Gov. David Ige announces the bills he vetoed Tuesday, including House Bill 862, which would take away the counties’ share of the transient accommodations tax and change the way the Hawaii Tourism Authority is funded. However, state lawmakers overrode his veto of the bill and other measures later in the day. The Maui News / COLLEEN UECHI photo

State lawmakers voted on Tuesday to override Gov. David Ige’s veto of House Bill 862, which would take visitor lodging taxes from the counties and change the way the Hawaii Tourism Authority is funded, a move that Ige worried would “severely damage” the agency’s ability to pivot from marketing to destination management.

“Now more than ever, we need to strike a balance on a sustainable and respectful visitor industry and mitigating the impacts on our community,” Ige said during a news conference on Tuesday.

Maui’s state lawmakers had expressed mixed feelings over the bill, saying they agreed with more oversight for the tourism authority but didn’t want Maui County to lose out on the $23.5 million of the $103 million in transient accommodations taxes distributed to the counties.

However, Maui Sen. Gil Keith-Agaran, who supported the override of the veto, said that the bill would give the county “complete control over whatever revenue they want to raise through the TAT” without having to query the state each year on how much TAT funding it will receive.

“Maui has always brought in more revenue than some of the other islands, mainly because we actually have on average higher room rates, and so this is actually a benefit to the county,” Keith-Agaran told The Maui News on Tuesday evening.

The Hawaii Tourism Authority website is shown. On Tuesday, the state Legislature overrode Gov. David Ige’s veto of a bill that would change the way the tourism agency is funded, forcing it to return to the Legislature to justify its funding request instead of receiving an automatic allocation every year.

The governor vetoed 26 of the 28 total bills on his intent-to-veto list and sent statements of objections for each measure to the Legislature, which met later that day and overrode many of Ige’s vetoes, including HB 862 by a vote of 17-8.

Introduced by state Reps. Lisa Marten and Adrian Tam of Oahu and Tina Wildberger of Maui, the bill will repeal TAT funding to the counties as well as the tourism special fund for HTA, including its market development-related research, while authorizing the counties to establish their own surcharge of up to 3 percent on the existing 10.25 percent rate for visitor lodgings.

Mayor Michael Victorino had disagreed with lawmakers’ decision to pass the bill in April but said he would consider adding a surcharge, with 1 percent going toward affordable housing, 1 percent toward emergency services and 1 percent for visitor education and cultural restoration.

Giving the counties this authority would put “us in the driver’s seat as far as maybe slowing down or reducing some of the amount of tourists that are coming in,” Victorino said during a news conference Tuesday afternoon.

“The Legislature’s action didn’t surprise me,” he said in a statement later in the evening. “It’s a mix of bad news and good news. The bad news is the immediate reduction in the county’s share of revenue from state transient accommodations tax. The good news is we anticipated this would happen, so it will not have an impact in the FY 2022 budget.”

He added that he looks forward to working with the Maui County Council, the hospitality industry and the community to discuss implementation of a county TAT that would “benefit our residents, as allowed by passage of this law today.”

In vetoing the bill, Ige said that HB 862 contains “flaws” that would make implementation very difficult and that he would be willing to work with the Legislature to make any necessary amendments or changes to authorize funding to help “HTA to be able to function in a way that allows us to accelerate economic recovery.”

Ige also said the bill undermines the purpose of the transient accommodations tax, which is to provide dedicated funding from visitors to mitigate the impacts on communities.

The counties would be unable to administer the new county TAT because the bill does not explain how it will be “levied, assessed and collected,” he said.

“It creates an inefficient system to collect taxes on behalf of the counties,” he added. “Previously, the Legislature has granted the state the authority to collect various surcharges on behalf of the counties, and the measure specifically prohibits the state from assisting in these areas.”

He also argued that the lack of special funding would make it “impossible” to reestablish sustainable visitor activity in Hawaii or allow for long-term planning outlined in the recently released strategic plan for HTA and the Hawaii Convention Center.

“We have a concern that we would be unable to implement our strategic plan which tries to balance the impact on the community and shift from purely marketing to get more and more visitors here, to really focus on high-quality visitors and managing the community impacts we see all around the state,” he added.

The bill will repeal the $79 million tourism special fund effective Jan. 1 and instead allocate $60 million under the American Rescue Plan Act for HTA for fiscal year 2021-22. Lawmakers explained that HTA would have to return to the Legislature the next year to justify its funding request.

Keith-Agaran and Sen. Bennette Misalucha of Oahu spoke in strong support of the bill during the legislative session on Tuesday afternoon because it would push for HTA to be more accountable and better manage tourism for residents.

Misalucha noted that the islands need to be managed in “appropriate ways using effective tools and that the funds dedicated towards its purposes are used wisely and effectively.”

As vice chair of the Energy, Economic Development and Tourism Committee, she said she witnessed the importance of the visitor industry as a crucial economic driver for the state.

However, during meetings with HTA amid the pandemic, Misalucha found that “data was not provided despite repeated requests” and that management decisions “were slow amidst a crisis.”

Misalucha said that HTA must convince the Legislature each year that “it is deserving of this economy.” Both she and Keith-Agaran agreed that HTA also needs to be more forthcoming with its strategic plans and communicate more with the Legislature.

“Last but not least, a lot has been said about the reduced funding for HTA. … The Legislature is not micromanaging how those funds will be spent, however, considering the fact that a lot of our residents are now less supportive of tourism, it may be prudent for HTA to focus its attention on resource management, tourism management, rather than just marketing to tourists,” Misalucha said. “At the end of the day, we’d like to support HTA and be their partners toward a good tourism platform. This can be possible with greater transparency and accountability.”

While many lawmakers supported the measure, others, like Sen. Laura Acasio, agreed with Ige’s veto because it had grown into a “Frankenstein bill” with too many broad moving parts and lacked input from the affected agencies. Wildberger also called it a “Franken-bill” last month and said she was “very surprised to see its final iteration.”

In addition to HB 862, lawmakers also voted to override Ige’s vetoes of four other measures, including Senate Bill 811, which requires the state Department of Education to publish a weekly report on schools that have positive COVID-19 cases. Ige said that the DOE and the state Department of Health already had necessary protocols in place to report cases and enact contact tracing when needed, and he worried that the measure would increase the chances for students to be identified and bullied. However, the Legislature noted that increased documentation is needed for transparency and to keep the community safe.

The Senate will reconvene at 3 p.m. Thursday to discuss other vetoed measures.

There were more bills than usual on the veto list this year because the state’s economic position “is much brighter” than the previous legislative session and federal COVID-19 relief funds helped Hawaii address pandemic relief efforts, Ige said.

The return of visitors led the Council on Revenues to increase its general fund revenue projections by $6.1 billion over a seven-year period, according to a news release from the Governor’s Office.

“This means we no longer need to take some of the extraordinary revenue actions that were proposed this legislative session,” Ige said.

One of Ige’s vetoes included House Bill 774, which would have established the Pulehunui community development district on Maui and created community development district authority boards. Ige said that the bill establishes four new boards but does not place them within one of the principal departments.

* Dakota Grossman can be reached at dgrossman@mauinews.com.