State legislators want to largely dismantle the state agency overseeing economic development, energy and tourism, saying the agency has done a poor job on Hawai'i's Clean Energy Initiative.

A budget bill approved by the House Finance Committee last week transfers most of the divisions and boards attached to the Department of Business, Economic Development and Tourism to other agencies. Other bills propose doing away with the department's tourism functions in favor of a new Department of Tourism.

The budget bill calls for transferring three of five divisions, including one providing economic research and forecasts, to other departments. Most of the more than a dozen boards attached to DBEDT for administrative purposes would find new homes.

"It was a real surprise," said Ted Liu, DBEDT director, who said he wasn't aware of the move to reorganize his department until details of the House budget were revealed late last week.

"Friday morning I get a call that 90 percent of your department is moving away."

The move would substantially cut into the responsibility of Liu, a Lingle administration appointee who has had a rocky relationship with some legislators. In recent years he has drawn criticism about the ethics of soliciting private donations to fund a trade mission to China and Korea and his handling of a fund for hydrogen energy development.

But the House Committee on Finance said it was the inability of Liu's department to provide a clear plan or specific goals on the Clean Energy Initiative that prompted the department's restructuring. The initiative calls for fundamentally transforming energy use here in the next 21 years with 70 percent coming from renewable resources by 2030.

"None of this is punitive," said Rep. Marcus Oshiro, the Finance Committee chairman. "We have never gotten straight answers (on energy)."

Moreover, the committee's action also was based on how best to structure government at a time of budget cuts, Oshiro said.

"We thought in this day of limited resources and getting the most bang for our buck that we should look at better placings of some of these functions," Oshiro said.

Therefore the budget calls for the Land Use Commission to be transferred to the Department of Land and Natural Resources and the Hawai'i Housing Finance and Development Corp. finding a home at the Department of Human Services.

Some business support functions like economic research and a regulatory review board would go over to the Department of Commerce and Consumer Affairs, which has self-funding through user or license fees, Oshiro said.

He acknowledged that no hearings were held on the changes, though he had talked with people at some of the affected agencies. Oshiro said some of those people welcomed the changes.

"There are some out there who actually felt a sigh of relief and expressed appreciation for getting them away from DBEDT," he said.

In addition, he said some of the changes could pave the way for a refocusing of the downsized department on energy and technology.

The budget bill would also transfer Creative Industries Division head Georja Skinner and Tourism Liaison Marsha Weinert to the Governor's Office and cut DBEDT Deputy Director Mark Anderson from the payroll. Deputy directors at several state departments were cut in the House budget.

Liu said he was still trying to understand the rationale for the Finance Committee's proposed changes and said that he believed he had been forthcoming about DBEDT's goals and progress. That included how the energy policies were being integrated across all of the divisions and boards under DBEDT.

"We're not sure what this all means at this point," Liu said. "Practically speaking, it could mean some big disruptions."

He said while he is in favor of making government more efficient and effective, it doesn't appear that the moves will save any money.

"The department is functioning very well and efficiently and is responding to the short-term and longer-term challenges faced by Hawai'i's economy," Liu said in an e-mail. "A major restructuring, without any attendant efficiency, governance or budgetary gains ... is not advisable at this time."

He said he looked forward to hearing the rationale for the changes.

Gov. Linda Lingle said yesterday that her administration and state lawmakers should put politics aside and work collaboratively to avoid losing public confidence during the economic downturn. Three years ago Democratic lawmakers pressed for an ethics investigation into DBEDT about Lingle-led trade missions that were funded in part by $268,000 in private sponsorships.

More recently, questions were raised about Liu's handling of the award of an $8.7 million hydrogen technology fund contract. A state Senate investigation concluded Liu sought to manipulate the process, something he has disputed and denied doing.

The investigation was headed by Sen. Donna Kim, who chairs the Senate Ways and Means Committee, which will be reviewing the House budget proposal.

The governor said some of the House budget "was just personality based and had nothing to do with public policy."

Lingle also noted the budget "basically disassembled" DBEDT and said that makes no sense.

"These are by people who have never led a department, I don't know any legislator who has ever headed a department, that I'm aware of," she said.