Whitmer seeks a $5 million Pure Michigan cut to apply to roads. GOP balks.

A disagreement about whether $5 million should be cut from the popular Pure Michigan tourism campaign next year has spurred debate about how best to recruit visitors and businesses, through marketing or by improving roads and schools? . (Bridge photo by Lindsay VanHulle)

Related: Michigan Senate panel rejects Whitmer gas tax, as budget dance continues

Gov. Gretchen Whitmer would cut $5 million from the popular $36 million Pure Michigan travel campaign next year, instead directing the money toward her top priorities to fix the state’s infrastructure and public schools.

Yet some state lawmakers, from both parties, are vowing to use the state budget process to keep the current tourism funding level intact.

In context, $5 million is a sliver of Michigan’s overall $10.7 billion discretionary general fund, which pays for everything from health and human services to prisons. But the reluctance to scale back Pure Michigan funding illustrates the difficult decisions state policymakers have to make when deciding how to prioritize spending in a state with other pressing fiscal challenges.

Related: Yes, it takes billions to fix Michigan roads. No, taxpayers don’t want to pay.
Related: A deal to fix Michigan’s roads looks to roll into summer, at least

In this case, should that $5 million go toward broader goals of improving Michigan’s poor roads and infrastructure and struggling schools, as the administration proposes? Whitmer’s team argues that recruiting visitors and companies to the state is easier when the roads are smooth and good schools and clean water are available when they arrive.

Or, as some legislators and tourism industry leaders contend, does the state need to continue investing in promoting its lakes and outdoors to get leisure travelers and businesses to consider Michigan in the first place?

“Both are right,” said the administrator caught in the crosshairs, Dave Lorenz, vice president of Travel Michigan, the state’s tourism promotion arm housed within the Michigan Economic Development Corp.

“We have all of these needs. We have all of these mutual goals that we all agree with,” Lorenz said. “That’s why I always say — and I mean it — whatever budget we have, we’ll make the best of it.”

The $36 million Pure Michigan campaign is perhaps best known for the series of TV and radio commercials voiced by actor Tim Allen, a Michigan native.

Under Whitmer’s budget proposal, Pure Michigan’s funding would shrink to $31 million for the 2020 fiscal year that starts Oct. 1, ultimately freeing up $5 million to go toward other general fund priorities.

The centerpiece of the governor’s overall proposed budget is a 45-cent, per-gallon gas tax increase that would raise $2.5 billion over a year for roads.

The Pure Michigan reduction is part of a broader package of $122 million in proposed cuts to several programs next year, $74.6 million of which is out of the general fund, according to budget office data.

Related: Tell us how YOU would fix Michigan’s roads

Administration and Travel Michigan leaders say the Pure Michigan proposed cut is doable in part because the campaign is now using more digital media marketing geared toward younger travelers, which is more cost-effective to produce than traditional TV or print ads. For instance, Travel Michigan has launched interactive road trips through social media channels, and advertises on the streaming music service Spotify.

A cut of $5 million likely would mean fewer broadcast TV ad buys, Lorenz said, though it’s difficult to quantify the impact before the budget is finalized. Local convention and visitors bureaus also contribute funding to Pure Michigan by partnering with the state on regional tourism promotion.

“We’ll survive with a budget cut, and we will find ways to be as effective as possible,” Lorenz said. “Let’s just hope that in the future, our budget will be able to increase.”

Related: Electric car fees in Michigan would soar under Whitmer’s roads plan

Republicans who control the state budget process, however, say they intend to keep Pure Michigan funding at least at today’s level when they release their budget proposals over the coming weeks and months.

GOP lawmakers represent many of the state’s lakeshore tourist destinations, especially in northern Michigan, though Pure Michigan funding has enjoyed bipartisan support.

“Pure Michigan is a promotional budget, not an infrastructure budget. And so we’re going to restore that. Probably add a little bit to it, in fact,” said state Sen. Ken Horn, R-Frankenmuth, chairman of a Senate budget subcommittee that has oversight of MEDC funding.

Related: Whitmer’s road funding plan could pit Michigan cities against rural areas

Republican House Speaker Lee Chatfield, from Levering in Emmet County, about a 15-minute drive from Mackinaw City, told Bridge he was “disappointed” to see Pure Michigan funding cut in Whitmer’s budget and, like Horn, vowed the House will “focus on ensuring that it’s fully funded.”

For her part, Whitmer doesn’t appear to be taking a hard line on cutting Pure Michigan, according to the state budget office, and she is open to talking with lawmakers about funding for the campaign.

“While we feel confident that the $31 million that was recommended is a funding amount that will provide for an effective marketing effort for Pure Michigan, restoring the $5 million reduction is certainly an item that we are open to having further discussion about with the Legislature,” said Kurt Weiss, a state budget spokesman.

Tourism industry opposes cut

Tourism industry leaders say they hope legislators preserve funding for Pure Michigan, a program some have criticized for how it calculates its return on investment.

The Pure Michigan campaign has succeeded at attracting visitors to Michigan, said Justin Winslow, president and CEO of the Michigan Restaurant & Lodging Association, which lobbies on behalf of the hospitality industry in Lansing.

Pure Michigan still generates positive returns on investment, Winslow said. That, he added, along with the fact that the economy is still growing, helps make the case for continued funding.

Winslow and other Pure Michigan supporters point to data collected for Travel Michigan that estimate return on investment; in 2016, for instance, it was valued at $8.33 for every dollar spent on the campaign. But that analysis has its skeptics, including the Midland-based Mackinac Center for Public Policy, a free-market think tank, which argues that the methodology used to produce the ROI figures is murky and the numbers can’t independently be verified.

Travel Michigan in 2017 hired a new company to evaluate the effectiveness of the Pure Michigan campaign, a decision the state said at the time was mostly because the new vendor would offer more insights about what promotional tools are working.

The company, Indianapolis-based Strategic Marketing and Research Insights, found that the ads returned $9.28 for every $1 spent in 2018.

Michael LaFaive, fiscal policy director for the Mackinac Center, said he applauds Whitmer for cutting funding for Pure Michigan and hopes it’s redirected to roads, where the money would be better spent.

“I agree with (Whitmer’s) priorities,” LaFaive told Bridge. Investing in transportation and infrastructure are “broad-based tools, and you could even call them economic development tools, such as an efficient transportation system.”

This isn’t the first time Pure Michigan funding has been mentioned in the same conversation as roads.

In 2015, an early road-funding proposal from House Republicans would have diverted some economic development dollars to roads. MEDC administrators countered that doing so would require cuts to Pure Michigan; lawmakers contended there were other areas within the state’s economic development agency that could be scaled back instead.

Peter Fitzsimons, executive director of the Petoskey Area Visitors Bureau, said what worries him is that once a budget is cut, it becomes easier to justify keeping funding at a lower level — or cutting more in the future.

“I think that’s a slippery slope,” Fitzsimons said. “I don’t want to get on that slope.”

A zero-sum game

To Mike Nystrom, the Pure Michigan campaign has always carried a bit of irony.

Michigan invites visitors to enjoy the state’s natural beauty, but when they get here, they find crumbling roads and beaches closed due to bacterial contamination, said Nystrom, executive vice president of the Michigan Infrastructure & Transportation Association, which represents Michigan road builders.

Nystrom said he isn’t advocating to walk away from Pure Michigan. But he said he agrees with Whitmer’s overall budget philosophy, adding: “Let’s work on fixing our foundation before we invite people into our home.”

“If you hit a pothole in Michigan and it affected your travel plans, you’re going to keep that in the memory banks and probably not rush back and visit our state again in the near future,” Nystrom said.

First impressions do matter, said Bonnie Knutson, a professor in the School of Hospitality Business at Michigan State University, who focuses on consumer trends and brand strategy.

Travelers might have a negative impression of a place if potholes and poor roads delay their arrival, Knutson said. But bad roads might not be the memory that lasts if the weather is perfect and they have fun at the beach.

Tourism promotion and fixing infrastructure aren’t mutually exclusive, Knutson said. The question for policymakers, she added, is to identify priorities, because money for one program generally has to come from another.

“It’s a zero-sum game, is the long and short of it,” she said.

To Horn, the Senate subcommittee chair, it boils down to this: The purpose of Pure Michigan isn’t to fund roads.

Horn, in his second and final term representing Saginaw County and parts of Genesee County, said his top priority is attracting more people to live and work in the state. State estimates have pegged the number of job openings by 2024 at more than 800,000.

Last term, Horn sponsored an economic development incentive to help developers clean up and build on contaminated sites, and championed a tax incentive for companies adding hundreds of jobs.

Those incentives, along with Pure Michigan, are necessary tools to lure young people to move to Michigan — particularly to cities — and fill high-tech positions, Horn said.

“I’m not going backwards on this,” he said. “Michigan has come too far with that Pure Michigan campaign to let it go now.”

Sen. Adam Hollier, a Democratic first-term state senator from Detroit, told Bridge he supports keeping funding in place for Pure Michigan and Whitmer’s proposed 45-cent gas tax increase.

If $5 million can stretch farther in digital to reach millennials like him, Hollier said, then spend the extra $5 million and do even more.

“People like to say you can do more with less, and to some extent that’s possible. But I’ve always been a firm believer that you get what you pay for,” said Hollier, the sole Democrat on the Senate budget subcommittee that oversees MEDC funding. “Programs that we believe are successful, we should continue to invest in. And I think this is one of those.”

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Comments

Ann
Mon, 04/22/2019 - 10:09am

Although I enjoy the destination, I always think how nice the roads are when driving through Ohio and Florida!

Mark Dobias
Mon, 04/22/2019 - 10:17am

Toll Roads with EZ pass. Quit messing around.

Jilly
Mon, 04/22/2019 - 3:57pm

Federal law prohibits states from taking existing interstates and making them toll roads. Also, there is little pass-through traffic in Michigan -- peninsula, remember -- which means we'd be mostly taxing ourselves on our trips up north, etc.

Mark Dobias
Tue, 04/23/2019 - 8:42am

The is little hesitation to pay the tolls on the Mackinac and International Bridges.

JDJ
Mon, 04/22/2019 - 10:17am

Several years ago it was the Republicans who cut PM funding.

Maureen
Fri, 04/26/2019 - 2:33pm

Yeah, JDJ, I am a conservative, but this one makes my blood boil. They did want to do away with the funding. If it's just because they want to be against Witmer, that is b.s. I am disappointed in whoever is leading this fight.

Henry Yanez
Mon, 04/22/2019 - 10:26am

Cut the entire $36M and put it towards roads/education.The Pure Michigan program doesn’t go away, it just gets funded by private dollars. In the multi-billion dollar tourism industry $36M is a drop in the bucket and the industry can afford it. This is just another example of corporate Michigan riding on the backs of the common taxpayer. That’s money that needs to go to the betterment of all our citizens through infrastructure and education funding, If the return is really 9-1 (it isn’t) private investors would be all over that. So why aren’t they putting up their own money? #scam

Ultimately this is just another example of how the Republicans that have run this state for years have fooled the public. Fiscally responsible my eye. Isn’t it ironic that the politicians that run our state (Northern state or rural Republicans) are from communities that benefit the most from PA51 and the Pure Michigan program? As I said before, #scam

Eugene A Jenneman
Mon, 04/22/2019 - 4:22pm

I find this to be a reasonable proposal to consider given the fiscal challenge we face. Let the tourism industry fund Pure Michigan, a program I strongly support, through hotel taxes or other assessments. Perhaps some of the hotel taxes we pay now goes to it, I am not sure if that is the case. But if it is not then do that or increase the tax to cover it. It does no good to attract tourists who hate the roads they are driving on. Fixing the roads is essential right now and for the future. Just make sure the repairs are done with consideration for longevity. It does no good to do cheap fixes that do not last. Given the climate here it is essential to do the job right the first time even if it costs more upfront to accomplish that. It is still cheaper in the long run.

Jeffrey Kless
Mon, 04/22/2019 - 10:49am

Has a study been done showing a direct correlation with Pure Michigan ad campaign and an increase in tourism which would bring in money to cover the cost of Pure Michigan and contribute a meaningful amount of gas tax money?

Bob Mortiere
Wed, 04/24/2019 - 8:41am

Don't know about a direct correlation but living in N.Dakota I saw a Pure Michigan ad on our local TV and it wet my curiosity enough to take a trip to Michigan . Really enjoyed the commercials. They just seems to relax you and that 's what my vacation was.

Timothy
Mon, 04/22/2019 - 10:55am

I left Michigan two years ago. Roads are bad, schools are bad, and an ineffective legislature that is okay with a race to the bottom on these items and more. Moved out of state to a more family friendly region with job opportunities and haven't looked back. I love the energy and underdog mentality of the state, however, in order to be an awesome underdog you have to win sometimes, and these legislators work hard at losing for Michigan residents.

Ken Mitton
Mon, 04/22/2019 - 11:10am

The Pure Michigan campaign has lost much of its luster since it was first developed. I remember being at a scientific meeting during the Flint water episode (which is still not fully solved) and watching national news in another state where almost every news show was doing coverage of Flint and water problems in general. I also recall seeing Pure Michigan commercials playing during commercial breaks during those programs. It was ironic, and even the topic of casual conversations at coffee breaks. An international audience of over 10,000 scientists and researchers in my field (Vision Sciences) found the Pure Michigan tag to be frankly, foolish. "Pure Michigan" is a sad ironic joke to many in other States and even countries. Our water problems were just beginning, it seems, with chemicals now leaching through groundwater in many MI communities. Don't get me wrong. I love Michigan. I grew up in the Northern climates of this continent. I learned to sleep under the snow in sleeping bags for that purpose, and to canoe lakes and streams and I love the Great Lake States and Provinces for their changing seasons. But it is high time our legislature stops easing off the regulations that should be stopping us from poisoning our environment. Hunting and Fishing. Its an admirable industry, but as a Biochemist I have no desire to eat any fish caught in most of this State. Michigan's tourist industry should be built on its reputation because the people who choose to visit us are not stupid. Ads, no matter how many are run, will not fix the impure perception of reality.

PS. Who wants to visit and drive around some of our roads? Those are the impressions they take home with them.

Cliff Yankovich
Mon, 04/22/2019 - 12:16pm

I love the Pure Michigan campaign, but taking 5 million from it TO DO THE ROADS makes sense to me. I would rather it went specifically to roads - not split up.

Don Sepanski
Mon, 04/22/2019 - 1:56pm

End crony capitalism. Of all kinds, Pure Michigan is just more crony capitalism.

In addition, ALL gasoline tax money should be spent on roads, ONLY.

Not "transportation" , not trains, not buses, not bike paths, not walkable cities, not roundabouts, not electric vehicle charging stations, not autonomous vehicles, and especially not the general fund.

All the special interests need to get off the "gasoline tax" tit.

Gasoline taxes should be mandated to be spent on nothing but roads.

Kevin Grand
Tue, 04/23/2019 - 7:30am

In for a penny, in for a pound.

If you're serious about funding the roads, get serious about your priorities. Ditch this crony capitalist pork project by zeroing out the entire line item and reprogramming 100% of it towards roads.

It isn't a function of government to promote a specific industry.

LAM
Tue, 04/23/2019 - 7:32am

We just returned from Florida. As we were crossing from Ohio back into Michigan my husband said "Wait for it. ...worse roads in the country." It's very evident how bad they are at "the border." Comments from the Florida folks were that we have the worst roads in the country.
When an individual or family has a budget crisis they hunker down and get rid of non essentials and reduce to the minimum essentials where ever they can. We should be doing that. Will it be tough? Of course it will. Much as I hate to say it we need to stop funding some non essentials for the time being--think refurbishing show boats (which was a BAD decision) and unfortunately maybe our museums--just for a year or two. I believe museums and the arts are very important and essential to our cultural well being but infrastructure comes first.
What about a tax on sports events? Could there be such a thing?
Why not reduce EVERY budget item by the same percentage and put that into the roads?

LLA
Tue, 04/23/2019 - 8:21am

Only in Michigan, I swear...the folks with 'Pure Michigan' literally state they can absorb the $5 million cut, they're cool with it. But, in sweeps the GOP: "Oh, no, no, no. A female democratic governor proposed these cuts? Absolutely preposterous! We must fight at all costs!"

Abe bubush
Tue, 04/23/2019 - 12:18pm

Why do they run pure michigan ads IN michigan? Isnt that just internal shuffling of revenue?

Bernadette
Wed, 04/24/2019 - 9:17am

The Republican party is in total denial of the reality of Michigan. What they don't realize is their ideas are outdated, their power is waning and they need to begin doing what the people of MI need.

KT O
Thu, 04/25/2019 - 10:54am

There’s already money available. See Senator Pete Lucido‘s proposal.
No need to take Pure Michigan funding and give it to the bottomless pit schools. They have plenty from the Michigan Lottery. Better to find out why the schools are still begging. Whose pockets are being filled?
Tolls? Does anyone realize that’s just another tax? We’re already paying our politicians to take care of our roads. What happened to those funds? Let’s make the cost of driving in Michigan so high that no one will come here. Great tourism plan.
We are taxed to the point of choking to death. How about showing taxpayers the books so we can keep our elected officials honest.