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The rush is on.
The Hawaii Tourism Authority Board of Directors on Thursday gave staff approval to advance 15 projects totaling $18 million to ensure the funds do not revert to the state.
HTA staff are now trying to encumber funds either by creating purchase orders to buy goods and services or by signing contracts that commit to buying by June 30, when the agency could lose access to any money carried over into its special fund.
HTA has $12 million in special funds for tourism and about $6 million that has been parked for years in a special fund created for the Hawaiian Music and Dance Center.
“We recognize that there are currently funds in the special tourism fund that are sort of sitting there,” HTA chief executive Keith Regan said. “They can be used to do the job and carry out the HTA’s mission now. If we don’t freeze these funds for Hawaiian culture, natural resources, and community beginning July 1, they will no longer become usable and will eventually revert to the general fund.
Regan said it might be difficult for HTA to get all the projects signed by June 30, but the agency is working hard to achieve that.
The move to force the spending of those funds is a pending end around pending legislation that HTA says puts its future at risk and takes away the kind of autonomy that has allowed the agency to execute projects. multi-year plans and to act with agility. It is also more difficult for state legislators to interfere with HTA’s destination management priorities.
Lawmakers passed House Bill 862, which removes dedicated transient accommodation tax funding for HTA since its founding. If the governor signs HB 862, HTA’s fiscal year 2023 budget starts at zero, and the agency would have to justify to lawmakers why it should receive general funds. HTA would also lose its procurement exemption, a decision that would require state approval for all future contracts and purchases.
Governor David Ige has until June 21 to release his veto intent list. However, in this case, his hands might be tied.
Lawmakers left HTA funding out of House Bill 200, the state’s budget bill. If Ige vetoes HB 862, the federal funding lawmakers allocated to HTA for fiscal year 2022 disappears, with no special funds to replace it.
An earlier version of HB 862 would have refocused the agency and its funds on its original marketing and branding functions, one of its four “pillars,” instead of prioritizing new pillars like Hawaiian culture, l environment and community.
The pillars of HTA remained intact in the version of the bill that was forwarded to the Governor. Still, if HB 862 and HB 200 are signed by Ige, state lawmakers would decide each year how much funding HTA should get, and it’s unclear whether the agency could count on future support for its pillars.
HTA President and CEO John De Fries told the board at its meeting on Thursday, “We are doubling down on our commitment to these pillars.”
Kalani Kaanaana, director of Hawaiian cultural affairs for the agency, said, “Investing in our community, our environment and our Hawaiian culture is essential for the visitor industry today and for the benefit of our children in the long term. The leadership and decision of the Board of Directors will allow us to have an impact and meet the priorities of our strategic plan, as well as the community-led destination management action plans, in order to improve the quality of lives of residents across the state.
Most of the encumbered funds will be directed to existing community enrichment programs and programs that preserve and protect Hawaiian culture and natural resources.
However, some of the funding will go towards a few new programs, such as the $1.5 million to support the implementation in partnership with the State Department of Lands and Natural Resources of a reservation system at the statewide at state parks and trails. An additional $500,000 has been allocated to support a pilot program to increase the number of Aloha Ambassadors in Waikiki for the summer travel wave.
HTA plans to encumber the $6 million special fund created for the Hawaiian Music and Dance Center.
Kaanaana, who inherited the music center project when he joined HTA, has been trying for several years to evaluate sites that might be a better fit than the rooftop of the Hawai’i Convention Center. Prior to Kaanaana’s time, HTA paid over $800,000 for consultancy work to create a Hawaiian music and dance center at the convention center, only to find the state could not afford the 98 million dollars it would cost to build.
Last year, the HTA board approved a request from Kaanaana to release $250,000 of those funds to explore the creation of a virtual museum.
When asked what the $6 million would be used for, Kaanaana said, “We are currently evaluating the best course of action that allows these funds to be spent responsibly and that achieves the vision set out by the Museum. Hawaiian Music and Dance Committee.
State Rep. Richard Onishi (D, South Hilo-Keaau-Honuapo), chairman of the House Labor and Tourism Committee, had few reservations about HTA’s rush to encumber special funds — although he wasn’t sure he had to move that fast.
“I thought the bill we originally tabled would allow them to access the funds until December. I am trying to get clarification on whether it is available to them or not,” Onishi said. “At this point, I have no problem with (encumbering the funds). If they can’t access it after June 30, that makes sense.
He said the legislature previously agreed that putting the Hawaiian center on the roof was not a good idea and removed the location restriction to allow HTA to develop it elsewhere. However, Onishi said the agency would still have to issue a request for proposals to spend the money, and “I don’t think it’s possible in less than two months.”
State Sen. Glenn Wakai (D, Kalihi-Salt Lake-Aliamanu), who chairs the Senate Committee on Energy, Economic Development and Tourism, was far less supportive of HTA’s actions than Onishi.
“The continued Achilles’ heel of government bureaucrats is that they spend money just because it’s there, not because it’s being used properly, and we saw that evidence in (Thursday’s) actions. “Wakai said.
If Ige signs the invoices, Wakai said, HTA’s budget will be reduced, but it will have $60 million to spend on projects. He called the board’s decision “a mad rush to waste money” and also expressed concern that HTA could use its procurement exemption to fulfill hasty contracts that are “only wanted by a friend of somebody”.
“That’s why we put them on supply, so these types of shenanigans don’t continue,” he said.
Regan said all projects align with the strategic plan adopted by HTA in January 2020.
“It seems that, and we feel that, the legislature, in general, has encouraged HTA to do a lot of these things that we actually do in the strategic plan,” he said.
Regan said HTA’s hope is that “by the next session we can share with the Legislative Assembly all of these great things that we have been working on that address a lot of their concerns.”
