Hawaii Legislature Cuts Tourism Agency's Budget by 3 Percent

Evening in Honolulu, Oahu

After threatening deep cuts to the budget of the Hawaii Tourism Authority, the state legislature passed a pared-down version of the bill Tuesday, according to M&C's sister publication, Travel Weekly.

The legislation, which came to a vote in both chambers on the last day of the legislative session, adds restrictions on HTA spending while also relieving the authority of debt related to Hawaii Convention Center operations.

The state Senate had pushed for deeper cuts of up to 44 percent of HTA's budget, including a more than $21 million reduction to its main operating fund. But after the Hawaii House and Senate met in conference, the final version significantly scaled back the funding reductions. The bill calls for a 3% cut, from $82 million to $79 million. The legislation now moves to the desk of Gov. David Ige.

The HTA receives $108.5 million from the state's Transient Accommodations Tax each year, with $26.5 million designated for the convention center. The state took on the debt related to convention center, relieving HTA of the $190 million balance while also reducing the funding earmarked for the convention center to $16.5 million.

Previously, the HTA reimbursed the state $26.4 million annually for debt service on bonds issued to build the $350 million facility, though in recent years it had been holding back $6 million of that payment.

The bill adds stipulations on where funds should be spent, but the HTA's ability to manage tourism and marketing programs and apply the tourism fund as they see fit was largely left untouched.

In addition to getting the convention center debt off its books, the HTA was also granted an extra $1 million to address homelessness in tourism areas. That sum will be matched by the Hawaii Lodging & Tourism Association.

The HTA enjoys more autonomy than other state entities, but the legislature has been angling for more control. In February, the state auditor issued a scathing report on the HTA, pointing out lax oversight of spending and a failure to follow internal rules and procedures.

The cuts to the HTA's budget come as the state is experiencing its seventh consecutive year of record arrivals and tourism spending. The Transient Accommodations Tax from hotels and lodging in Hawaii generated a record $546 million in revenue in fiscal year 2018.