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HB1517: Don’t resurrect tourism fund with HTA future in doubt

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the House Committee on Tourism on Jan. 30, 2024.
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Jan. 30, 2024
10 a.m.
Hawaii State Capitol
Conference Room 423 and Videoconference

To: House Committee on Tourism
      Rep. Sean Quinlan, Chair
      Rep. Natalia Hussey-Burdick, Vice-Chair

From: Ted Kefalas, Director of Strategic Campaigns
            Grassroot Institute of Hawaii

RE: HB1517 — RELATING TO THE TOURISM SPECIAL FUND

Comments only

Aloha Chair Quinlan, Vice-Chair Hussey-Burdick and other members of the Committee,

The Grassroot Institute of Hawaii would like to offer its comments on HB1517, which would reestablish the tourism special fund as a source of funding under Chapter 201B, which establishes the powers and duties of the Hawaiian Tourism Authority. 

The special fund would receive a portion of the transient accommodations tax as well as a $90 million appropriation, which is itself subject to further allocations.

With the reestablishment of the tourism special fund, the Legislature would come full circle on its contradictory and confusing approach to the HTA. Over the last several years, we have seen lawmakers consider defunding the HTA or dissolving it in favor of a new destination-management agency. In addition, both the public and policymakers have frequently expressed general dissatisfaction over the agency’s management and effectiveness. 

This proposal ignores that debate and restores generous funding to the HTA without ever resolving the issues that prompted lawmakers to reduce the HTA’s funding in the first place.

The tourism industry is critical to Hawaii’s economy, but it is clear that the industry is capable of paying for its own marketing. Allocating money to a tourism special fund would not be necessarily the best use of taxpayer dollars when Hawaii is already facing a budget crunch.

Moreover, subsidizing the tourism industry is not fair to other industries in Hawaii, nor is it optimal for Hawaii’s economy in general. One could even argue that it has contributed to the “overtourism” we hear so many people complaining about, and to our lack of economic diversity.

The Grassroot Institute of Hawaii suggests that instead of supporting this bill, the Legislature should consider halting HTA funding for at least five years, during which time it could properly measure the utility of the agency. 

We might find that reducing the TAT or other tourism taxes is as effective in fostering tourism as the HTA, but at a lower cost and with a higher benefit to the economy as a whole.  

Meanwhile, reallocating the funds intended for the HTA would give lawmakers the flexibility to reduce the budget or mitigate a tax cut.

Thank you for the opportunity to submit our comments.

Sincerely,

Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii

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