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The game is on.

State legislature has condemned Governor David Ige to a move that threatens funding for the Hawaii Tourism Authority.

What happens next will determine the fate of HTA. The agency had broad support when it was founded in 1998 to help the tourism industry overcome a seven-year slump after the Japanese bubble burst. But over the years the agency and its work have become increasingly politicized.

Legislature passed House Bill 862, which takes away the earmarked funding that HTA has had since its inception. If the governor signs HB 862, the HTA’s budget for fiscal 2023 would start from zero and the agency would need to justify to lawmakers why it should receive general funding. HTA would also lose its procurement exemption, a move that would require government approval for all future contracts and purchases.

Ige met with the HTA board in a board meeting on Wednesday for about four hours. The outcome of this conversation was not made public, although Ige recently agreed to support the agency.

“I am disappointed with what happened to HTA. … Loss of dedicated funds is a big problem, “Ige told the Honolulu Star Advertiser in an interview on April 29th.

Ige said the legislation leaves HTA with one-year funding, making it difficult to carry out multi-year efforts like the Goal Management Action Plan program that identifies trouble spots where there is friction between residents and visitors and develops an action plan to address them to solve.

“The visitor industry is number 1 in this state. It creates more than 200,000 jobs and we won’t see an economic recovery until the visitor industry has recovered, ”said Ige.

Ige has until June 21st to publish his list of vetoed intentions. In this case, however, his hands could be tied.

Legislators left HTA funding out of HB 200, the state’s financial accounts. If Ige vetoed HB 862, the federal funding that lawmakers allocated to HTA for fiscal 2022 will go away with no special funds to replace it.

Legislators also used the bill to remove the counties’ share of the $ 103 million temporary housing tax and give each county the right to increase their island’s TAT ​​by 3 percentage points.

HTA board member Fred Atkins said at the HTA board meeting on April 29th that the creators of HTA made it law-independent “because they knew how brutal politics can be.”

Former HTA board member Ku’uipo Kumukahi, whose term ended in April, said she feared the current situation would make HTA a pawn in a high-stakes game where no one wins. If HTA loses its special fund status, Kumukahi said, “In my heart it would be a really great job” that HTA receives enough future funding to survive.

Keith Vieira, principal of KV & Associates, Hospitality Consulting, said the agency and the temporary housing tax, which has been its source of funding from the start, have grown in influence over the years, placing it higher on the state legislature’s radar to have.

TAT began as a 5% tax to fund the Hawai’i Convention Center. Over time, it increased to 10.25% and raised more than $ 600 million in 2019, which Vieira said was used to fund many agencies and projects, including rail.

“Agreements were made and visitors paid mainly to fund tourism-related efforts,” said Vieira. “Now they are just trying, out of greed, to put everything in the general fund. That’s just wrong. It’s almost like stealing. “

Until the pandemic, HTA was part of the backbone of Hawaii’s key industry. Visitor arrivals reached a record 10.4 million in 2019, completing the long-term growth in record arrivals.

In recent years, HTA has grown from a unique focus on marketing and branding to a mission where the natural resources, community and growing tourism are more prominent through visitor spending rather than arrivals. But those measures have still not been enough to appease lawmakers, who cut funding for HTA from $ 82 million in 2018 to $ 79 million and now plans to cut it down to $ 60 million.

Residents’ sentiment towards tourism weakened during the pandemic, while hostility towards tourism began to increase as visitor numbers returned in greater numbers. The spread of illegal vacation rentals in neighborhoods – a trend that HTA has fought against in recent years – has only exacerbated the situation.

Frequent HTA leadership changes did not help either.

Former HTA board chairman Rick Fried, who chaired his last HTA board meeting on April 29, worked with four HTA CEOs during his seven-year tenure, including George Szigeti, interim president and CEO Marc Togashi, Chris Tatum and the current president and CEO John De Fries.

The HTA Board of Directors voted in 2018 to oust President and CEO George Szigeti for no reason after a critical government review that found the agency suffered from “lax oversight (and) poor internal controls”.

At the time of Szigeti’s departure, Fried said, “One of the main reasons we are doing this is the difficulty in the current political climate and the difficulty of keeping our budget through the Senate.”

More recently, the legislature has taken a critical look at the special exemptions for the financing and procurement of HTA. House Funding Chair Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu) said during a hearing at the HB 862 conference, “We know we have really worked on transparency and accountability this year, and we believe we have that does. “

State Senator Kurt Fevella (R, Ewa Beach-Iroquois Point) was the only dissenting vote when HB 862 left the conference. The vast majority of state legislators also supported the measure in voting. If lawmakers returned to session, they would likely have the two-thirds vote required for a veto override.

HTA hired De Fries last year to replace former Marriott executive Chris Tatum, who ran the agency for less than two years.

De Fries, the first native Hawaiian to head HTA, said the agency returned $ 20 to the state for every dollar spent in 2019. Now, says De Fries, the agency’s focus is on regenerative tourism, where the benefits of tourism outweigh the resources it consumes.

“When the governor met with me and the board of directors, he was very supportive and emphasized again how important it is for HTA to lead the visitor industry at a critical time in order not only to relaunch tourism, but also the sustainable relaunch of the Maintain tourism-run Hawaiian economy. Said De Fries. “At the same time, he expressed great concern about HB 862 and said his team is still investigating its options. It’s like trying to distribute an explosive. It is not easy.”

De Fries said that despite the fact that HB 862 was created through Gut-and-Replace, more than 200 people testified against the measure. He said it is important that the visitor industry and community continue to strengthen HTA’s industry leadership and the work it does in communities across the state.

Mufi Hannemann, president and CEO of the Hawaii Lodging & Tourism Association, said if HTA lost its funding or dissolved over time, the state would need to identify a new agency or division to effectively manage tourism in Hawaii.

But Keli’i Akina, president and CEO of the Grassroot Institute of Hawaii, said the state shouldn’t use scarce tax resources to fund tourism, which the hotel industry itself could support.

“Subsidizing the tourism industry is not fair to other industries in Hawaii, nor is it optimal for the economy in general. If anything, this has contributed to the “overtourism” so many people complain about and our lack of economic diversity, “Akina said. “All in all, now may be the perfect time for the state to save money while allowing Hawaii’s tourism industry to do it itself.”

Rep. Richard Onishi (D, South Hilo-Keaau-Honuapo), chairman of the House’s Labor and Tourism Committee, told the HTA Marketing Committee on April 28 that there are “numerous people in the public who even have a reduction The HTA call calls for the elimination of HTA and the requirement of marketing to the private sector. “

Onishi said the “unfortunate cuts” proposed by the Senate are “a slightly deeper issue than you know what you are doing right now. It goes back to this question of what HTA is supposed to do, and that’s a message that I don’t think gets well conveyed to lawmakers or the public. “

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Star Advertiser reporter Dan Nakaso contributed to this report.