Much-lauded Wisconsin tourism gains helped greatly by drawn-out recovery funding
For the third year in a row, Gov. Tony Evers has patted his administration on the back for record-breaking tourism in Wisconsin.
What Evers and the state Department of Tourism do not mention is that the recovery from a protracted government-mandated pandemic shutdown was built, at least in part, on more than $160 million in federal bailout money and a record doubling of the tourism department’s budget.
Like most of the nearly $2 trillion from the American Rescue Plan Act (ARPA) thrown at the economic damage from the reaction to COVID 19, state officials have very little knowledge of how, exactly, the money was spent and what economic impact it has on tourism.
Failing to factor in huge sums of federal and state spending skews the rosy report by Travel Wisconsin, the department’s marketing arm, for what Evers called “a tourism hat trick,” academics who study government economic impact reports say.
“These reports are created for economic boosters and take advantage of the ignorance of legislatures and the public,” John Crompton, associate head of Hospitality, Hotel Management and Tourism programs at Texas A&M University.
Last year, according to the Travel Wisconsin report, tourism produced an overall economic impact of $25.8 billion, besting the 2023 record of $25 billion. That activity produced $1.7 billion in state and local tax revenue, another record. And the report counts 114.4 million visitors in 2024, yet another record, wiping away 113.2 million visitors in pre-COVID 2019.
“Tourism is such an important and amazing industry for our state, and I’m proud we’re on a record-breaking roll under my administration,” said Gov. Evers said in a press release back in June.
Evers credited his administration and the hard work of the tourism department. But there is not a single mention of the taxpayer dollars lavished on tourism in the 2024 report or any of the others that followed the grants that issued forth from ARPA beginning in 2021.
While the ARPA money was sent to states in the first year, several extensions granted by the Biden Administration allowed states, local governments and individual grantees until the end of 2024 to allocate how the money would be used and until the end of 2026 to spend it.
Because the state hasn’t tracked the spending, it is impossible to know in what year the tourism allocations — or any other federal allocations — would have had an impact and what that impact was.
Amanda Weibel, a communications officer with Travel Wisconsin, acknowledged in an email that the annual report does not account for any ARPA funding impact, but did not respond to an email asking why.
Nor does the report account for the nearly 200 ARPA grants totaling nearly $12 million overseen by the tourism department. The largest — $500,000 — went to each of the convention and visitors bureaus of the state’s largest cities. Nearly all of them went to chambers of commerce or tourism associations rather than individual businesses.
The Travel Wisconsin grant sum, however, was a small fraction of the ARPA money. The Badger Institute tracked grants totaling $72.2 million for lodging businesses; $30.8 million for event venues; $22 million for local government tourism efforts; $15 million for tourism destination marketing; $10 million for movie theaters; $2.8 for minor league sports.
Add to that a nearly doubling of state taxpayer support for the Department of Tourism 2023-25 budget, to $72.3 million from $36.6 million in the previous biennial budget, which included a one-time, $20 million increase for marketing.
The Legislature agreed to the budget increase without the benefit of any assessment of the impact ARPA and state taxpayer spending has had on the tourism industry. As pointed out in the Badger Institute’s Tracking the Trillions, state agencies — in particular, Evers’ Department of Administration — have been taken to task by the Joint Legislative Audit Committee for failing to explain how and why they made their grants choices and not assessing their economic impact.
When it was brought to his attention, Chanz Green, chair of the Assembly Committee on Tourism, seemed surprised that the impact of more than $160 million in ARPA money was absent from state impact reports. “It certainly should be a factor,” Green told the Badger Institute.
Neither Travel Wisconsin nor the Department of Administration has ever provided Green’s committee with data and analysis of ARPA funding. Which isn’t to suggest that Green has anything other than a fine working relationship with the travel agency, which has merited its marketing budget increase with its hard work, he said.
Still, Green said the Department of Administration owes the public a lot more transparency in its handling of all COVID spending in the state.
“We haven’t seen where the money went,” Green, R-Grand View, said. “There has been no accountability and there should be.”
As has been the case over the years when asking about ARPA and other spending, the Department of Administration declined to reply to an email inquiry from the Badger Institute.
When provided with Travel Wisconsin’s economic impact documents, Michael Hicks, a professor of Economics at Ball State University’s Center for Business & Economic Research wasn’t surprised that ARPA wasn’t part of the report.
Most tourism reports for public consumption rely on rudimentary numbers and a flawed shorthand to tote up economic impact, tax revenues and visitors to a state, something Hicks calls input-output modeling.
Because Wisconsin, like other states, frequently fails to trace spending like ARPA to its eventual beneficiaries, they either guess about or ignore important economic impacts.
“In other words, these studies cannot tell us how many jobs will be created if a new business comes to the area, or even how many jobs will be created if a business hires more workers,” Hicks told the Badger Institute. “And, because of this, they cannot tell us anything about GDP growth, income growth or tax revenues either.”
Hicks and Crompton have, individually, created a body of research that suggests strongly that economic impact reports are crafted in such a way to sway policymakers, most often for increased tax expenditures.
Crompton caused a stir with a research paper in 2010 that recounted the Texas Legislature looking into the Texas Parks & Wildlife Department’s long insistence that between 18 and 23 million people took day visits to state parks every year.
An independent study found that between 10 and 11 million people visit annually.
The Travel Wisconsin study is done annually by Tourism Economics, a company that prepares similar studies for many other states, using the same general parameters.
Crompton questions the methodology. Tourism Economics, for example, uses a variety of data to determine what constitutes in-state tourism but loosely includes trips that might be for other purposes.
As he points out, an in-state traveler spending money or paying a sales tax in another place in the state isn’t creating a new economic impact, merely shifting that economic impact from one place to the other. “There is no new economic growth, only a transfer of resources between sectors of the local economy,” he said.
Don’t expect to see any collective crisis of conscience in the tourism racket, Crompton said. He is among the many who have written persuasively about the folly of building stadiums to boost the economies of cities and states. Washington D.C. is just the latest.
“They are going to keep doing what they’re doing and telling you it’s good for your state,” he said. “Just know that all of it — the job creation, the tax revenue, the overall economic impact — is all very suspect.”
Mark Lisheron is the Managing Editor of the Badger Institute.
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