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To keep state fairs thriving, organizers tap multiple revenue sources — including tax dollars

by Carolyn Orr ~ November 2014 ~ Stateline Midwest »
In Kansas, some visitors come to the State Fair for the carnival rides, others for the food, music and entertainment. But organizers and legislators alike also don’t lose sight of one of the fair’s more important missions — as a source of boundless agricultural education for the young and old alike.
The annual event is promoted as the “state’s largest classroom,” and as Kansas Sen. Larry Powell notes, legislators themselves are among those getting lessons as part of an event that has them team up with a 4-H member who teaches them the finer points of cattle showmanship. A contest is then held, “much to the delight of the crowd,” Powell says. Illinois has a similar event with legislators driving harness horses in a race.
Beyond the fun and education, state fairs can also help boost the economies of host cities and surrounding regions. Some studies, for example, have put the impact at over $100 million a year. But state fairs also cost money to operate and maintain, and in recent years, states in the Midwest have had to grapple with this question: Should tax dollars be used to help keep the fairs going?
“The key to long-term viability is maintaining the infrastructure to put on a top-notch event,” says Jim Tucker, president of the International Association of Fairs and Expositions.
If this is true, Nebraska is leading the way.
In 2008, the Legislature agreed to move the fairgrounds from Lincoln to the city of Grand Island. The new fairgrounds required a $50 million investment — $21.5 million from the University of Nebraska, $7 million from Grand Island and $5 million from the state.
Another $6 million was invested this year by the university, Nebraska State Parks and commodity groups to build a permanent home for the fair and other exhibits. And under a constitutional amendment approved by Nebraskans in 2004, 10 percent of the state’s lottery proceeds go to the fair’s operational or capital funds.
“This amounts to about $4 million, and Grand Island, the host city, has to match it,” explains Joe McDermott, the fair’s executive director. Lastly, individuals can donate to the fair on their income tax forms.
Nebraska is not alone in using multiple sources of revenue to help its state fair thrive. In Indiana, for example, the state devotes a portion of its riverboat admissions tax to the fair (up to $6.2 million annually), and the General Assembly makes a general-fund appropriation of about $600,000.
Another popular funding mechanism has been the use of nonprofit foundations.
Since 1993, the Iowa Blue Ribbon Foundation has raised more than $100 million to renovate and preserve the state’s historic fairgrounds and buildings. That money has come from a mix of individual contributions, grants and state appropriations.
The Wisconsin State Fair also operates a nonprofit foundation and gets $1.5 million annually from the Legislature for capital improvements. In South Dakota, the state budget provides $268,000 for operating expenses, and a separate foundation is working to raise $4 million to replace a building at the fairgrounds.
The Kansas State Fair, one of the oldest in the nation, gets approximately $300,000 annually from the state to match investments made by the fair itself. The Illinois State Fair is one of the few fairs that operate as a part of a department of agriculture; as a result, it receives funds for operations and capital improvements as part of the department’s budget. (Illinois also runs a second event, the DuQuoin State Fair.)
In contrast to other states, Minnesota Rep. Rick Hansen says, taxes are not used to fund the fair in his state. Held in the Twin Cities area, it attracts nearly 2 million people every year (largest attendance in the region). The lowest-attended state fair is in Michigan (see map). In fact, it ceased to exist for a time when Gov. Jennifer Granholm vetoed legislation in 2009 to fund it. Subsequent legislation (SB 515 and HB 4803) transferred the fairgrounds to the Michigan Land Bank, which is overseeing its transfer to the private sector. In 2013, the fair returned as a much smaller and shorter, privately run event.

 

Article written by Carolyn Orr, staff liaison for the Midwestern Legislative Conference Agriculture & Natural Resources Committee. The committee's co-chairs are Indiana Rep. Bill Friend and Minnesota Rep. Rick Hansen.