Some Hawaii lawmakers want to channel $30 million annually from state visitor accommodation taxes to benefit local natural resources including parks, beaches and marine habitat.
A joint House of Representatives committee voted unanimously Tuesday for a bill that would do this through a proposed new commission, led by the Hawaii Tourism Authority’s CEO, by distributing the money via grants to nonprofit organizations and county and state agencies.
The measure, Senate Bill 775, received heavy support from environmental advocates as well as from several visitor industry stakeholders. But some dissent exists over the proposed commission and special fund.
Also, the bill could test the bounds of a recent Hawaii Supreme Court decision given that the content in the measure approved Tuesday did not receive a public airing in the Senate earlier — when the bill proposed a completely different change to Hawaii’s transient accommodations tax.
Originally, SB 775 aimed to boost the TAT’s existing 10.25% rate by 2% after years in which visitor arrivals reach or exceed 9 million, and to decrease the rate by 2% but not below 10.25% if arrivals total fewer than 8 million.
On Tuesday the House Committee on Labor and Tourism, along with the House Finance Committee, held a public hearing on a proposed new draft of the bill — aiming to create a natural resource management commission that would receive $30 million in TAT revenue for distribution to nonprofits as well as local government agencies “to address impacts to natural resources and manage natural and open space resources that are important to residents and the visitor industry.”
Additionally, the new draft of the bill would give HTA $60 million from TAT revenue for normal operations.
Hawaii’s TAT generated more than $600 million in 2019, when tourism surpassed the mark of 10 million visitor arrivals. HTA automatically secured a share of the tax revenue until 2021 when lawmakers did away with dedicated funding and cut the agency’s budget to $60 million from its per-pandemic rate of about $80 million.
The envisioned natural resource management commission would have 17 members — HTA’s CEO as chair, four state department directors, four county visitors bureau directors, a tourism industry representative, a Hawaiian cultural representative, a young adult with experience in environmental preservation and five representatives of nonprofit organizations — each with expertise in a different environmental issue.
”I think that this allocation could make a really big difference, a transformational difference, for (natural resources) work and for the implications of that work on our island for future generations,” Carissa Cabrera, an Oahu-based marine conservationist, told the committees.
“I also think that it’s high time that visitors play a role in giving back to our island that they also get to enjoy during their time here.”
About 90 individuals and organizations submitted written testimony supporting the proposed draft of
SB 775 discussed Tuesday, including The Nature Conservancy, Sustainable Coastlines Hawai‘i, The Surfrider Foundation, Hawai‘i Wildlife Fund, Resources Legacy Fund, The Trust for Public Land, Friends of Hanauma Bay and Climate Protectors Hawai‘i.
Visitor industry stakeholders expressing support included HTA, Hawaiian Airlines, the Hawai‘i Lodging and Tourism Association, the Maui Hotel and Lodging Association and The Kohala Coast Resort Association.
The state Department of Budget and Finance opposed the measure in part because placing the commission under HTA as opposed to one of the state’s principal departments might run afoul of Hawaii’s Constitution.
Craig Hirai, the agency’s director, also raised a concern that conflicts of interest could arise with entities represented on the commission applying for and receiving grants, and added that the state Department of Land and Natural Resources is better aligned to carry out what is proposed in the House draft of SB 775.
DLNR Director Suzanne Case told the committees that it would be more efficient for such a fund to be administered by DLNR with grant decisions made by the agency’s board.
Currently, DLNR receives $3 million a year in TAT revenue to spend on natural resource management. This allocation would be eliminated under the new draft of SB 775.
State Rep. Patrick Branco (D, Kailua-Kaneohe) raised a concern about how much TAT revenue could be spent by the commission and grant recipients on personnel and administrative costs. Under the bill, up to $900,000 (3%) could be spent by the commission, and up to $1.5 million (5%) could be spent by grant recipients on such costs, which the Finance Committee member viewed as expensive.
“I think this is an innovative and great idea, but I don’t know if this is the right mechanism,” Branco said.
State Rep. Richard Onishi (D, South Hilo-Keaau-Honuapo) endorsed the measure as chair of the Labor and Tourism Committee and suggested that state agencies also be allowed to seek and receive grants from the proposed commission.
SB 775, with Onishi’s suggested change, was approved on a 7-0 vote by the Labor and Tourism Committee. The Finance Committee, chaired by state Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), voted 13-0 for the bill.
If the full House approves the bill, it could be considered by the Senate for approval as is or get referred to a House-Senate conference committee to negotiate changes.
If enacted without additional hearings in the Senate, SB 775 could be vulnerable to legal challenge over the controversial practice of gutting and replacing contents of bills well into the legislative session.
In November the Hawaii Supreme Court declared a 2018 law unconstitutional because it stemmed from a bill that didn’t receive three separate readings in both the state House and Senate while pertaining to the same subject.
The 2018 law had to do with a hurricane shelter mandate under a bill that originally had to do with prison inmate data, though both were related to public safety.
SB 775 was passed by two Senate committees in February, followed by a 25-0 vote in the full Senate in March, while pertaining to the proposed TAT rate change.
