The state House of Representatives is allotting the Hawaii Tourism Authority a dollar to pay for its operations, and has eliminated all money for staffing in the version of the state budget that it transmitted to the Senate.

An earlier version of House Bill 1600, which was supported by HTA, provided the agency with a $60 million budget, which included funding for 25 positions, and a $28.5 million expenditure ceiling for a Hawai‘i Convention Center’s enterprise special fund. It also included $64 million in capital improvement funds to repair the convention center’s leaky roof.

The House’s transmitted version allocates $1 for the convention center and $1,000 to fix its roof. The entire House budget includes nearly $8.6 billion in general funds and almost $16.7 billion in all means of financing.

The Senate Committee on Ways and Means held a hearing Tuesday on the transmitted budget but deferred decision making until April 5. After WAM makes a decision on the budget, the House and Senate will come together to craft a final budget at the end of April, which will be voted on in early May.

Mike Mc­Cartney, executive director of the Department of Business Economic Development and Tourism, submitted testimony requesting that the Senate committee restore funding to the HTA and to the convention center, which falls under HTA’s oversight. HTA President and CEO John De Fries submitted a similar plea.

The budgetary whiplash was something of a deja vu moment for the embattled agency. Legislators in 2021 took out their frustrations about over-tourism by overriding Gov. David Ige’s veto of House Bill 862, which put HTA in jeopardy.

When that bill became law last year, it took away HTA’s dedicated funding source and cut its annual budget to $60 million from $79 million, which was appropriated through federal American Rescue Plan Act funds. The bill, which was created at the 11th hour through a legislative gut-and-replace maneuver, made the agency’s funding subject entirely to the whims of state lawmakers.

Frank Haas, president of Marketing Management Inc., said the passage of HB 862 made it clear that the agency’s funding procedure was going to change.

Haas said the House’s $1 provision is likely a legislative device signaling that HTA’s budget is up for debate. The odds of the Legislature actually appropriating just $1 are “probably pretty low,” he said. But even if the agency secures $60 million, Haas said, such an allocation would be preceded by “deep discussion.”

De Fries said in an email statement to the Honolulu Star-Advertiser that the use of placeholder budget dollar amounts “was anticipated as the starting point for future budget negotiations and should not be misinterpreted as an effort to defund or eliminate HTA.”

“Developing the state’s budget is an ongoing process between the House, Senate, and state administration. We appreciate all the efforts in both chambers, and we are in close communication with the leadership of the House, Senate and DBEDT,” he said. “We appreciated the opportunity to offer testimony on this bill today in the WAM Committee hearing.”

But Colin Moore, director of the University of Hawaii Public Policy Center, said the Legislature’s actions could prove to be a “real threat and not just a placeholder.”

“It’s fair to say HTA has come under more scrutiny in this budget process than any other state agency. I agree that some of this funding will likely be restored, but the Legislature is clearly indicating that there are going to need to be major changes,” Moore said.

“HTA is in a tough spot. There’s little political goodwill. I think they have tried very hard to pivot to destination management, but that doesn’t seem to be enough.”

Over the past several years, HTA and lawmakers have experienced considerable pushback from community members who say they have experienced the negative impacts of over-tourism in pockets of the state.

This year’s Senate Bill 1065 initially sought to take 97% of HTA’s funding and give it to the counties. While that massive cut was eliminated from that bill, Moore pointed out that House Bill 1785, which is still advancing, requires the Legislative Reference Bureau to conduct a study that identifies and analyzes alternative tourism governance systems.

The Senate Committee on Energy, Economic Development and Tourism is slated to hear HB 1785 shortly after 3 p.m. today in Conference Room 224.

Moore said he supports House Bill 1785, as does HTA. “I just hope the Legislature understands that it would be terrible public policy not to fund HTA when there’s nothing to replace it,” he said.

However, Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii, has a different view. Akina is among those who have questioned whether HTA is necessary, especially given the current tourism rebound.

“I hope this is a serious proposal and that Hawaii lawmakers are finally recognizing that our hospitality industry, which is wonderful and largely beneficial for Hawaii, already pays for its own marketing and doesn’t need to draw on scarce tax resources,” Akina said.

Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), chair of the state House Finance Committee, said the House used placeholders because HTA needs more scrutiny as it transitions from a strictly marketing agency to one focused more on destination management.

“We felt that we didn’t have enough information of their needs on the destination management side. They are giving us more information,” Luke said.

Based on preliminary discussions, Luke said HTA is going to need assistance to transition into a fuller destination management role.

“It may not be in the same pockets of funding, but it may be a different variety of support that will lead to similar amounts. I can’t really say exactly if it will end up being $60 (million) or a different number,” she said.

“But I think we are trying to be as supportive as we can as we figure out — before we hit 10 million tourists again — how we can look at tourism as a whole and how we can manage tourism, and then kind of figure out what’s tourism’s role in the overall state economy.”

Jerry Gibson, president of the Hawaii Hotel Alliance, said the onus will be on HTA and Hawaii’s tourism industry to show that the agency and the Hawai‘i Convention Center need the funds they are seeking.

“We need to get this destination going again. We need to get people here who want to be here for the right reasons. This is not going to be an easy climb,” Gibson said. “We have a lot of competition, and we want to win the best we can by doing the best we can. I don’t know that we’ve got enough money on the table, but we’re going to do with what we have.”

Keith Vieira, principal of KV & Associates, Hospitality Consulting, said given tourism’s role as an economic engine here, it’s hard to follow the logic of certain lawmakers.

“I think if legislators ever put as much effort into finding new or alternative sources of revenue as they put into trying to cut down tourism, we might have alternative businesses or ways to drive taxes and employment,” Vieira said. “But there aren’t any. They haven’t come up with any. Therefore, we should be putting our marketing dollars and our efforts into driving visitor spending in order to keep our economy afloat tax-wise and employment-wise.”

HTA was created as a marketing agency, but it reorganized in July to put greater focus on destination management, an effort that could stall if the agency’s budget is severely cut.

In written testimony submitted Tuesday to the Senate Committee on Ways and Means, De Fries said: “The centerpiece of all of our work is the vision of Malama Kuu Home (caring for my beloved home), which strives to achieve a regenerative tourism model that is responsive and sensitive to community needs.

“In its current form, HB1600 HD1 provides us with $1 in operating funds and no positions to continue this work.”

In vetoing House Bill 862, Ige said one of his concerns was to keep HTA’s destination management action plans going.

“In addition to our strategic plan, our work is guided by the community-generated Destination Management Action Plans — clear road maps to address kama­aina concerns, mitigating negative impacts and amplifying positive impacts of visitor activity,” De Fries said.

McCartney in his testimony joined De Fries in reiterating that promptly repairing the convention center’s rooftop deck would help avoid a potential safety hazard and a larger repair bill.