Tourism authority Hawaii Tourism Authority officials are trying to figure out how to avoid losing $200,000 -- funds that should market Hawaii as a visitor destination -- to a calendar snafu.
may owe $200,000
The HTA couldn’t pay
its vendor for 2 monthsBy Tim Ruel
truel@starbulletin.comThe Hawaii Visitors & Convention Bureau has contracts worth $45 million with the authority to market Hawaii. The bureau's contracts with the authority are based on a calendar year, starting in January. The authority, a state agency, works on a fiscal year that starts in July.
When the bureau got its first calendar-year contract from the newly formed authority in 1999, the authority was only able to pay for the first six months of the year, leaving the bureau approximately $27 million short for the last six months. There simply wasn't money in the authority's budget for the entire year, said Lloyd Unebasami, chief administrative officer of the authority.
When the authority entered a new fiscal year in mid-1999, the agency was able to cover the rest of the bureau's contract. Since then, the bureau has limited itself to spending approximately $18 million in the first six months of each year, which is the maximum the authority could budget for, Unebasami said. The remaining $27 million was funded in the remaining six months as the state fiscal year rolled over.
"HVCB was a good partner, sensitive to our financial condition," said Unebasami.
Still, it's a problem to make the bureau hold back marketing efforts in the first half of the year, he said.
A second problem was born last year by Sept. 11. The Legislature appropriated $10 million in marketing funds out of the state's tourism special fund to bolster Hawaii's visitor industry. That wiped out a stockpile of money the authority had built up to keep a steady cash flow, Unebasami said. The authority had to wait on hotel room tax revenues to come in each month to pay the bureau and other contractors.
The authority asked the state Department of Budget and Finance to ease the situation by advancing the revenues ahead of time, which was approved, Unebasami said.
But there's a third problem. After June 30 of this year, when the authority's fiscal year ended, Unebasami had to go back to the governor and the Budget Department for another cash advance. He didn't get approval until mid-August.
The bureau, not wanting to halt its marketing activities in July and early August, has drawn credit at private banks to the tune of $5 million. The authority now has the money to pay the bureau and cover the debt, but the bureau wants the authority to pay for accumulated interest, which is estimated at $200,000.
The revelations were made yesterday by authority and bureau officials during a monthly board meeting of the HTA.
Rex Johnson, newly appointed chief executive of the authority, said the $200,000 should go toward marketing Hawaii, not to interest, as a matter of principle. The authority will need to discuss the issue further to find a solution, Johnson said.
During yesterday's meeting, the board unanimously approved Johnson's $240,000 annual salary, making him one of the top-paid government officials in the state.
Hawaii Tourism Authority