HTA rushes to keep from losing $18M in special funds

HONOLULU — The rush is on.

The Hawaii Tourism Authority board on Thursday gave staff approval to move forward on 15 projects totalling $18 million to ensure the funds do not revert back to the state.

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HTA staff is now trying to encumber the funds either by creating purchase orders to buy goods and services or signing contracts that commit to purchases by June 30, the date the agency could lose access to any carryover money in its special fund.

HTA has $12 million in leftover tourism special funds 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 monies in the tourism special fund right now that are just sort of sitting there,” HTA Chief Administrative Officer Keith Regan said. “They can be used to do the work and carry out the mission of the HTA now. If we don’t lock those monies in for Hawaiian culture, natural resources, community as of July 1, they no longer become usable and will eventually just go back into the general fund.”

Regan said it could be a stretch for HTA to get all of the projects contracted before June 30, but the agency is working hard to get it done.

The move to obligate the spending of these funds is an end run around pending legislation that HTA says puts its future in jeopardy and takes away the kind of autonomy that has made it possible for the agency to execute multiyear projects and move nimbly. It also makes it harder for state lawmakers to interfere with HTA’s destination management priorities.

Lawmakers passed House Bill 862, which takes away the dedicated transient accommodations tax funding HTA has had 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 legislators why it should receive general funds. HTA also would lose its procurement exemption, a move that would require state approval for all future contracts and purchases.

Gov. David Ige has until June 21 to release his intent-to-veto list. However, in this case his hands might be tied.

Legislators left HTA funding out of House Bill 200, the state’s finance bill. If Ige vetoes HB 862, the federal funding that lawmakers allocated to HTA for fiscal year 2022 disappears, without any 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, the environment and the community.

HTA’s pillars were left 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 legislators would decide annually 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 Thursday meeting, “We’re doubling up on our commitment to those pillars.”

Most of the encumbered funds will be directed toward existing community enrichment programs and programs that preserve and protect Hawaiian culture and natural resources.

However, some funding will go to a couple of new programs, such as the $1.5 million earmarked to support implementation in partnership with the state Department of Land and Natural Resources of a statewide reservation system at state parks and trails. An additional $500,000 was allocated to support a pilot program to increase the number of Aloha Ambassadors in Waikiki for the summer travel surge.

HTA plans to encumber all $6 million in the special fund created for the Hawaiian Music and Dance Center.

Regan said all of the projects align with the strategic plan that HTA passed in January 2020.

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“It seems like, and we get the sense that, the Legislature, in general, has been encouraging HTA to do a lot of those things that we are actually doing in the strategic plan,” he said.

Regan said HTA’s hope is that “between now and the next session that we can share with the Legislature all these great things that we’ve been working on that address a lot of their concerns.”

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