Bill advances to cut Hawaii Tourism Authority funding

The Senate Ways and Means Committee advanced a measure Tuesday to dramatically cut funding to the Hawaii Tourism Authority, the state agency responsible for marketing Hawaii to the world.

All nine senators present at the WAM hearing voted for House Bill 2010, which in its latest version would reallocate as much as 40 percent of HTA’s share of transient accommodations taxes (TAT) to other state agencies. HTA receives $108.5 million in transient accommodations taxes from the state Legislature each year with $26.5 million of it earmarked for the Hawai‘i Convention Center.

In its original form, House Bill 2010 sought to forgive the debt that HTA owed to the state for construction of the convention center. However, the Senate Committee on Economic Development, Tourism and Technology gutted and replaced House Bill 2010 with Senate Bill 2224’s contents, which weren’t heard by the House Finance Committee.

House Bill 2010 now would cut HTA’s convention center fund to $6 million and HTA’s tourism fund to $60.3 million, roughly the amount the agency currently spends on marketing. It also appropriates $1 million to establish a Center for Hawaiian Music and Dance, a project that has ties to Sen. Donovan Dela Cruz’s outside work at WCIT Architecture and its offshoot, DTL Hawaii, which provides public relations and community outreach. Those two companies count HTA among their clients.

The Ways and Means Committee did not address recent criticisms that have surfaced over Dela Cruz’s potential conflicts of interest or the committee members’ rationale for supporting the gut-and-replace provisions. However, Dela Cruz previously told the Honolulu Star-Advertiser that he did not consider his work at WCIT and DTL Hawaii as conflicts. Dela Cruz, who serves as WAM chairman, said he and his committee support diverting HTA funds to address community concerns about the negative impacts of visitor industry growth.

“I can see us funding HTA in regards to marketing to maintain current levels, but not to continue funding HTA to get more and more visitors without addressing the impacts,” Dela Cruz said.

KC Connors, who lives in Koolauloa, said she supports reappropriating some of HTA’s funding for use by state agencies like the Department of Business, Economic Development and Tourism or the Department of Land and Natural Resources.

“It makes more sense from an economic development point of view to capture some of the tourism money and use it to try to develop industries that offer higher-paying jobs,” Connors said. “We’ve been too dependent on tourism for too long.”

Connors said she is concerned that most of the state’s recent tourism growth has come from illegal vacation rentals, which she says have put upward pressure on housing costs and contributed to the strain that tourism has put on infrastructure and natural resources.

But HTA President and CEO George Szigeti said last year’s record tourism results — the 9.4 million visitors who came to Hawaii and the $16.8 billion that they spent — helped support 204,000 jobs and returned nearly $2 billion in taxes to the state.

“Every dollar allocated to HTA through the tourism special fund, whether spent marketing Hawaii as a destination, developing programs and activities that reinvest in our communities and places, or supporting important programs for residents and visitors, benefits the state’s economy,” Szigeti said.

Keith Vieira, principal of KV &Associates, Hospitality Consulting LLC, said HTA’s TAT share has remained stagnant for years even though its efforts have helped increase state TAT from $395 million in fiscal year 2014 to $508 million in fiscal year 2017.

“It’s ridiculous to take away HTA’s funding when the state faces stiff competition from tourism destinations across the world. Growth isn’t automatic. If airline load factors start to drop, they’ll move planes,” he said.