Business Insider: Indiana's tourism budget playing catch-up

Indiana's budget for tourism spending will hit $7.5 million in fiscal year 2016, triple the budget for the current fiscal year, which ends June 30.

Honest to goodness, that's a big jump. It's tempting to blame the hullabaloo around the Religious Freedom Restoration Act, but that's not the case. Discussions began last fall to bridge the wide gap in tourism spending between Indiana and surrounding states and the budget proposed in January by Gov. Mike Pence started the process.

The state's still dealing with the RFRA fallout, but not through the tourism budget.

The Indiana Economic Development Corp. recently signed a $750,000 contract with New York-based Porter Novelli this month to help repair the state's image after passage of the "religious freedom" law. It runs through Sept. 30 and pays the international advertising firm a $300,000 retainer to develop the campaign. The remainder is for ad buys, but that's likely to increase since the state indicated earlier it's likely to spend up to $2 million with Porter Novelli.

The appropriation for the Office of Tourism is reduced to $5.9 million in fiscal 2017. The difference between fiscal 2016 and '17 is the cost of a special torch relay being conducted as part of the state's bicentennial celebration next year.

The total two years out still is more than double what Indiana budgeted for this year. In fact, the tourism budget has remained static at $2.4 million annually since fiscal 2012. In the three previous two-year budget cycles going back to fiscal 2006, the appropriation averaged $4.5 million a year — or about a third of the national average that states spent on tourism.

Indiana's tourism spending has lagged so far behind other states that even when it's tripled in a crisis, it still is just half of the $14.9 million national average. Illinois spent $55.4 million promoting tourism in 2012-13, according to a survey conducted by the U.S. Travel Association. That was the third-highest total behind Hawaii's $75 million and Florida's $55.6 million.

All of our other neighbors outspent Indiana. Michigan budgeted $27.4 million, Kentucky $7.4 million and Ohio $5 million, according to the U.S. Travel survey.

Why is this important? Because tourism in Indiana generated $10.1 billion in spending in 2013, according to the U.S. Travel Association. That's akin to the economic activity generated by the state's transportation and warehousing sector, according to data compiled by STATS Indiana. It's big business.

The business supports about 102,000 jobs and produces $1.4 billion in tax receipts for state and local governments, according to the U.S. Travel research.

Clearly tourism matters, particularly in Central Indiana, yet it receives an appropriation that amounts to a rounding error in the state's $31 billion two-year budget. Even that's divvied up, so the amount the Office of Tourism receives is smaller.

Lawmakers directed $500,000 a year goes to the Department of Natural Resources to assist with marketing, while $550,000 is directed to the Indiana Sports Corp. to promote amateur sporting events in Indiana.

Further, lawmakers set aside $75,000 a year for the Grissom Air Museum near Peru and $50,000 a year for the Studebaker National Museum in South Bend.

So the Office of Tourism's buying power is limited to $4.3 million a year. The General Assembly did add $1 million annually for local tourism agencies and $500,000 for marketing development grants to local convention and visitors' bureaus.

The state's Honest to Goodness slogan may be another casualty of the RFRA debate, according to published reports, so brand equity is hurting, too.

Amid all this gloom, though, lawmakers have reconfigured and streamlined the Indiana Tourism Council. The council, which includes the lieutenant governor and members appointed by the General Assembly and tourism trade groups, will now have 19 members, down from 33.

The advisory group is meant to develop tourism goals, measure the effectiveness of campaigns and, hopefully, build unity in the sometimes fractious industry.

Lawmakers added a new duty this year. The council will consider applications submitted for the statewide tourism marketing development program, an attempt to broaden the campaign's appeal.

Among those with appointments to the council is the Indiana Tourism Association, which itself was remade last year. The group represents many local tourism agencies and works with the General Assembly to boost the industry's funding and effectiveness.

It took a public relations crisis for the state to realize it needs to invest more to promote tourism, among the state's biggest industries. The real test of commitment, though, comes when the crisis is past.

John Ketzenberger is president of the Indiana Fiscal Policy Institute, a nonpartisan and nonprofit organization toresearch state budget and tax issues. Email him atjketzenberger@indianafiscal.org. Follow him on Twitter: @JohnKetz.