The state of Michigan has created numerous economic development programs and departments over the last several decades. The Great Lake State’s modern era of taxpayer-funded efforts to protect existing jobs and create new ones can be traced back at least as far as Governor Kim Sigler in the 1940s.[1] This study attempts to measure the economic impact of just one of these programs: state-funded tourism promotion.
This analysis uses national data and employs a statistical model whose design was informed by a review of existing academic literature on the subject. It also examines the state of Michigan’s effort, through the Michigan Economic Development Corporation, to measure the success of its tourism promotional program. Finally, this report concludes with recommendations for reform based on these analyses.
Michigan operates a department dedicated to promoting tourism called Travel Michigan, whose mission is to promote the state as a travel destination, among other duties.[2] The office was named in 1997, but the existence of a state travel promotion arm can be traced as far back as 1945 when it was called the “Travel Bureau.”[3] Today the MEDC promotes the state in part by running tourism advertising campaigns inside and outside of Michigan. In the past 10 years more than $261 million has been appropriated for the cause.[4]
State-funded tourism promotion often uses a slogan or tagline to distinguish itself. For instance, during Gov. James Blanchard tenure (1983-1991), Michigan’s promotional campaign was called “Say Yes to Michigan!”[5] Today’s tourism promotion efforts can be traced back to Gov. Jennifer Granholm in 2005 and is known as “Pure Michigan.”[6] This campaign has been continued and expanded under current Gov. Rick Snyder.[7] In fiscal year 2016, $33 million was appropriated for Pure Michigan, and this at the time was the second largest appropriation for this purpose to date — although, Michigan’s tourism industry has called for even larger amounts.[*]
Michigan has dramatically increased its use of taxpayer-funded tourism promotion over the last decade. In 2003, the state spent only $0.82 per capita.[8] For 2016, that figure was $3.43, a whopping 318 percent increase.[9] The same trend is found via a different measure: a ratio of tourism promotion spending to state personal income. In 2003, the state spent three-tenths of a penny ($0.003) per dollar of personal income on tourism promotion spending, but by 2015 this had more than doubled to seven-tenths of a penny ($0.007) per dollar of personal income.[10]Michigan is not the only state in the union to adopt tourism promotion subsidies as part of an overall economic development strategy — most states routinely appropriate money for tourism promotion and most have done so for many years.[11] This study takes advantage of this fact and uses data from all 48 states from 1973 through 2012 to analyze the impact of taxpayer-funded tourism promotion on states’ tourism industries.[†]
[*]The largest appropriation ($33,217,500) to date in 2016 came in FY 2009 and came from appropriations from the state’s general fund ($5,717,500) and from 21st Century Jobs Fund revenues ($27,500,000). Ben Gielczyk, “Pure Michigan Tourism Marketing Campaign” (Michigan House Fiscal Agency, Oct. 29, 2015), https://perma.cc/VQ4G-CUXB. A strategic plan published by the Michigan Travel Commission lists as one of its top objectives to “increase funding for the Pure Michigan tourism campaign to $50 million by 2017 and establish Michigan in the top five highest funded states for tourism marketing.” Sarah Nicholls, “Pure Michigan: A Plan for the Industry By the Industry,” (Michigan Travel Commission, Feb. 15, 2013), https://perma.cc/44FR-D2VZ.
[†]Hawaii and Alaska spend taxpayer resources on promoting tourism but are not included in our calculations due to the fact that they are not contiguous to the continental United States.