What Does It Mean for HTA to be Administratively Attached to DBEDT?

by Paul Brewbaker, Frank Haas, and James Mak, UHERO, August 8, 2023

Hawaii Tourism Authority (HTA) was established by Act 156 in 1998 and is administratively attached to the State Department of Business, Economic Development and Tourism (DBEDT). HTA’s mission is “To strategically manage Hawaii tourism in a sustainable manner consistent with the economic goals, cultural values, preservation of natural resources, community desires and visitor industry needs.” Hawaii Revised Statutes HRS 201B describes in great detail HTA’s mission, organization structure, powers and duties. Currently, there are nine other state agencies that are also administratively attached to DBEDT including the Agribusiness Development Corporation, Hawaii Community Development Authority, Hawaii Housing Finance & Development Corporation, Stadium Authority, and others.

HRS Chapter 26-35 spells out the requirements that apply to an agency (“board or commission”) that’s administratively attached to a state department:

(1) The head of the department represents the agency in communications with the governor and with the legislature, unless the legislature or a legislative committee requests to communicate directly with the agency;

(2) An administratively attached agency must submit its budget request through the head of the department and included in the budget of the department;

(3) Rules adopted by the agency are subject to approval by the governor;

(4) Decisions related to an agency’s personnel (e.g. employment, promotion, transfer, etc.) are determined by the agency but subject to the approval of the head of the department and applicable personnel laws;

(5) Purchases of supplies, equipment or furniture by the agency are also subject to the approval of the head of the department;

(6) The department has the power to allocate space to be used by the agency;

(7) Any quasi-judicial functions of the agency are not subject to the approval, review, or control of the head of the department; and

(8) The head of the department does not have the power to supervise or control the administratively attached agency in the exercise of its functions, duties, and powers.

In other words, under Chapter 26-35, the head of the department to which an agency is administratively attached acts as intermediary between the agency and the governor/legislature and has final say on the agency’s purchasing and personnel decisions, but cannot usurp the agency’s statutory powers and interfere with the agency’s work.

The advantage of attaching agencies administratively to departments comes from cost-savings from sharing support services (administrative resources); at the same time it allows the important work of the agencies to continue unimpeded. Hawaii is not the only state that has administratively attached agencies. For example, New Hampshire and New Mexico also have statutes with similar provisions that apply to their administratively attached agencies.

Perhaps, because of the economic importance of tourism to the State, Chapter 201B-5 states that “the authority shall be exempt from section 26-35”, with the exception of items #2, #3, #7 and #8. The exemption means that HTA can communicate directly with the governor and the legislature. It can buy supplies, equipment and furniture, allocate space to be used by the authority, and hire consultants and engage “qualified persons” to implement the State’s marketing plan without approval from the department. That gives HTA more freedom to manage its own affairs; at the same time, direct communication between legislators/governor and HTA allows legislators and the governor direct oversight of HTA. Exceptions #7 and #8 reaffirm provisions in Chapter 26-35 that prohibit the DBEDT director from usurping the HTA’s powers and obstructing its duties. Consequently, DBEDT has had little to do when it came to managing its tourism portfolio.1

For HTA, being administratively attached to DBEDT didn’t impede its work; that is, until recently when (former) DBEDT director, Mike McCartney, controversially canceled U.S. marketing and destination management contracts awarded by HTA because they were “not in the best interest” of the state. McCartney’s actions raised the question of who is actually running HTA. If current statutes (201B, 26-35 and Hawaii Public Procurement Code, 103D) lack clarity on the division of authority between HTA and DBEDT, they need to be fixed.

So, what’s the significance of all of this? Central to this is the question: what is the best tourism governance structure for Hawaii? Good governance implies an effective organization equipped to deal with issues. Unhappy with HTA’s perceived slow pivot from destination marketing to destination management, state lawmakers almost dissolved HTA during the 2023 legislative session. House bill HB1375 H.D.3 S.D.3 sought to dissolve HTA and establish within DBEDT for administrative purposes an Office of Tourism and Destination Management with powers and duties described in Chapter 201B. This proposed new agency essentially amounts to a name change and would not improve tourism governance in the state. At the last minute HTA got a reprieve but still faces an existential threat in the 2024 legislative session.

In an effort to stave off extinction, HTA is rushing to complete its own tourism governance study before the next legislative session; the study, among other things, “…must evaluate the overall governance structure…”2 The project time frame of three-months is more than ambitious. (Perhaps feeling pressure from the legislature, HTA is simultaneously engaging in reorganization before the governance study is completed.3) We believe that such a study should carefully examine Chapter 201B to ascertain HTA’s future role in managing Destination Hawaii. It is not to justify the continuation of HTA as the designated provider of “comprehensive management of tourism for the State of Hawaii.” By its own admission, HTA has failed in that task, though not entirely of its own fault.4 Chapter 201B is faulty and needs to be fixed. The study might conclude that an entirely different governance structure is needed. We have argued that a whole-of-government approach to tourism governance—that involves not just HTA but other state and county government agencies with shared and clearly defined responsibilities and adequate funding—would work best for Hawaii. HTA can’t do it alone. This essay argues that the study must also address the role of DBEDT in tourism governance and its relationship with HTA.

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Footnotes

1 Paul Brewbaker is fond of referring to DBEDT as “DBEDT with a silent T”. The department prepares tourism forecasts as part of its regular population and economic forecasts for the State. The critically important task of collecting official tourism statistics was transferred from HTA to DBEDT effective July 1, 2021.

2 Hawaii Tourism Authority, Staff Request to the Board of Directors, July 13, 2023.

3 Allison Schaefers, “HTA to focus on destination stewardship,” Honolulu Star Advertiser, July 31, 2023, B1 and B4.

4 Hawaii Tourism Authority, Staff Request to the Board of Directors, July 13, 2023. The staff presentation to the HTA board of directors requesting the governance study says the following: “The HTA strategic plan and destination action plans recommend actions that require coordination with other agencies, entities, and organizations. However, limitations on resources and personnel and the lack of a formal system of coordination and enforcement capacities make it difficult to achieve results.”