The state of Michigan continues to receive accolades from across the country on how good it's tourism marketing campaign is.Personally,I like the ads and think they do a good job of showing our state in a very positive light.The funding of the program is now in the spotlight given the budget mess our state is in.
In 2009,we spent $30 million on the campaign.This year it's between $5 to $6 million depending on which story you read.The state claims that for every dollar we spend on it,the state gets back between $2.50 and $3.00 in tax revenue,again depending on which news source you are using.
This makes me wonder if this formula is one of guaranteed success,why is the state funding it?What is the goal?Is it to benefit tourism related businesses?Is it to generate additional tax revenue for the state?Is it both?It would seem to me that if the return on the investment is a ratio of 2 or 3 to one,we should be spending much,much more,right?I mean,if we spend $30 million,that means we generated $60 to $90 million more in tax revenue.We also generated all of the increased business required to tax that much which means businesses must have had a proportional increase in sales and thus profits.
The obvious problem is that the state has no money to fund this program as the budget is currently facing a $1.7 billion shortfall for fiscal year 2011.It would seem to me that both business and the state tax coffers benefit equally under this campaign if the claims of 2 or 3 to 1 are true.So,wouldn't the results be the same even if the tourism businesses funded this program rather than our tax dollars?It doesn't matter who is paying for the program,the important point is that it generates an excellent return on the investment.So,who better to invest in this program than the primary beneficiaries themselves,meaning the tourism businesses.
Why shouldn't they fund the program 100%?They are promoting that it works,so this should be a slam dunk return on their money.The state would be even better off because it would continue to see the increased tax revenue without having the burden of funding the program.Looks like everybody wins!Just create a fair assessment program which spreads the cost across the state to all tourism industries and base it on their revenue.The more they make,the more they pay.Sounds great,huh?Just like our income tax system.
See,I think when push comes to shove,you wouldn't find businesses so eager to fund this program despite the claims of super returns on the investment.People love a program like this,only when somebody else is paying for it.And the tourism industry likes the idea of spreading the cost across the entire taxpayer base rather than paying for it themselves.
I question the validity of these claims.If it were really failsafe as they say,my idea would be embraced.There is no question the ads are good.But how effective?I could create a beautiful,enticing ad for Gitmo,but I don't think I'd want to visit.You could promote the beautiful climate,stunning ocean views,the best cigars on the planet,etc.But who would go?That's the dilemma we face here.Our economic situation is so dire and so well documented across the country that we can't realistically get too many people to come here.Regardless of how slick the Pure Michigan ad looks.
So,I say put the cost in the hands of those that stand to benefit most.If they truly believe in the statistics,they will support and expand the program.We have an $18 billion dollar tourism industry here in Michigan.$30 million or more spent on promoting their product seems like a drop in the bucket.Less than .02% of their revenue.Any business spends far more than that in advertising or they go out of business.
Which brings this all back to the point of who really benefits from the tax dollars being directed at this program.I say we call their bluff and find out.More to come...