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‘Unpleasantly Surprised Almost Every Single Day’

Is promoting tourism a legitimate government function?

Shelley Zumwalt has a tough job. In October, Oklahoma Governor Kevin Stitt appointed her as the new boss of the Sooner State’s Department of Tourism and Recreation. Ten months earlier, the Legislative Office of Fiscal Transparency had “identified millions of dollars spent imprudently while tourism officials requested yet more money from the Legislature based on faulty budgets.”

The ensuing months brought more trouble. In April, the department terminated its contract with Swadley’s Restaurant Group to operate Foggy Bottom Kitchen eateries at six state parks. According to a statement, in 2021, it:

initiated an internal investigation after reports of financial irregularities were brought to our attention. Financial payments for construction costs were immediately halted in September, while management fees were suspended in December. After extensive review, it has become clear the continuation of the agreement with Foggy Bottom Kitchen is not in the best interest of Oklahoma taxpayers.

A week later, the Department of Tourism and Recreation’s executive director resigned. In May, the legislature held the first hearing of its own investigation.

Zumwalt took the reins pledging to gain back “the public trust” as well as “the trust of the legislature.” That won’t be easy. Last week, she told lawmakers that the department was “recovering from a ‘toxic environment’ and suffer[ed] from a lack of financial checks and balances.” Even after serving “in state government for 11 years,” she had “never seen anything like this,” and was “unpleasantly surprised almost every single day.”

Let’s wish Zumwalt the best, and hope that her tenure will bring accountability and efficiency to what is clearly a deeply troubled entity. But let’s also ask a fundamental question: Why is government involved in tourism-promotion at all?

All eight states of the America Southwest use tax dollars to tout themselves as great places to take vacations. But within and outside the region, no adequate justification has ever been offered to explain why leisure-and-hospitality businesses can’t do their own marketing. From candymaking to HVAC, auto repair to software engineering, legal services to dental care, thousands of industries contribute to state economies. What’s so special about tourism?

And what kind of return on taxpayer “investment” do tourism bureaucracies generate? Research on the question was scant until 2016. That’s when the Mackinac Center for Public Policy conducted a deep dive into “the effectiveness of state-funded tourism promotion.” Its findings? Subsidies did not, “on average, boost gross state product or income in a meaningful way in any of the three sectors examined in this analysis: hotel and accommodations, amusement and recreation and arts and entertainment.” While two of the three did experience a “statistically significant gross positive result,” the “benefits were tiny and outweighed by the costs to the state economy as a whole.” Of the 48 contiguous states, only five (Mississippi, Idaho, Washington, Maryland and Nevada) “distinguished themselves from the national average, with a “$1 million increase in tourism promotion spending … increas[ing] hotel and accommodations activity by as much as $300,000.” Just $300,000 in extra business at a cost of $1 million? Lousy deal.

Death Valley National Park. Hoover Dam. The Grand Canyon. The Las Vegas Strip. Zion National Park. Monument Valley. Canyon de Chelly National Monument. Acoma Pueblo. White Sands National Park. The Durango & Silverton Narrow Gauge Railroad. The National Cowboy & Western Heritage Museum. Historic Route 66. Roswell. The Alamo.

Think the American Southwest has the goods to hack it as a tourist mecca? Then it’s hardly necessary for politicians and bureaucrats to meddle with the industry. In addition to a departure from the core functions of local and state governments — e.g., plowing snow, keeping violent felons behind bars, conducting health-and-safety inspections — corporate welfare invites the kind of malfeasance that Shelley Zumwalt has been asked to clean up.

By D. Dowd Muska

Dowd brings nearly 30 years of research and writing experience to the Institute. A veteran of several think tanks, he is an expert on government at the municipal, county, state, and federal levels.

Raised on an apple orchard in the Connecticut River Valley, D. Dowd Muska is a researcher, writer, editor, and commentator. His focus is the nexus of fiscal policy, economic development, and technology.

Mr. Muska is the author of numerous policy studies, and his writing has appeared in newspapers throughout the nation, including the Las Vegas Review-Journal, The Detroit News, the Orlando Sentinel, the Cape Cod Times, the Santa Fe New Mexican, the Hartford Courant, the Waco Tribune-Herald, the Albuquerque Journal, the New Haven Register, and The Oklahoman. A graduate of The George Washington University, he lives in the Albuquerque metro area, but has started (very) early planning for a relocation to the Sierra Blanca in Lincoln County, New Mexico. He recently launched the Substack platform No Dowd About It.

3 replies on “‘Unpleasantly Surprised Almost Every Single Day’”

I believe that in New Mexico, the hospitality industry pay taxes an in Cities and counties pay lodgers taxes also that are based on occupancy of hotels to do general advertising for the the cities counties and state . Tourism Department goal should be to disperse information to public not direct to business but must work with businesses and organizations to promote the state as a whole . I would point out that the state is also in the tourism business with state parks and monuments all of which they collect fees. Having worked with my city and county ,Chamber of Commerce and yes department of Tourism I believe our Tourism department does a good job of marketing our state as a whole . Of course as with every department in government there are always things that could be done better. In working with the Tourism Department in the past I think they have done a good job marketing the whole state.

We’ll have to agree to disagree on this one. Government has no legitimate role to play in promoting any industry, no matter how the scheme is funded/administered. Corporatism is problematic for so many reasons. I’ve studied the issue for three decades, and have never heard a persuasive argument for blurring the line between the private and public sectors. I have, however, run across a lot of sleaziness, and a fair amount of waste/fraud/abuse.

One of the most interesting reactions I ever got to my work was from a man in the lodging business in Taos, New Mexico. He was pretty steamed that the town had “squandered” much of its occupancy-tax revenue “on non-promotion related spending.” He called the pot of money “a political plum with meaningless performance standards.”

If you’re going to market a place as terrific for tourism, I can’t think of a *worse* way to do it than imposing a tax, appointing a board, and making the project a collective effort. Wow, nothing but a big minefield there. Guaranteed to make a lot of folks feel angry, frustrated, disappointed, ignored….

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