Two bills are moving forward to repeal the embattled Hawaii Tourism Authority this legislative session, which could prove one of the more contentious for the agency since state lawmakers gave it life in 1998.

Amended versions of House Bill 1375 and Senate Bill 1522 were slated to face a vote Tuesday in the chambers where they originated and could be approved or head to conference. Both bills passed out of their final committees last week after crossover. The bills seek to point HTA’s statutory mission more toward stewardship of home rather than tourism promotion, which had been HTA’s main focus for many years.

If neither bill is approved and the state budget becomes the vehicle to fund HTA, the agency faces another substantial hurdle as the current appropriation is $35 million — a more than 50% cut from the $75 million that it requested this legislative session. The request included $15 million to help the agency make up for receiving just $35 million in 2022 from Gov. David Ige, who found the agency federal funding after vetoing a so-called “gut-and-replace” capital improvements bill, which contained its only legislative appropriation.

Colin Moore, director of the University of Hawaii’s Public Policy Center, said, “It’s clear that the demand for reform in the Legislature is overwhelming. It appears that no matter what, at the end of the legislative session, HTA will be a very different or much weaker agency.”

HB 1375, which was introduced by Rep. Sean Quinlan (D, Waialua-­Kahuku-Waiahole) and other House members, in its current form provides a $60 million appropriation to establish an Office of Tourism and Destination Management within the Department of Business, Economic Development and Tourism that encompasses regenerative tourism and best-practice destination management. It also makes a $64 million appropriation to the Hawai‘i Convention Center to fund repairs for its leaky rooftop.

The measure, which is effective upon approval, dissolves HTA and its board of directors. It establishes a new nine-member board and transfers the agency’s functions, duties, appropriations and positions to the Office of Tourism and Destination Management. It caps the executive director’s salary at the same level as the DBEDT director’s salary and the assistant executive director’s pay at 90% of the top DBEDT job, which would likely have a trickle-down impact on HTA’s current pay rates, which have always been based on higher private- industry executive scales.

For example, according to the terms of HTA President and CEO John De Fries’ three-year contract, which ends Sept. 15, the base salary was $270,000 with an automatic 5% increase for each full year of the contract. In contrast, DBEDT Director Mike McCartney was making about $155,000 in 2022.

Sen. Donovan Dela Cruz (D, Wahiawa-Whitmore-­Mililani Mauka), who chairs the Senate Ways and Mean Committee, introduced SB 1522. The bill now has an effective date of June 30, 3000, which almost guarantees that it will head to conference. Similar to the House bill, in its current form the bill seeks to repeal HTA and instead establish within DBEDT an Office of Destination Management, which will be governed by a nine- member board of directors. The bill, which would be funded through the general fund, would require the Office of Destination Management to implement certain county destination management action plans. It establishes and appropriates funds for a tourism liaison officer within the Office of the Governor. The bill also caps salaries for HTA’s top two jobs.

HTA Chief Administrative Officer Daniel Naho‘opi‘i said the bills are a far cry from HTA’s origination in the Legislature, which followed a public-private effort over several years. Naho‘opi‘i, who worked at the Hawaii Visitors Bureau at the time of HTA’s creation, said the intent was to support tourism with dedicated funding that was outside the scope of politics. HTA back then was given a new funding base primarily for marketing that was expected to approach $60 million per year coming from the newly created transient accommodations tax.

De Fries, HTA president, told lawmakers that they gave birth to HTA in Chapter 201B-3 of the Hawaii Revised Statutes and that the newly proposed entity “reminds me of throwing the baby out but keeping the bathwater.”

De Fries said in 2020, HTA adopted a strategic plan from which its Destination Management Action Plan process sprung, and with the help of industry and community leaders was able to put an infrastructure and system in place that are now at work.

De Fries said 201B-3 was the “birth certificate” for HTA, and referred to new legislation as the “death certificate.”

Moore of the UH Public Policy Center had predicted that this year’s legislative session would be a rough one. A reason is that some Hawaii residents are still deeply critical of tourism, which has been blamed for everything from Hawaii’s high housing costs and traffic ills to over- tourism and degradation of natural resources and neighborhoods. HTA’s difficulty in awarding its largest U.S. tourism contract, which is in its third solicitation, also has cost it some visitor industry support.

It’s a sign of the times that proposed bills to dismantle HTA and a possible budget cut have advanced without vigorous pushback from the visitor industry, DBEDT or even the governor’s office. In the past, all mounted robust defensive strategies to support HTA when lawmakers threatened budget cuts or reorganization.

De Fries, HTA staff and HTA board members supported House Bill 1381 to fund a study to find and identify the best governance model for tourism. However, the bill didn’t get a hearing.

Rep. Richard Onishi (D, South Hilo-Keaau-Honuapo), who introduced HB 1381, said, “I’m very disappointed that the governance bill didn’t move. These bills seem to change the governance structure without knowing how this kind of structure would impact the tourism industry and the communities. I think they are all worried in terms of what is going to be the future.”

The bills also have raised red flags with organizations such as the Grassroot Institute of Hawaii, which is on record “as opposing the use of taxpayer funds to support the visitor industry, which is well able to pay for its own promotion.”

De Fries said a unanimous consensus from HTA’s board and staff has emerged in opposition to dissolving the HTA, which since passage of its 2020 Strategic Plan and the creation of Destination Management Action Plans has steadily taken on a more regenerative tourism role.

“We believe in our model, the trust we are growing with our communities and the results we are seeing across the islands,” he said. “What we are debating is how do we change. It’s a process. By merely taking HTA’s name off and putting a new name for an entity that basically is going to be doing the same thing that we are doing right now would be like changing the Stadium Authority and calling it the Office of Scrap Metal and Swap Meets.”

Keith Vieira, principal of KV &Associates, Hospitality Consulting, questioned putting HTA under DBEDT, which faces challenges in leadership following the Senate’s decision not to confirm Gov. Josh Green’s nominee Chris Sadayasu for director.

“What they want to create is worse than what HTA is now,” he said.

HTA Board Chair George Kam said reforming tourism governance requires a more thoughtful and well-funded approach. “You can’t shrink your way to success,” he said.

To be sure, local economist Paul Brewbaker told the Honolulu Star-Advertiser that the proposed HTA budget of $35 million is the equivalent in today’s dollars to $19 million in 1998, when HTA was created. A budget of $60 million in 1998 would be about $111 million in today’s dollars, he said.

Having a total of $35 million for destination marketing as well as destination management “doesn’t sound like enough to me,” Brewbaker said.

And, while Brewbaker said the bills “represent a good starting point,” he said they don’t do enough to further a “whole-of-government approach,” which to succeed requires broad “collaboration, coordination and cooperation” across departmental boundaries.

James Mak, who co- authored a brief with Brewbaker and Frank Haas called “Dissolving the HTA,” published Thursday by the University of Hawaii Economic Research Organization, said in an email that a “whole- of-government” approach would break down “structural deficiencies” at HTA.

“The purpose of (‘whole- of-government’) is to break down the ‘silos’ that we have talked about. Right now, HTA is literally running around like a chicken with its head chopped off trying to implement” the Destination Management Action Plans, he said. “In sum, there is likely a need for a separate entity to foster the (‘whole-of- government’) approach to tourism destination management and promotion. I think this is where the proposed study of governance systems comes in. More evidence needs to be gathered on how this approach has improved tourism governance in destinations that have adopted that approach.”

Haas noted in an email that repositioning Hawaii’s strong and long-established brand of sun/sand/surf and recreation in existing markets and attracting new and different types of visitors are a heavy lift that will require substantial spending.

“Ultimately, if we want to change the nature of Hawaii tourism, a different and well-funded marketing program is an essential part of a comprehensive tourism management program,” Haas said.

HTA Vice Chair Mike White, who was a state representative when HTA was created, called the current approach “irresponsible. They haven’t taken the time to do a study to see what the other models advise. To make those kinds of changes, you may not be able to recruit the level of talent that you need to run this organization.”

White declined to comment on personnel matters but said De Fries, who had his first performance evaluation during an executive session with the HTA board in March, is “all-in” and that “he’s the best man for the job right now.”

The agency faces an uphill climb. HTA Chief Brand Officer Kalani Ka‘ana‘ana said HTA already has been dealing with fallout due to the loss of its procurement exemption in 2021, as well as earlier budget cuts and changes to sources of funding that have made it difficult for HTA to execute competitive long-term contracts or promptly pay community groups.

De Fries said if current proposals come to pass, it’s likely that HTA “would have to reduce the scope of its work,” which means cuts not only to marketing, but to community programs as well.

White said it’s unlikely that HTA’s plans would include cutting its 23-member staff, which is already down by three and stretching to fulfill the agency’s mission. Still, Kam said many are worried, and that has strained working conditions, which had already been impacted by greater workloads and fewer resources.