million. That bill passed the full Senate, 25-0.
Last Tuesday’s major changes by the House committees on Labor and Tourism, and on Finance, mean the amended SB 775 is unlikely to get three readings, as
constitutionally required. For any bill to become law,
Hawaii’s high court said in its position against gut-and-replace, “the three readings begin anew after a non-germane amendment changes the object or subject of a bill so that it is no longer related to the original bill as introduced.”
Non-germane changes have certainly occurred here — and even well-intentioned bills should not be allowed to skirt good-government processes.
Indeed, the proposed Natural Resource Management Commission has potential to do good by funneling tourism-derived dollars to upkeep Hawaii’s well-used natural sites. But the concept raises questions that must be vetted. Among them: To which root state agency should this commission be administratively attached — HTA or the state Department of Land and Natural Resources? DLNR seems to be the logical agency, which then raises the question of whether a new commission is needed, since the DLNR’s board could handle the grant decision-
making.
Pushback against overtourism has been mounting since before the pandemic, with record numbers of visitors topping 10 million in 2019. So it’s not surprising that HTA is under great pressure to refocus from pure tourism marketing to sustainable tourism. It’s also not surprising that a wide range of stakeholders — from environmental groups to visitor industry advocates — supports the
$30 million for a natural resources commission.
HTA, in fact, has been swatted around in recent years by the Legislature. Last year, the agency’s dedicated funding mechanism — a percentage of annual TAT take — was eliminated in another eleventh-hour gut-and-replace bill move. That loss for HTA was further compounded when its annual budget was cut from $79 million to $60 million, which ultimately was funded by federal American Rescue Plan Act (ARPA) money.
It’s unfortunate that funding for HTA, which helps drive Hawaii’s top economic engine, now rises or falls on political whims. But trying to slide in $60 million for operations via SB 775 is not sound policymaking.
Fortunately, HTA funding isn’t reliant on that flawed bill this year; the Senate’s version of the state budget bill,
HB 1600, does include $60 million for HTA, again thanks to ARPA funds. Clearly, though, federal funds won’t be available much longer as pandemic allocations end.
Hawaii residents deserve better than slapdash budgeting and ill-cobbled programs. Earmarking $30 million for natural resource management makes sense, but even good ideas deserve full public hearings, to optimize execution that sets them up for efficiency and success.
