Pure Michigan Campaign Gets Half Of Requested Funds

The stellar Pure Michigan advertising campaign, which broadcast the State’s tourism treasures to a national audience, is the victim of state budget cuts. After a great deal of political wrangling, the state legislature is expected to fund $15 million in advertising—just half of last year’s allocation.

This, in spite of the fact that studies have shown that the $30 million expenditure brought $500 million in tourism dollars to the state.

George Zimmerman, Vice President of Travel Michigan says that the ads will continue in nine markets (Chicago, Milwaukee, Indianapolis, Cleveland, Cincinnati, Dayton, Columbus, St. Louis and southern Ontario), but that last year’s national ads on the Golf Channel, A&E and CNN will come to a halt.  Those ads aired about 7,900 times on cable channels and reached an estimated 60 million viewers.

Michigan’ s current budget deficit is somewhere in the neighborhood of $1.5 billion dollars. Saving $15 million really doesn’t get the state closer to fiscal soundness. In fact, if fewer advertising spots means fewer tourists, cutting the advertising could end up as a net loss. If you simply take the studies’ $500 million figure at face value, and multiply that by a state sales tax rate of 6%, the program pays for itself. But that doesn’t take into account the idea that money has velocity, which would generate even more for the state.

Lets say that a tourist comes into the state and spends $100 at Zingerman’s restaurant in Ann Arbor. Zingerman’s then spends $50 of that to purchase more eggs from a local poultry producer. The poultry producer spends $25 to buy chicken feed. And the grain farmer spends $12 to purchase fertilizer and seed. That initial $100 thus generates $187 in transactions, all of which presumably are taxed. Tourism generates jobs and income far beyond the hotels, restaurants and golf courses.

As a fiscal conservative, I understand the cut the budget. But only when it makes sense to do so. In this case,  the legislature is being penny wise and pound foolish.