Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Tourism and Intergovernmental Affairs, to which was referred S.B. No. 1029 entitled:

begs leave to report as follows:

The purpose of this measure is to assign the responsibility to market, operate, manage, and maintain the Hawaii convention center facility to the Hawaii Tourism Authority and to establish a Hawaii convention center enterprise special fund; to increase the number of public voting members of the HTA; and to increase the transient accommodation tax rate based on the number of visitor arrivals, with a portion of the moneys to be designated for state parks.

Your Committee received testimony in support of this measure from the Department of Business, Economic Development, and Tourism, Department of Land and Natural Resources, and Hawaii Tourism Authority (HTA). The State Auditor, Office of Information Practices, Hawaii Hotel Association, Hawaii Resort Developers Conference, Maui Hotel Association, Waikiki Improvement Association, Sheraton Hotels & Resorts Hawaii, Hawaii's Thousands Friends, Sierra Club Hawaii Chapter, and the Tax Foundation of Hawaii submitted comments.

Your Committee finds that there is considerable division within the tourism industry and the broader community on this measure. While there is general support for the proposal to transfer the responsibilities of the convention center to HTA, your Committee heard numerous concerns regarding the membership of the HTA and the phased increase of the tourism accommodations tax.

Your Committee fully understands the intent behind the creation of the HTA in 1998, but has expressed considerable frustration at the implementation thus far by the HTA. The HTA board has broad authority over a significant, dedicated source of funding, but apparently little oversight.

Your Committee finds that the HTA is unable to state clearly how the funds have been spent, why certain contracts were awarded, and how these contracts meet the needs of tourism marketing. Your Committee further finds that despite references in previous committee reports to a $60,000,000 "cap" on spending, there is no statutory ceiling on the moneys that may be expended by the HTA from the tourism special fund.

Your Committee does support assignment of the management of the Hawaii convention center to a tourism entity, such as the HTA. With the expiration of the convention center authority in 2000, this assignment is a prudent measure to ensure the continued operations of the convention center. Your Committee has concerns about the proposed increase in the transient accommodations tax, but believes it merits further discussion by the Legislature.

Your Committee has therefore focused its concerns on the oversight of tourism spending, and has amended this measure to:

With regards to the provision of the tax increase that would support the state parks, your Committee urges the Department of Land and Natural Resources, once it receives the moneys, to place its initial emphasis on parks security and safety, which will benefit residents and visitors alike.

As affirmed by the record of votes of the members of your Committee on Tourism and Intergovernmental Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1029, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1029, S.D. 1, and be referred to the Committee on Ways and Means.