One would think that the powers that be in Lansing would have studied economics, right? So, those same people HAVE to know about the trickle down effect. It does exist and it exists EVERY PLACE; every little town in the U.S. is affected by it.
We all know that Michigan is at the bottom of the economic pole of success. It doesn’t take a genius to figure out with all the car plants that closed (talk about eggs in one basket) that had a trickle down effect. Once that trickle ball gets rolling, there doesn’t seem to be any stopping it.
But for now, let’s concentrate on what is going on in Lansing currently with the budget issues and various cut backs and “do we raise this”, “do we do away with that”.
As business owner in the U.P., it is already difficult enough to make a living. Camping USE to be an inexpensive way to travel. Now the price of gas makes camping too far away from home less than desirable to some people. I’m just glad that we have our lodging accommodations to help get us through….but even that has been on a financial roller coaster the past 3-5 years. If ya don’t have a job or job security, are you going on vacation?
So now the snowmobile association funds are in question/jeopardy due to the State budget issues. These are supposed to be protected funds but with trail permits down 30,000 last year (that isn’t dollars; that is permits) even the protected funds are suffering. But there are other problems in the mix of “grooming or not grooming”. I am posting directly from Bill Manson, Michigan Snowmobile Association;
“Yet another problem in the mix is the lack of an approved state budget. As we all know, we still don’t have an approved state budget in place. In a letter from Jim Wood of DNR Grants Management, dated Oct. 10, 2007, it states, “At this time, we are operating under a one-month continuation budget ... The continuation budget does not include funding for issuing new grants. Until the state legislature appropriates sufficient funding for the 2007-08 fiscal year, the grants will remain on hold.”
With all of this seemingly bad news, as a snowmobiler, you’re probably asking, “What now?” Well, presently, MSA is asking every one of our grant sponsors in the state if the remaining issues, regarding old equipment and new equipment are not resolved, will they sign their grant sponsor’s contract this year?
What do I think? I think most of our Northern-lower Michigan and Eastern Upper Peninsula grant holders will not sign their new contracts as written. Those contracts ask the grant sponsors to give up the right to get any money on previously purchased equipment back. Many would be left with no way to recoup funds they have already put toward loans taken out on that equipment.”
Snowmobile clubs are in sad shape with this looming over their heads, which means the economy of Michigan will be in sadder shape if clubs don’t get their funding to groom, do maintenance, etc. This will come back and bite the State of Michigan in the derriere.
The snowmobilers rent rooms. There are roughly 450 rooms in the Newberry area. The snowmobiler pays a room tax on each night they rent that room. In Newberry, there is a 2% room tax that goes to the Newberry Area Tourism Association and a 6% use fee that goes to the State of Michigan. Snowmobilers also purchase gas, food, etc. But for now, let’s just talk about the rooms and the room taxes.
During a good winter, those 450 rooms can equate to over $321,000 PER DAY. That figures out to about $19,260 PER DAY use tax that eventually goes to the State of Michigan and another $6420 PER DAY in room tax that goes to the Newberry Area Tourism Association. While it would be fantastic to always have 100% occupancy for the roughly 81 day season, we know that won’t happen, so we’ll use 50% occupancy. That figures out to roughly $780,000 at the 6% use tax and roughly $260,000 at the 2% room tax for the Tourism Association for 81 days. THAT IS JUST FOR THE 450 (give or take) AREA ROOMS! What does that equate to through out the State?
Each month or each quarter (depending on how that particular motel/cabins etc is set up with the State) the lodging establishments have to submit all that use tax for the month or the quarter to the State of Michigan. This is done through out the entire state of Michigan. I have NO idea how many motel rooms or cabins there are within the State that cater to snowmobilers but we know it is thousands. You can see what kind of money that equates to!
If snowmobilers are not traveling to Newberry (or any place in Michigan) to ride due to ungroomed trails, there will not be that 6% room tax per room, per night being sent to the State of Michigan. How do you think THAT is going to affect the State coffers?? Even that 2% that goes to the Newberry Area Tourism Association will be missed! That will be money that cannot be put back into promoting the area.
And now, there is the very good possibility of a raise in the toll for crossing the Mackinac Bridge. Bridge crossings are down 20%...how much further down do you think the numbers will be if no one comes to the U.P. this winter if there is no grooming? Then there is the price of gas…
This past spring, I was supposed to go to Lansing and give testimony before a handful of Senators in regards to the fee that Dan and I pay for our sewage lagoon (that is a long story). ARVC Michigan, one of the state campground associations that we belong to, has been fighting this fee and the proposed increase on this fee and my testimony was needed as to how if affects our business. The night before I was supposed to leave for Lansing, I received a phone call telling me not to come because that meeting had been postponed. It was eventually rescheduled…several more times but by then I could not go. And to be truthful, I can’t remember if it ever WAS held. But this was all leading up to one arm of the Michigan budget. We were told at one time that there would not be an increase in the fee. Now I’m being told that there probably will be an increase in the fee. The financial category that OUR business falls under is at $1500 per year. It most likely is going up to $2000 per year. I still don’t have a good idea of what this fee is for. No one even comes out and looks at the darn thing. Another fee all campgrounds pay is their license fee. That is based on the number of sites. Our fee for this year is $136. Then we also have what is called a NONCOMMUNITY PUBLIC WATER SUPPLY ANNUAL FEE. That is $111.46. We refer to it as our water tax because we really don’t even know what THAT fee is for. After all, we DO take our required water tests (and of course there is a fee we pay for that), so what the heck is this for???
I told someone the other day that Michigan was going to heck WITHOUT the hand basket because Michigan can’t afford the hand basket!
Our New Normal
4 weeks ago