The Hawaii Tourism Authority is in the legislative crosshairs again, and its funding has come down to the wire.

State House and Senate conferees left HTA funding out of House Bill 1600 when approving their final version of the state’s $17 billion supplemental budget for the upcoming fiscal year Wednesday.

The agency could get funded through House Bill 1785 or Senate Bill 775; however, if neither of these heavily amended bills advances, HTA will get defunded.

“At the state Legislature our budget for fiscal 2023 is tied directly to two bills, which remain active at this time, and negotiations are still pending between the two houses,” HTA President and CEO John De Fries told the HTA board Thursday. “The future of that will be determined in the next 24 to 48 hours.”

Lawmakers must reach agreement and pass at least one of the measures today, the deadline for fiscal bills.

Even if lawmakers reach resolution, the fluidity of the situation could bring major changes affecting HTA, as well as the state’s visitor industry and taxpayers.

If HB 1785 passes, the tourism agency will face new legislative controls. The bill seeks to reorganize HTA and designate how much of its budget should be spent on administration costs and the agency’s “four pillars”: natural resources, Hawaiian culture, community and brand marketing.

That’s on top of an HTA budget cut in 2018 and major changes in 2021 when legislators overrode 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.

The current version of SB 775 funds HTA without strings but also creates an additional agency, a Natural Resource Management Commission, with an appropriation of $30 million.

There’s a standoff between Sen. Glenn Wakai (D, Kalihi-Salt Lake-Aliamanu), who chairs the Senate Committee on Energy, Economic Development and Tourism, and Rep. Richard Onishi (D, South Hilo-Keaau-Honuapo), chair of the House Labor and Tourism Committee.

“It’s imperative that one of the bills moves forward, or HTA gets defunded,” Wakai said. “We are not receptive to Onishi’s idea of putting them under special funds, nor are we inclined to agree to his $30 million of (transient accommodations tax) for some conservation commission.”

Wakai said Senate conferees support HB 1785, which Onishi introduced to create a new model for tourism governance by 2025. Wakai’s committee, along with the Senate Committee on Government Operations, in March amended HB 1785 to reorganize HTA.

Wakai said HB 1785 keeps HTA going with $60 million in American Rescue Plan Act funds. It also provides a $28.5 million expenditure ceiling for the Hawai‘i Convention Center’s enterprise special fund.

He told HTA at its Thursday board meeting that the Senate version of HB 1785 retains all 25 HTA employees and adds funding for an additional employee. However, lawmakers inserted a reorganization chart assigning pay and redescribing some of the positions.

The bill puts HTA’s community-developed Destination Management Action Plans into statute to ensure continuity of funding, he said.

Wakai said the bill also would require HTA to make its marketing contracts performance-based, and to limit the scope of a contractor’s work to the pillar they were hired to address.

Onishi said the House is working with the Senate to figure out which bill to use to fund HTA.

“As far as we are concerned, HB 1785 micromanages HTA, and we don’t want to do that,” Onishi said. “We always depend upon their board to provide the oversight and the big question as to how the budget is set up.

“Our House preference is SB 775 because it provides the funding for HTA and establishes the Natural Resource Management Commission.”

Onishi said he wants HB 1785 to fulfill its original intent to direct the Legislative Reference Bureau to conduct a study that identifies and analyzes alternative tourism governance systems.

Joe Kent, Grassroot Institute of Hawaii executive vice president, said in an email: “The real question is whether the HTA should be funded at all, since it would save tax dollars and foster economic sustainability to let the tourism industry pay for its own advertising and management.

“It is also concerning that the Legislature seems to be testing the limits of the recent ‘gut and replace’ court ruling, since the language of these two bills has morphed substantially since their original versions.”

SB 775, introduced in 2021, proposed to raise Hawaii’s transient accommodations tax rate, and as such was passed by two Senate committees and a 25-0 vote in the full Senate.

On April 1 the House Committee on Labor and Tourism, along with the House Finance Committee, announced that a public hearing had been scheduled on a proposed new draft of the bill, which no longer included a rate increase and instead created and funded a natural resources commission.

HB 1875 appears to have made more progress than SB 775 since legislative conferees have already been appointed and the bill has been discussed with HTA. However, much can change, as has been the status quo throughout the current session.

Uncertainty over HTA’s future has been building since late March when the House transmitted a version of the state budget that allotted only $1 to pay for HTA operations and eliminated all money for staffing, while allocating just $1 for the convention center and $1,000 to fix its roof.

The Senate eliminated HTA funding from the state budget and instead had tied potential funding to a bill that provides lawmakers with greater ability to redirect the agency’s mission.

HTA was established in 1998 through a legislative act to serve as the state’s lead agency supporting tourism, and since its inception has faced various lawmaker-driven funding and organizational changes.

About 20 years ago legislators amended an appropriations bill to require that the same contractor market and manage the Hawai‘i Convention Center. It was only in the past few years that this statutory requirement was lifted.

The HTA has come under greater scrutiny by lawmakers over the past few years as community sentiment toward tourism has fallen. The negative feelings were so strong that they did not rebound during Hawaii’s pandemic-related economic collapse. It left the community, including lawmakers, even more undecided about whether HTA should prioritize tourism marketing or tourism management.

“We’re bipolar in our views on tourism,” said Wakai while serving as a panelist at the April 19 “Global Perspectives and Local Initiatives for Managing Tourism” event by the Hospitality and Tourism Education Department at Ka­piolani Community College.

“We love it because it provides all these jobs, and at the same time we hate it and vilify it because it provides some of the impacts that we have discussed tonight,” he said.

Colin Moore, director of the University of Hawaii Public Policy Center, said there have been “a lot more fights between the chambers” about tourism and a host of other issues over the past few years.

“The most visible piece of policy (this session) was the minimum wage, and that’s come down to this game of chicken as well,” Moore said. “There’s no entity that can replace HTA. I think it will get worked out because it has to; nobody wants to be the legislator that sinks the tourism industry. That’s a bit of an exaggeration, but there would be tremendous consequences, real blowback if it happened.”

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Star-Advertiser reporter Andrew Gomes contributed to this story.