West Guards Tourist Funds

Despite deficits, states keep promotion budgets for 2003-04

By: R. Scott Macintosh

Funding for state tourism departments in the Western U.S. is holding steady for the current fiscal year, even as many legislatures deal with significant budget deficits that will strain spending.

Early projections by the Travel Industry Association, which tracks the tourism budgets of all 50 states, shows that Western states are bucking a nationwide trend of tourism budget cuts.

Patty Hubbard, the association’s vice president of national councils, said that, nationally, “It’s hard to generalize, but it looks as if half are down by varying degrees.”

But Western states including Idaho, Montana, Hawaii, Washington, Texas, Wyoming, Nevada, Alaska and Arizona have approved budgets that remain close to those of the previous year, most with slight increases. The fiscal year runs from July 1 through June 30.

Only a couple of Western states expect to see their tourism budgets cut for the current fiscal year, although some states haven’t finalized their budgets.

The news is positive for a hard-hit travel industry. In the last fiscal year, Western states cut nearly $10 million in spending on tourism and travel development.

The ripple effect of promotional dollars and incentive programs for tourism has widespread effects across the travel industry, although the direct effects on the agent community can be limited.

For many tourist-dependent Western states, promotion of their brand images is viewed as a proven method to increase or maintain market share, as well as a way to significantly increase state and local tax revenues.

Colorado, for one, is banking on tourism to help ease its budget deficit of more than $800 million.

It is the only Western state to substantially increase funding for tourism marketing and advertising, with a one-time $9 million allocation that will allow the state to air its first national TV advertising.

In fiscal 2002, Colorado reported a $32 million boost in local taxes from a $2.5 million advertising campaign. The state hopes to replicate that success and reap even more revenues this year.

"Tourism is Colorado's second-largest industry," said Gayle Brody, deputy director of the state's Office of Economic Development and International Trade. "With the $9 million, we anticipate that we will get a dramatic increase in revenues."

In some cases, budgets can reflect regional competition for travelers.

As a result of Colorado’s increase, New Mexico legislators decided to add $1.5 million to the state’s tourism budget as a one-time appropriation to prevent the Rocky Mountain State from stealing market share.

“We want to stay competitive in the marketplace,” said Jon Hendry, travel and marketing director with the New Mexico Department of Tourism.

New Mexico, subsequently, is one of the few Western states without a deficit.

Oregon is also hoping to increase tourism funding, though the state’s tourism budget had not been approved late last week.

In past years, the state had one of the lowest tourism budgets in the nation, at roughly $3 million; this fiscal year it could add $2 million if a lodging tax is approved.

Though state tourism budgets that rely on lodging taxes remained relatively stable last fiscal year, budgets that depend on appropriations have been the most at risk.

This vulnerability ultimately prevents a state from being able to make a long-term marketing strategy, according to Hubbard.

“They never know how much they are going to have,” said Hubbard. “To have a marketing plan that is effective there needs to be a long-term vision. If you don’t know what the budget is going to be, you can’t make a commitment.”

Hubbard also contends that states that increase their marketing budget one year will lose the investment if they don’t maintain the same funding in following years.

“If you don’t market, you don’t get tourists,” she said. “It’s a very competitive market out there, not just between states, but also globally. You have to stay in the market and have a consistent message out there. “Otherwise, it is very easy to lose market share.”

Officials in Utah and California fear that is what will happen with cuts in their tourism budgets.

Utah’s budget has been cut by roughly 6 percent. In years following the Olympics, Utah approved $4 million in supplemental funding to promote tourism while the exposure from the Games was still fresh in the hearts and minds of the public.

The appropriation for the next year was gradually chipped away during a series of special sessions dealing with the state’s $117 million deficit. The budget that was eventually approved fell far short of the $20 million originally requested by the Utah Division of Travel Development, leaving the state with $4 million to promote the state.

Dean Reeder, the director of travel development, believes the state has lost an opportunity to further capitalize on Olympic exposure.

“The proposal to raise the budget by a factor of 15 would have returned $80 million to the state,” he said. “That’s what’s disappointing. The window of opportunity is closing and will be totally closed when the torch goes to the Greek Islands. It’s a fleeting thing.”

California legislators were grappling with a multi-billion dollar tax cut last week, but the state tourism budget will be cut by at least $2 million, said Terri Taylor-Solorio, president of the California Travel Industry Association.

The California Travel and Tourism Commission, the state’s tourism marketing arm, received $7.3 million from the state last year, in addition to roughly $8 million from an industry assessment.

This year, in the frenzy of dealing with such a large overall state deficit, spending allocated for tourism has varied as the state budget makes its way through the legislative process.

Regardless, some cuts are expected.

“The bottom line is if advertising revenue goes down, revenues will drop and market share will drop,” said Jennifer Jasper, deputy director of the California Travel and Tourism Commission. “Without our branded message, it will definitely impact business.”