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Michigan Business Climate 'Terrible' Says Boyne USA's Kircher; Lobbying Effort A Must
By Craig Altschul
November 05, 2007
"You don't have to ask why we are expanding outside of Michigan," said Boyne USA's Steve Kircher. "It's a terrible business climate right now, and our state government is not helping the situation." Boyne has expanded across the nation from coast-to-coast in recent years, often in concert with CNL, the Florida-based REIT.
Kircher was one of several Michigan ski resort leaders who spoke with The Industry Report's Mike Terrell, Midwest Regional Editor of OnTheSnow.com, about the state's woeful economics and the need for lobbying in the legislature to avoid paying the price for that bad economy. Michigan's woes stem in large part from huge unemployment due to the sinking American auto industry.
That price, Terrell explains, is a six percent tax on all lift tickets sold in the state this winter that was contained in the state budget passed in the wee morning hours of Oct. 1.
The state, thanks to a split between Democratic Governor Jennifer Granholm and the Republican-controlled Senate, went beyond the last hour to adopt a state budget that would be balanced with tax increases on individuals and services, like skiing, Terrell explained. The state was facing a deficit of $1.5 billion, and massive layoffs were threatened. The tax increases assessed on a "pick and choose" basis are supposed to make up the deficit. How's it playing in the mountains? We don't need to tell you that answer.
"If this tax goes through, we will be the only state in the nation that levies a tax like this on winter tourism that I know of. It's just bad for tourism, and affects an industry that is already in bad shape," Kircher told Terrell.
"Many of the small ski areas that used to be the backbone of the industry are just barely hanging on. This may push some out of the business. When you start picking and choosing which businesses and industries to tax, that's bad and can lead to corruption and all kinds of other ethical problems. Now our industry has to get a lobbyist; another expense we didn't have before," Kircher told Terrell.
Another fallout, beyond the ticket tax, will be if the Michigan ski industry does not receive enough Travel Michigan and Pure Michigan funding for ads aimed at surrounding states to attract skiers to the Wolverine State. There's little left in the till.
Mickey McWilliams, Executive Director of the Michigan Ski Industry Association, explained to The Industry Report what dire consequences might occur "if we don't have representation through a lobbying firm.
"This six percent tax will happen, and many of our smaller ski areas are just hanging in there now. It's the only way we have of fighting back and getting this tax repealed. If you look at the list of those entities slated to be taxed after Dec. 1 when it goes into effect, not one of them had lobbyists. Those, including skiing, that had no representation, got hit."
Terrell notes that the Michigan golf industry, which does have lobbyists working with the state legislature, did not get slapped with a tax. Gold resort operators were also the beneficiaries of a significant ad campaign last summer.
"When it comes to winter tourism , you would think the legislators would protect the one facet of the business that was still bringing in tourism dollars," Kircher added.
"If they were going to have to levy a tax like this to balance the budget, it would make sense to keep it fair by levying it on all business and industries at a lower rate; say three or four-percent, and spread it across the board instead of picking and choosing."
Jim Bartlett, longtime general manager of Nubs Nob, has lived and worked in Michigan his entire life. He's spent the last 30 years at Nubs. He's hopping mad.
"I'm ashamed to say I'm from Michigan for the first time. Our state has become the butt of jokes, and the business climate is terrible. What the governor and our state legislature did in running this budget battle to the brink was just terrible. They are all to blame," he told Terrell.
"This is a horrible state to be doing business in right now. They were still bickering about the budget when I went to bed about 11 p.m. the night this all unfolded, but nothing, absolutely nothing, had been said about levying this sales tax on all the little businesses. Apparently they think the ski industry and hairdressers are all the same. It's ridiculous. Many of our small ski areas are just barely scraping by, and they can't eat this tax.
"This is a slap in the face to our winter snowsports industry; primarily downhill skiing. What were they thinking? I don't have a clue, and I think they were clueless as well. It's just terrible. Don't get me started," Bartlett said.
McWilliams recently sent a memo to MSIA members saying, in part, "We must all work to repeal or delay implementation of PA 93. Achieving that, we must all come together in support of replacing the estimated $600 million in revenues needed to bring the budget back into balance. At that point, we're in a good position to increase tourism promotion funding without new taxes... The harder we work - the better off we'll be."
Ski areas are red hot just as the weather turns cold in Michigan. It has nothing to do with global warming.
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