Report Title:

Tourism; Hawaii Tourism Authority

 

Description:

Transfers responsibility for the tourism special fund to the department of business, economic development, and tourism; establishes the five-year tourism marketing plan under chapter 203 in chapter 201; establishes the tourism registry in chapter 201; amends the transient accommodations tax to allow the rate to increase based on the number of visitor arrivals, with a portion of the revenues to be expended for the operation and maintenance of state parks; repeals chapters 201B and 203, Hawaii Revised Statutes. (SD1)

 

 

THE SENATE

S.B. NO.

336336

TWENTY-FIRST LEGISLATURE, 2001

S.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO Tourism.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

Section 1. The legislature finds that 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. 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."

The legislature further finds that under current law, the HTA has broad authority in expending the moneys in the tourism special fund. While required to submit a complete and detailed report of its activities to the governor and the legislature, the HTA is not required to seek approval for its activities before expending any moneys in the tourism special fund.

The legislature is concerned that the expenditure of $60,000,000 annually in support of an industry so critical to the economic well being of the State should be more carefully monitored by the State.

The legislature is further concerned that in addition to chapter 201B, Hawaii Revised Statutes (HRS), which governs the Hawaii tourism authority, the department of business, economic development, and tourism retains some responsibilities for tourism activities under sections 201-91 to 201-97, HRS, as well as under chapter 203, HRS. The legislature finds this duplicative, confusing, and detrimental to the efficient conduct of the State's activities related to tourism.

The purposes of this Act are to:

(1) Transfer responsibility for the tourism special fund to the department of business, economic development, and tourism;

(2) Establish the five-year tourism marketing plan under chapter 203, Hawaii Revised Statutes (HRS), in chapter 201, HRS;

(3) Establish a tourism registry in chapter 201, HRS; and

(4) Repeal chapters 201B and 203, HRS.

SECTION 2. Chapter 201, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"201-   Tourism special fund. (a) There is established in the state treasury the tourism special fund, into which shall be deposited:

(1) A portion of the revenues from any transient accommodations tax, as provided by section 237D-6.5; and

(2) Appropriations by the legislature to the tourism special fund; and

(3) Gifts, grants, and other funds accepted by the department.

(b) Moneys in the tourism special fund may be placed in interest-bearing accounts or otherwise invested by the department until such time as the moneys may be needed. All interest accruing from the investment of these moneys shall be credited to the tourism special fund.

(c) Moneys in the tourism special fund shall be used by the department for the purposes of this chapter; provided that not more than three per cent of this amount shall be used for administrative expenses.

201-   Five-year tourism marketing plan; procedures for submission and evaluation of proposals; measures of effectiveness; report. (a) The office of tourism shall be responsible for developing and annually updating a tourism marketing plan for the subsequent five years that includes but is not limited to the following:

(1) Identification and evaluation of current and future tourism needs for the different regions of the State;

(2) Goals and objectives in accordance with identified needs;

(3) Statewide promotional efforts and programs;

(4) Targeted markets;

(5) Measures of effectiveness for the office's promotional programs; and

(6) Coordination of marketing plans of all destination marketing organizations receiving state funding and departmentally initiated marketing plans prior to finalization of the office's marketing plan.

The five-year tourism marketing plan shall be updated and submitted to the legislature not less than twenty days prior to the convening of each regular session.

(b) All marketing programs, including those of destination marketing organizations receiving state funding and state department initiated plans, prior to finalization, shall be transmitted to the office of tourism for coordination with the office's tourism marketing plan, in accordance with subsection (a). The office of tourism shall be responsible for establishing procedures for the selection and evaluation of statewide tourism promotion projects. The procedures shall include submission of proposals to the office prior to disbursement of any tourism promotion funds, and a final report at the completion of the project to be submitted by the funded entity to the office. All statewide tourism promotion contracts, including the Hawaii Visitors and Convention Bureau, shall be subject to this subsection.

(c) In accordance with subsection (a), the office shall be responsible for developing measures of effectiveness to assess the overall benefits and effectiveness of the marketing plan and include documentation of the directly attributable benefits of the plan to the following:

(1) Hawaii's tourism industry;

(2) Employment in Hawaii;

(3) State taxes; and

(4) The State's lesser known and underutilized destinations.

(d) The office shall submit annual reports regarding the status and execution of the marketing plan and the effectiveness of the promotions to the legislature twenty days prior to the convening of the regular session in each year.

"201-   Hawaii tourism registry; promotion of Hawaii by state residents traveling out-of-state. (a) The department shall establish a registry of groups of state residents, who plan to travel out-of-state, to market or promote Hawaii as a tourist destination, which shall be known as the "Hawaii tourism registry".

(b) The department shall promote the Hawaii tourism registry and advertise how groups may be included in the registry, including through the establishment of an Internet website, which shall:

(1) Discuss and promote the Hawaii tourism registry;

(2) Specify qualifications for registration;

(3) Advertise the possibility of entering into contracts and the awarding of grants, including information regarding how groups may qualify for contracts and grants;

(4) List the groups that are registered; and

(5) Specify the destination of each particular group, the travel dates, the number of individuals in each party, and the marketing or promotional goals and objectives of each group.

(c) Groups intended for inclusion in the Hawaii tourism registry shall:

(1) Consist of five or more Hawaii resident individuals, who may be related to each other by birth or marriage, and may be nonprofit or for-profit organizations; and

(2) Intend to travel to out-of-state destinations for purposes that are not solely tourism-related, for example, professional, business, cultural, or fraternal organizations or associations attending conventions or meetings, dance troupes and hula halau, groups having common interests, hobbies, or avocations, and high school or college bands performing in concerts or parades.

(d) The department shall work with each qualified group prior to travel to coordinate the promotional or marketing plans, goals, activities, and objectives to be targeted, including Hawaii sports, culture, health, education, business, eco-tourism, and techno-tourism.

(e) The department may:

(1) Contract with a private entity or individuals to implement or assist in the implementation of this section;

(2) Enter into agreements with groups in the Hawaii tourism registry, either directly or through the private entity or individuals contracted with pursuant to paragraph (1), which shall be exempt from chapter 103D if the value of the agreement does not exceed $10,000, to engage in tourism marketing and promotional activities; and

(3) Award grants to groups in the Hawaii tourism registry in accordance with standards specified in section 42F-103.

(f) The department shall adopt rules pursuant to chapter 91 as may be necessary to implement this section."

SECTION 3. Section 36-27, Hawaii Revised Statutes, is amended to read as follows:

"36-27 Transfers from special funds for central service expenses. Except as provided in this section, and notwithstanding any other law to the contrary, from time to time, the director of finance, for the purpose of defraying the prorated estimate of central service expenses of government in relation to all special funds, except the:

(1) Special summer school and intersession fund under section 302A-1310;

(2) School cafeteria special funds of the department of education;

(3) Special funds of the University of Hawaii;

(4) State educational facilities improvement special fund;

(5) Convention center capital and operations special fund under section 206X-10.5;

(6) Special funds established by section 206E-6;

(7) Housing loan program revenue bond special fund;

(8) Housing project bond special fund;

(9) Aloha Tower fund created by section 206J-17;

(10) Domestic violence prevention special fund under section 321-1.3;

(11) Spouse and child abuse special account under section 346-7.5;

(12) Spouse and child abuse special account under section 601-3.6;

(13) Funds of the employees' retirement system created by section 88-109;

(14) Unemployment compensation fund established under section 383-121;

(15) Hawaii hurricane relief fund established under chapter 431P;

(16) Hawaii health systems corporation special funds;

(17) Boiler and elevator safety revolving fund established under section 397-5.5;

(18) Tourism special fund established under section [201B-11;] 201-  ;

(19) Department of commerce and consumer affairs' special funds;

(20) Compliance resolution fund established under section 26-9;

(21) Universal service fund established under chapter 269;

(22) Integrated tax information management systems special fund under section 231-3.2;

(23) Insurance regulation fund under section 431:2-215;

(24) Hawaii tobacco settlement special fund under section 328L-2;

(25) Emergency budget and reserve fund under section 328L-3;

(26) Probation services special fund under section 706-649; and

(27) High technology special fund under section 206M-15.5;

shall deduct five per cent of all receipts of all other special funds, which deduction shall be transferred to the general fund of the State and become general realizations of the State. All officers of the State and other persons having power to allocate or disburse any special funds shall cooperate with the director in effecting these transfers. To determine the proper revenue base upon which the central service assessment is to be calculated, the director shall adopt rules pursuant to chapter 91 for the purpose of suspending or limiting the application of the central service assessment of any fund. No later than twenty days prior to the convening of each regular session of the legislature, the director shall report all central service assessments made during the preceding fiscal year."

SECTION 4. Section 36-30, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Each special fund, except the:

(1) Transportation use special fund established by section 261D-1;

(2) Special summer school and intersession fund under section 302A-1310;

(3) School cafeteria special funds of the department of education;

(4) Special funds of the University of Hawaii;

(5) State educational facilities improvement special fund;

(6) Special funds established by section 206E-6;

(7) Aloha Tower fund created by section 206J-17;

(8) Domestic violence prevention special fund under section 321-1.3;

(9) Spouse and child abuse special account under section 346-7.5;

(10) Spouse and child abuse special account under section 601-3.6;

(11) Funds of the employees' retirement system created by section 88-109;

(12) Unemployment compensation fund established under section 383-121;

(13) Hawaii hurricane relief fund established under chapter 431P;

(14) Convention center capital and operations special fund established under section 206X-10.5;

(15) Hawaii health systems corporation special funds;

(16) Tourism special fund established under section [201B-11;] 201-  ;

(17) Compliance resolution fund established under section 26-9;

(18) Universal service fund established under chapter 269;

(19) Integrated tax information management systems special fund;

(20) Insurance regulation fund under section 431:2-215;

(21) Hawaii tobacco settlement special fund under section 328L-2;

(22) Emergency and budget reserve fund under section 328L-3;

(23) Probation services special fund under section 706-649; and

(24) High technology special fund under section 206M-15.5;

shall be responsible for its pro rata share of the administrative expenses incurred by the department responsible for the operations supported by the special fund concerned."

SECTION 5. Section 201-92, Hawaii Revised Statutes, is amended to read as follows:

"201-92 Office of tourism. There is established an office of tourism within the department of business, economic development, and tourism.

[For the period beginning January 1, 1999, and for each year thereafter, the office of tourism shall provide assistance to the Hawaii tourism authority established in section 201B-2.]"

SECTION 6. Section 237D-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is levied and shall be assessed and collected each month a tax of [:

(1) Five per cent for the period beginning on January 1, 1987, to June 30, 1994;

(2) Six per cent for the period beginning July 1, 1994, to December 31, 1998; and

(3)] 7.25 per cent for the period beginning January 1, 1999, and thereafter;

on the gross rental or gross rental proceeds derived from furnishing transient accommodations [.]; provided that if the number of visitors during a calendar year as determined by the department of business, economic development and tourism:

(1) Exceeds 7,500,000 visitors, the tax shall be 8.25 per cent beginning on the July 1 after the public notice is given;

(2) Exceeds 8,000,000 visitors, the tax shall be 9.25 per cent beginning on the July 1 after the public notice is given; or

(3) Exceeds 8,500,000 visitors, the tax shall be 10.25 per cent beginning on the July 1 after the public notice is given; and

that any tax collected as a result of the visitor levels exceeding 7,500,000 shall be deposited into the state parks special fund established under section 184-3.4 to be expended by the department of land and natural resources for the purposes of the fund; provided that the department of business, economic development, and tourism shall determine if visitors exceeded the visitor number set forth in paragraph (1), (2), or (3), for a preceding calendar year before June 30 of each year. Upon a determination that the number of visitors exceeded the number set forth in paragraph (1), (2), or (3), the department of business, economic development, and tourism shall notify the department of taxation and give two statewide public notices of that determination and the tax rate for the fiscal year beginning on the July 1 occurring after the public notice. This determination shall be made each calendar year and the public notice shall be given more than sixty days before June 30. If any determination finds that the visitor number set forth in paragraph (1), (2), or (3) has not been reached, then the public notice shall be given and the tax rate shall be 7.25 per cent for the fiscal year starting on July 1 after the public notice."

SECTION 7. Section 237D-6.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Beginning on January 1, 1999[[],[]] revenues collected under this chapter shall be distributed as follows:

(1) 17.3 per cent of the revenues collected under this chapter shall be deposited into the convention center capital and operations special fund established under section 206X-10.5;

(2) 37.9 per cent of the revenues collected under this chapter shall be deposited into the tourism special fund established under section [201B-11;] 201-  ;

(3) 44.8 per cent of the revenues collected under this chapter shall be transferred as follows: Kauai county shall receive 14.5 per cent, Hawaii county shall receive 18.6 per cent, city and county of Honolulu shall receive 44.1 per cent, and Maui county shall receive 22.8 per cent.

All transient accommodations taxes shall be paid into the state treasury each month within ten days after collection, and shall be kept by the state director of finance in special accounts for distribution as provided in this subsection."

SECTION 8. There is appropriated out of the tourism special fund the sum of $          , or so much thereof as may be necessary for fiscal year 2001-2002, for contracts previously executed or entered into by or on behalf of the Hawaii tourism authority; provided that the department shall make no additional expenditures without the approval of the legislature.

SECTION 9. The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 10. Chapter 201B, Hawaii Revised Statutes, is repealed.

SECTION 11. Chapter 203, Hawaii Revised Statutes, is repealed.

SECTION 12. All rights, powers, functions, and duties of the Hawaii tourism authority are transferred to the department of business, economic development, and tourism.

All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 13. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the Hawaii tourism authority relating to the functions transferred to the department of business, economic development, and tourism shall be transferred with the functions to which they relate.

SECTION 14. All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the Hawaii tourism authority pursuant to the provisions of the Hawaii Revised Statutes, which are reenacted or made applicable by reference or through the implementation of the powers conferred upon the department of business, economic development, and tourism by this Act, shall remain in full force and effect. Effective July 1, 2001, every reference to the Hawaii tourism authority therein shall be construed as a reference to the department of business, economic development, and tourism.

SECTION 15. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 16. This Act shall take effect on July 1, 2001.