Report Title:

Hawaii Tourism Authority; Audit

RESOLUTION

WHEREAS, Act 156, Session Laws of Hawaii (SLH) 1998, created the Hawaii Tourism Authority (HTA), raised the tourism accommodations tax (TAT) to 7.25 per cent, and distributed 37.9 per cent of the TAT to the tourism special fund under the HTA, beginning January 1, 1999; and

WHEREAS, the intent of the 37.9 per cent figure was to ensure a dedicated funding source of approximately $60,000,000 from the TAT to the HTA, and the conference committee report on the 1999 budget bill (Act 91, SLH 1999), provides "for the expenditure of up to $60 million in each fiscal year for the Hawaii Tourism Authority to strategically plan, coordinate and develop the tourism marketing initiatives"; and

WHEREAS, the HTA has in many ways succeeded in meeting the intent of its founders – to focus State tourism funding on marketing Hawaii – and visitor arrivals are up significantly and the projections for the future indicate growth will continue; and

WHEREAS, the Legislature recognizes these results and acknowledge that they were accomplished by a fledgling organization with limited personnel; and

WHEREAS, the Legislature finds, however, that after two years, the HTA remains in transition and appears unable to adequately explain its actions in a number of areas, including contracting, marketing, and accountability measures; and

WHEREAS, the Legislature is particularly concerned about the lack of accountability in spending public dollars, and the fact that, for the most part, the TAT moneys come from those who live outside of Hawaii does not mean the Legislature should be any less vigilant in its oversight; and

WHEREAS, the Legislature further finds a disturbing lack of communication among the members of the HTA board, as well as instances in which there is at least an appearance of a conflict of interest in board decisions – both of which affect the ability of the organization to function in an efficient and accountable manner; and

WHEREAS, the HTA law restricts administrative expenses to no more than three per cent of moneys in the tourism special fund, or approximately $1,800,000 currently, but for an organization that is intended to contract the majority of its activities, this is a substantial amount of money, particularly when contracting or out-sourcing the major portion of the $60,000,000 budget was intended to avoid creation of a tourism bureaucracy; and

WHEREAS, given the funding and the current staffing levels, the HTA might be expected to provide more information on the impacts of Hawaii's tourism industry, such as the hotel capacity of the State, the concerns of state agencies whose activities and programs indirectly affect tourism, and the State's infrastructure under the projected visitor growth scenarios, but has not done so; and

WHEREAS, legislation introduced in the 2001 Session proposes to transfer the responsibility for the convention center to the HTA, including authority over the expenditures of 17.3 per cent of the TAT reserved for the convention center; and

WHEREAS, if this legislation is approved, the HTA will control nearly fifty-five per cent of the revenues from the TAT – an amount approaching $100,000,000, given the current collections of $168,567,596 in fiscal year 2000, and the projections for growth in visitor arrivals; and

WHEREAS, the Legislature is concerned that the expenditure of such a significant amount of money in support of an industry so critical to the economic well being of the State should be more carefully monitored by the State; and

WHEREAS, the Auditor has previously conducted management audits of the convention center, but has not undertaken an audit of the HTA; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-First Legislature of the State of Hawaii, Regular Session of 2001, the House of Representatives concurring, that the Auditor is requested to conduct a management and financial audit of the Hawaii Tourism Authority; and

BE IT FURTHER RESOLVED that the Auditor's review is requested to include, but not be limited to:

BE IT FURTHER RESOLVED that the Auditor shall also review the current laws relating to tourism, including Chapter 201B, Hawaii Revised Statutes (HRS), which governs the Hawaii Tourism Authority, the tourism activities in sections 201-91 to 201-97, HRS, under the purview of the Department of Business, Economic Development, and Tourism, as well as those under Chapter 203, HRS, and shall make recommendations for amendments if these laws are found to be duplicative, or in any way detrimental to the efficient conduct of the State's activities related to tourism; and

BE IT FURTHER RESOLVED that the Auditor shall report all findings and recommendations twenty days prior to the convening of the Regular Session of 2002; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of Business, Economic Development, and Tourism, the Executive Director and the Chairman of the Board of the Hawaii Tourism Authority, and the Auditor.