Hawaii Tourism Authority faces possible defunding by state

  • Cruise ship passengers from the Pride of America and others check out the Kailua Pier on March 12, 2020. The Hawaii Tourism Authority has started planning for the possibility the organization could be defunded by the state. (Chelsea Jensen/West Hawaii Today)

HONOLULU — The Hawaii Tourism Authority has started planning for the possibility the organization could be defunded by the state.

Officials at the agency responsible for leading statewide tourism recovery said the authority is in a dire financial situation, the Honolulu Star-Advertiser reported Monday.

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The agency was established by the state Legislature in 1998 to serve as the state’s lead agency supporting tourism.

Gov. David Ige issued an executive order after the outbreak of the coronavirus pandemic ceasing transient accommodations tax disbursements to the authority.

The agency in 2019 received $79 million in transient accommodations tax funds and another $16.5 million for the Hawaii Convention Center.

In fiscal year 2020, the authority received only the first four months of its tax distribution. The agency cut its fiscal budget in September to $48 million from $86 million, followed by another cut in November to $41 million.

The authority is operating through funding from prior years and budget cuts, while rapidly burning through its reserves.

Without the restoration of funding by Ige, the authority said it would be down to $10 million by June 30, the end of fiscal year 2021.

“At $10 million with no added funding. I would be in a winding-down phase,” authority President John De Fries said.

De Fries said he and Chief Administrative Officer Keith Regan “are looking at what amounts to being kind of doomsday scenarios.”

“We haven’t presented it to the board yet, but I mean, with that kind of dramatic loss in funding, it would eventually render HTA limited in whatever it could do,” De Fries said.

De Fries said he hopes to meet with Ige to request full restoration of the agency’s budget.

The state Senate Committee on Energy, Economic Development and Tourism sent a Jan. 4 letter to Ige advocating for the restoration of transient accommodations tax disbursement to replenish the agency.

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“Defunding them will mean employment for our neighbors will continue to evaporate,” Democratic state Sen. Glenn Wakai, the committee chair, wrote in the letter. “HTA is the fulcrum that will catapult Hawaii out of its financial misery.”

Ige replied with a letter saying the state would revisit the tax suspension “as revenues improve.”

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