The Hawaii Tourism Authority is headed for another rough round in the Legislature, but the stakes are higher this session, when for the first time, the agency’s future is entirely dependent on getting a share of general funds from state lawmakers.
Even before the Legislature’s opening day last week, HTA was already facing intense scrutiny. During a briefing Tuesday before the Senate Committee on Ways and Means and the Committee on Energy, Economic Development, Tourism and Technology, several lawmakers made it clear that HTA is really going to have to justify why it needs its full biennium budget request of $75 million in fiscal year 2024 and $60 million in fiscal year 2025.
In fact, HTA must justify its very existence.
Committee members grilled HTA officials at the briefing, and, ultimately, some threw out proposals ranging from defunding the agency to changing it from an attached agency that is governed by an appointed board to a state agency that falls under the full oversight of the state Department of Business, Economic Development and Tourism.
“Over the past two and a half years, Hawaii experienced and has survived a massive economic collapse thanks to a coordinated effort between the private and public sectors,” said HTA President and CEO John De Fries in a statement following the briefing. “In concert with our partners and stakeholders, led by our Senate-confirmed board of directors and operationalized by a dedicated HTA staff, our agency has been guiding and supporting the recovery of our tourism industry which has helped to resuscitate Hawaii’s overall economy ahead of projections.
“At this time, the community’s universal call for tourism management has never been more resounding and urgent,” De Fries said. “The budget request we presented will allow us to support Hawaii’s largest industry while fulfilling our responsibility in destination management and visitor education. We look forward to a rigorous and productive Legislative session.”
Rigorous could be an understatement, given the tenor of the briefing.
“It’s going to be a very rough session for HTA,” said Colin Moore, director of the University of Hawaii’s Public Policy Center. “Public opinion has largely been against them, and I think legislators are very sensitive to that.”
Moore said HTA has made an effort to address the community’s call for more tourism management through Destination Management Action Plans, but he doesn’t think HTA’s role has filtered down into public consciousness. Moore said fallout from two failed procurements for the U.S. tourism contract “cements an image in the Legislature that (HTA) is mismanaged whether that’s fair or not, and it was already a politically weakened institution going into that.”
IT’S HARD to know how the session will end for HTA, which has been in the hot seat for many years. Lawmakers trimmed HTA’s budget in 2018. Then, in 2021, HTA experienced major changes after legislators overrode former 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.
HTA’s exemption that allowed it to opt out of state procurement rules also was taken away in 2021 by legislators, who said the move was geared to making HTA more accountable and to address complaints about lack of transparency within the agency.
Last year, House and Senate conferees left HTA funding out of the state’s $17 billion supplemental budget, and legislative conflict over alternative bills put the agency’s financial outlook in jeopardy.
Lawmakers used so-called gut and replace to amend House Bill 1147 — originally just a capital improvements measure — after the deadline for fiscal bills to save the agency’s $60 million annual budget. The bill was vetoed by Ige, who later funded HTA with $35 million in federal American Rescue Plan Act money.
Since Tuesday’s briefing, several legislators said there has been talk at the state Capitol of introducing a bill this session to disband HTA. On the flip side, Senate Bill 364, which was introduced Friday, allocates $60 million in transient accommodation taxes to HTA and establishes a Natural Resource Management Commission, which would be administratively placed within HTA and funded through a $30 million natural resource management special fund.
Rep. Richard Onishi (D, South Hilo-Keaau-Honuapo) said he plans to bring back a bill from last year that sought to have the Legislative Reference Bureau study best practices for tourism management across the world to come up with a new governance model for Hawaii tourism. Onishi said the study, which would be due in 2025, would not have an immediate impact on HTA but could have an impact on the organization down the road.
“The issues surrounding the industry — the impact with the 10 million visitors, capacity, natural resource management — all of those things have changed significantly since the creation of HTA or any governance model that we had before,” he said. “I believe a study is really important for the Legislature to look at how to move forward.”
Moore, who worked with visitor industry consultants Frank Haas and John Knox to help Onishi draft legislation for the tourism study, said, “I think we need a new governing model, and maybe that means a new version of HTA that doesn’t have all the baggage and has the authority to do what it is we think they need to do.”
DURING THE Tuesday briefing, several lawmakers expressed disappointment over the HTA’s track record with procurement, especially for its top U.S. tourism contract, which is now heading toward a third solicitation.
Sen. Kurt Fevella (R, Ewa Beach-Iroquois Point) has indicated he does not favor a third solicitation, which he said was the result of an eleventh-hour decision by former DBEDT Director Mike McCartney to walk away from a settlement agreement with bidding parties and could ultimately end in litigation.
“You guys making something complicated of something that he destroyed and screwed up. Just end it and go back to you guys’ regular way of doing it,” Fevella said. “If that’s the case, we don’t need you guys. Seriously, just put everything in DBEDT.”
During the briefing, Sen. Donna Mercado Kim (D, Kalihi Valley-Moanalua-Halawa) suggested that lawmakers consider a five-year moratorium on funding HTA to determine if the agency is needed.
One of Kim’s key questions was whether HTA’s decision to seek two U.S. tourism contracts during the third procurement — one for destination management and the other for branding — was properly vetted. She also sought clarification on how HTA planned to integrate the two contracts.
Sen. Glenn Wakai (D, Kalihi-Salt Lake-Aliamanu) expressed concern over a followup report released by the state Office of the Auditor in September, which showed that HTA has fully implemented only five and partially implemented 16 of 27 audit recommendations that came out of a scathing 2018 audit that found the agency had “lax oversight” and “deficient internal controls” over its largest contracts.
Senators also criticized HTA for lack of transparency, which included refusing to make clear how much of the budget was expected to go toward the two U.S. tourism contracts.
Marc Togashi, HTA vice president of finance, told the senators, “We have to be careful in what we communicate because the (request for proposals) is currently still being drafted.”
Some lawmakers also questioned the effectiveness of HTA’s board, saying they had received complaints that board members rubber-stamped HTA staff recommendations and allowed McCartney to control procurement for the U.S. tourism contract.
Stephanie Donoho, administrative director for the Kohala Coast Resort Association, said it’s the job of lawmakers to scrutinize HTA but that ending the agency would be a mistake.
“HTA since its inception has gathered a vast group of community organizations and industry partners working collectively on big-picture goals like how do we take tourism and help it support our islands,” she said. “If we were to throw away the good will that has come because of HTA bringing in that diverse group of partners, I think that’s a misstep.”
Donoho said she was running the Clear Creek County Tourism Bureau Office in Colorado when that state’s tourism authority decided it didn’t need a statewide tourism office and that each community had to do its own marketing.
“My little county was between Denver Metro Convention and Visitors Bureau and Ski Country USA. Tell me how I would compete in a little residential community of 10,000?” she said. “We didn’t, we couldn’t, so I think we would go backwards if HTA didn’t get any funding. It lifts up all the smaller festivals and events and all the smaller community projects. It lifts up and it provides support to the island visitor bureaus, which I believe are an essential part of people understanding the diversity of Hawaii.”
But Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii, isn’t convinced of HTA’s usefulness.
“I recognize that tourism is an extremely valuable part of the Hawaii economy, and it’s important that we market Hawaii as a tourist destination at the highest level. But promoting tourism would be better left in the hands of the tourism industry itself,” Akina said. “The airlines, hotels and many other industry players are more than able to handle this themselves, and they are in a better position to gauge the results of their efforts.”
He added, “At the very least, the Legislature should consider the suggestion that it halt HTA funding for five years. That would be a pilot program I would like to see.”
