Funding for the “Pure Michigan” tourism ads had been cut in half by a penny wise-pound foolish State legislature, but the amount apparently is being reconsidered in the State house today. Governor Granholm is considering an additional tax on rental cars at the airport to fund it.
The program more than pays for itself, which is why I for one can’t figure out why out legislative
leaders idiots won’t fund it.
A state-sponsored study concludes the ads lured 2 million visitors from outside of Michigan. Sen. Nancy Cassis, R-Novi, said she isn’t con vinced. She questioned the study and led an effort to scale back funding in her Senate Finance Committee. The study was conducted by Longwoods International, a Toronto-based advertising research firm whose clients in clude Procter and Gamble, General Motors, Whirlpool and the Canadian and U.S. postal services.
Longwoods founder William Siegel is to testify today before Sheltrown’s House Committee on Tourism and Outdoor Recreation.
Siegel said for every dollar the state spent airing “Pure Michigan” ads in surrounding states, Michigan received $5 in tax revenue; for more distant states, the return was nearly $3 for every $1 spent.
Siegel said Monday he’s done advertising research for 30 years, and he called the “Pure Michigan” campaign “terrific, it seems to hit emotional levers that a lot of adver tising doesn’t do. And it’s paying off.”
What the state legislature is saying is that they’re willing to forego $100 million in tax revenues to save $30 million. It’s likely even worse than that. As I noted in a previous post, a single transaction generates far more than the initial investment because money is turned over many times—in technical terms, money has velocity:
Lets say that a tourist comes into the state and spends $100 at Zehnder’s restaurant in Frankenmuth. Zingerman’s then spends $50 of that to purchase more chicken (it’s a chicken restaurant) 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.
The opponents of this program are the poster children for what happens when you don’t pay attention in your economics classes in high school. And while I’m standing on my soapbox ranting, let me just say that the worst single thing this state has ever done politically is to enact a term limits amendment. All that has done is to purge anyone in state government with a long term vision, and replace them with short term, self-serving, not-terribly-bright amateurs. Since the law ensures that there’s no future in politics in Michigan, the qualified, intelligent, forward thinking people stay in private industry, leaving us with people like Cassis.
We don’t need term limits. We’ve always had them—they’re called elections. We in Michigan have gotten the government we deserve.