Clash erupts over HTA budget request

The director of the state Department of Business, Economic Development and Tourism is planning to make a $70 million legislative budget request for the Hawai‘i Tourism Authority, even though its board, of which he is a voting member, voted to request a higher amount.

The HTA board voted 7-3 during a spirited and lengthy special meeting Sept. 13 to seek an $80 million budget, which was transmitted to DBEDT Director Jimmy Tokioka. On Friday, Tokioka told the Honolulu Star-Advertiser that he planned to reduce HTA’s budget request by $10 million before transmitting it to Gov. Josh Green and state Director of Finance Luis P. Salaveria.

Tokioka said Salaveria had instructed him to stay within HTA’s base budget; however, he said he is advocating for a $7 million increase because “there were some programs that needed additional funding and I was trying to be as congenial with the HTA board as possible. I’m not trying to be an obstructionist, but the $80 million — $17 million more than the base of what we were instructed to do — I cannot support that.”

Tokioka’s decision runs contrary to the wishes of HTA Chair Mufi Hannemann, HTA board vice chair Mahina Paishon, HTA board members Stephanie Iona, James McCully, Blaine Miyasato, Roy Pfund and Mike White, who voted to approve the higher amount.

David Arakawa, who chairs HTA’s Budget, Finance and Convention Center Committee, committee vice chair Kimberly Agas and Tokioka, who serves on that committee, instead favored a recommendation that came out of their committee to support a base budget of $70 million along with two additional supplemental requests for up to $10 million to fund medium- to lower-­priority items.

While Tokioka voted for the losing side, he said that, ultimately, HTA’s budget is his decision. He pointed out that HTA reports to DBEDT as of July 1, when Senate Bill 3364 went into effect, repealing the exemption of HTA from the administrative supervision of boards and commissions.

Tokioka said the change means that HTA is now “an attached agency and needing approval for expenditures, the budget and (spending categories).”

HTA emerged from last year’s legislative session with a recurring lump-sum budget of $63 million — no small feat for an agency that between 2018 and 2023 endured cutbacks, organizational changes, the threat of defunding and possible repeal.

However, the exemption removed by Rep. Sean Quinlan (D, Waialua-Haleiwa-­Punaluu), House Tourism Committee chair, was the last one HTA had from when it was founded in 1998. It lost its procurement exemption in 2021, and in 2022 the agency lost its special fund status.

“What’s happened over the last few years is that there’s been a lack of trust between the Legislature and HTA, and I think passage of (SB 3364) is reflective of that lack of trust. Whether it’s warranted is harder to say,” Quinlan said. “When we removed their dedicated funding source, it really gave the Legislature a lot more influence over HTA’s operations.”

Quinlan said HTA’s bungled procurement of the multimillion-dollar U.S. tourism award in 2021 and 2022 “was a red flag to a lot of folks in the Legislature that HTA might need more oversight.”

State Sen. Lynn DeCoite (D, Hana-East and Upcountry Maui-Molokai-Lanai-­Kahoolawe), chair of the Senate Committee on Energy, Economic Development and Tourism, said she’s been monitoring the HTA board’s “back and forth” but has chosen not to get in the middle.

“I think that they should have that discussion internally. Aside from what they approved on their budget and what Director Tokioka is looking at doing, they’ll have to justify the funds that they had this year and see whether it has merit to move forward in the ask, as well as whether there are funds available to even hit the $70 million,” DeCoite said.

“As you know, we have to consider the Maui wildfires and we also have to consider hazardous payouts.”

She said she wants to make sure HTA is as diversified as possible, and that it is able to quantify its return on investment. For instance, she said, “the films in Hawaii showcase our beautiful landscapes and environment. How many people are touched by those, versus those who have actually seen an advertisement on behalf of our marketing?

“On my side, I’m wanting to consider where am I getting my biggest bang for the buck because it’s taxpayer dollars.”

She said the “Hawaii Five-0” TV series value-add during prime time was $100 million, “so they are marketing around the world and its streaming.”

In contrast, DeCoite said when she asked about the effectiveness of an HTA advertisement, she learned that “60 percent of the people who came to Hawaii never saw it.”

Daniel Naho‘opi‘i, HTA interim president and CEO, told the Star-Advertiser that if “HTA’s board-adopted request for a base budget of $80 million is not approved, it would most noticeably impact our ability to implement much-needed market saturation campaigns in key source markets and cooperative industry programs intended to stimulate travel bookings to Hawaii in the short term.”

“Additionally, we would have to pull back on our airport greetings program that ensure the Hawaiian Islands brand is incorporated in the visitor experience from arrival to departure, efforts to develop sports tourism opportunities, our visibility and effectiveness at major industry trade shows, and our workforce development program.”

Naho‘opi‘i said the HTA’s staff budget request is well below its 2018 budget of $88.5 million and 2009 budget of $88 million, and the disparity would be even greater if adjusted for inflation.

‘I had to be realistic’

Tokioka, who rose through the ranks of Hawaii’s visitor industry from busser to general manager and served as a Kauai County Council member and state legislator, said, “I wish we had a $90 million budget, but that’s not realistic and I had to be realistic.”

He said, however, that he was able to justify a $7 million increase to HTA’s base budget to support key marketing and sports programming, the airport music and entertainment program, and some additional signature events.

Council for Native Hawaiian Advancement CEO Kuhio Lewis, Maui visitor industry executives Angela Vento and Josh Hargrove, and longtime visitor industry leader Keith Vieira were among those urging the HTA board to seek a higher budget.

Vieira told the Star-Advertiser Friday, “Does (Tokioka) understand that he is in charge of economics for the state? Our booking pace is down compared to destinations that we know that are spending more money.”

“Our state is trying to recover the economy. We are trying to put people back to work, and HTA doesn’t have enough of a marketing budget to do it,” he said. “They should spend at least $80 million, and we can prove that there will be a return.”

HTA board members Miyasato and Iona questioned Tokioka’s decision not to advance the will of the board and said they plan to continue advocating for more funding.

Iona noted that when she served as chair of Hawaii Health Systems Corp.’s Kauai Region, “If the majority voted, the board’s decision went forward because it was the board’s decision. I give Director Tokioka every respect for his position, but on that board it was a 2-to-1 vote for the $80 million and that’s where it should stay, plain and simple because the board voted.”

Iona said the situation where Tokioka is a voting member of the board for the agency that he oversees “puts Jimmy in a very awkward place.”

“Is it the right thing? In his view it could be,” she said. “But in my view it’s about a world-class destination and providing the needed dollars to make more support for our islands.”

Miyasato said the HTA board is at a crossroads again as the “unintended consequences” of SB 3364 play out.

“(Tokioka) is doing what now he’s allowed to do by statute, so it’s different than it was a year ago. I think from that perspective, he’s doing the right thing,” he said. “But the sort of wonkiness of it is that he’s also in the conversations … . Either this board has the ability to affect the changes or revisions or improvements or whatever it has to do with the express outcome of divining the results by the state of Hawaii up and down the measurements (or not).

“We’ve lost so much. I feel like we’re being dismantled and torn apart from within; it’s not even coming from the square building (state Capitol),” he said. “The vote is a big part of the organization, and the people who voted in favor of this have the requisite experience in this industry to make these determinations.”

Small changes

Colin Moore, who teaches public policy at the University of Hawaii and is an associate professor at the University of Hawaii Economic Research Organization, said previous DBEDT Director Mike McCartney had a nonvoting seat on the board.

“I think this has been a slow progression to give DBEDT more control over HTA. One thing you begin to see around this issue is that there’s been these small marginal changes, and there’s never really been an attempt to reconceive our tourism governance model from the ground up,” Moore said. “As a result, you get these somewhat unusual or ambiguous situations like we are seeing now.

“I’m not really sure that I have an opinion on whether this is good or bad, but it doesn’t really seem like what anyone would have developed as the ideal situation.”

HTA board member Arakawa pointed out that the chairperson of the state Board of Agriculture also serves as the director of the Department of Agriculture, and the same is true for the state Department of Land and Natural Resources and its corresponding board.

He said in his view, Tokioka’s role as a voting member of the HTA board makes him a better advocate for the agency he oversees.

“I look at it like we are darn lucky, and the reason why is that in (Tokioka’s) position he’s seeing everything, and based on that big picture he can say HTA really deserves more money,” Arakawa said. “In my opinion, it’s not about the $80 million HTA high and medium priorities budget request versus the 2024 HTA DBEDT ‘guardrails-­oversight’ law that passed. The bottom line is trust and the best financial interests of the state.”

Tokioka said he is comfortable with his dual role and that some of the current tensions may ease once HTA has a full board. He said Green is appointing Todd Apo, former Honolulu City Council chair and longtime tourism industry and nonprofit executive, to fill Sig Zane’s open seat.

“I worked with Todd. we were both county council members at the same time. I was on Kauai and he was on Oahu,” Tokioka said. “I have a lot of respect for him, and he’s a volunteer referee. He’ll be good at being neutral.”