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FY-16 State Fair Funding: Some States Restore Cut Money, Illinois Cuts All Allocations

7/15/2015

By Timothy Herrick

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By supporting fairs with tax dollars, states have annual events that generate economic activity and promote regional agricultural industries. During the economic downturn of a few years ago, state governments slashed budgets and taxpayer support for fairs were chopping block victims in many states.

The economic recovery has not been as strong or as widespread as most people wish. In addition, state governments are often as polarized as Washington with leaders refusing to budge from ideological positions to find common ground. Although often under the media radar, how much to spend on fairs is always part of the budget debate, and this year - July 1 was the start of Fiscal Year 2016 - some states continued to cut funding while a few have actually restored some of the funds eliminated or reduced during leaner times.

Draconian Illinois
Illinois is the most extreme case of the former. The start of the FY16 on July 1st set in motion a budget crisis that only may mean the loss of million of dollars for  all Illinois fairs, but has forced fairs into fiscal uncertainty for both this summer and beyond.

The Illinois legislature and governor failed to agree on state budget by the start of FY 2016, resulting in a state-wide suspension of government spending, impacting the state's 103 county fairs and the two state fairs - the Illinois State Fair, which runs August 13th - 23rd  and the DuQuoin State Fair runs August 28th - September 7th. The budget impasse has meant the Agriculture Department has suspended funding to county fairs for premiums and fairground rehabilitation projects; agricultural extension and 4-H clubs for premiums at agricultural shows and suspended funding for premiums for Agricultural Education Fairs.

The state uses a complex funding formulation for each county fair so the exact amount differs for each event, but generally numbers amounted tens of thousands of dollars per fair in FY 2015. The fiscal year budgetary structure means that the early summer fairs that have already been held in Illinois - their fund was to have come from FY2016 funding - have now spent money they were expecting from the state, while the post-July 1st fairs are unsure if they can now afford all the programs planned  and in most cases already promoted -  for this summer's annual event. 

State funding for Illinois county fairs comes from a complex network of different governmental sources, and the current budget crisis  means every source is now extinguished, impacting both the present and future wellbeing of all fairs in the state. Reportedly, the state allotted 92 county fairs a maximum of $13,250 each, or a total of around $1.3 million, according to the agriculture 2014 Rehabilitation Fund Report. 

Anticipating the budget crisis as early as March, Republican Gov. Bruce Rauner's administration sent a letter to all Illinois fairs to stop spending state money on rehabilitation. Other sources of revenue county fairs receive come from the General Revenue Fund  and Agricultural Premium Fund.  The exact amount each county fair receives is unclear, but the bottom line is that the vast majority of fairs must now deal with a sudden elimination of revenue that was planned on and expected. 

Further complicating matters for fair boards and stakeholders is that, whether a fair has been held or will be held, expenditures were made in anticipation of state reimbursement. This reimbursement takes place in the fall, but without a state budget in place, fairs may now have out-of-pocket expenses unplanned for in their budgets. 

Uncertain Funding
"All fairs are expected to submit reimbursement forms in October of this year, but without a balanced budget it is unclear if there will be funding to reimburse those organizations," said Kristi Jones, Communications Manager, Illinois Department of Agriculture

The legislative process this session, especially between the two branches of state government, was filled with blow ups and bickering, according to Ron Meyer, president of the Illinois Association of Agricultural Fairs and president of the Will County Fair. "Both sides are backing the party ticket," he said. 

The sudden elimination of state funds to local fairs has come on the heels of more than a decade of increased austerity when it comes to state fair support. Meyer pointed out that county fairs are receiving upwards of 70 percent less state funding than they were just a few years ago. 

The fairs still "receive a lot of different funding," but with the current budget crisis, "we don't know what is going to happen. It's very scary."

He added, "this will hurt every county fair, and devastate about a third of them. Without the state funding, I don't see how they can put on those fairs."

Asked how he expects fairs to cope this summer with what at the very least is an impasse with no resolution in sight, Meyer replied, "some fairs are more financially stable than others. Some are notifying their exhibitors that the premium money is not there and other funding may not be there. We have no idea what will or will not be reimbursed. Some fairs may raise rental fees, but you do that you get less events. Fairs will probably cut back on advertising or entertainment, but most fairs in Illinois have already cut back expenses to the bone."

This year, the Illinois Association of Agricultural Fairs released the results of a year-long study - "Economic  Impact of Illinois Agricultural Fairs" - conducted by the University of Illinois - that showed fairs generated $170 million in spending statewide. Unfortunately, state governmental leaders turned a deaf ear to the economic benefits of the state's fair industry. "We made sure everyone had a hard copy of that report," said Meyer. "They all know what fairs give back to the people of Illinois." 

State Fairs Cuts
The exact impact of the Illinois Budget crisis on the two state fairs is just as murky as their smaller counterparts. According to Jones, "The Illinois State Fair operates their own fund, the Illinois State Fair Fund.  The cash in this fund is generated through: ticket sales (admission, grandstand, parking), corporate sponsorships, space rental (vendors, concessions), and competitive events (entry).  In FY 15, the Illinois State Fair received an appropriation of $6.4 million from the Illinois State Fair fund. It is unclear how the budget crisis will affect this fund.

The DuQuoin State Fair received $1.7 million in operational funds - combined from two different funding pools - General Revenue Fund  and Agricultural Premium Fund.  "The budget request for FY 16 was held level from FY 15," said Jones. "The Illinois State Fair fund is a State of Illinois fund. The Illinois State Fair does not receive funds from the General Revenue Fund."

In a cost saving measure a few weeks ago, Patrick Buchen was appointed fair manager of both the Illinois State Fair and the Du Quoin State Fair. Buchen declined to be interviewed for this article or discuss the amount of or the impact of the sudden loss of state funding on the two fairs he now manages. Buchen's statement to Carnival Warehouse read: "Staff continue to plan and prepare for the 2015 Illinois State Fair and DuQuoin State Fair." 

California Comeback
Half a continent away, California backed away from its austerity towards fairs that had permeated budget issues for half a decade. In 2011, a peak year for the great recession, Democratic Governor Jerry Brown cut $32 million in funding, virtually eliminating all fair subsidiaries for the 78 fairs presented by the 54 District Agricultural Associations under the California Department of Food and Agriculture (Fairs & Expositions Unit). 

A report by California Watch (3-10-11) stated that the cut meant a loss of $25,000 to $250,000 - a near-crippling amount for fairs already struggling during the height of the recession, with businesses eliminating sponsorships and consumer confidence plummeting. According to Stephen J. Chambers, Executive Director, Western Fair Association, to cover costs they cut fair days, reduced work hours, laid off staff and postponed building maintenance and fairground upkeep; many raised fees and even ticket prices. These measures could only be short term - a fair needs some paid-staff to operate and raising fees and ticket prices in a down-trending economic climate will only further diminish the bottom line.

Chambers said that the larger fairs were better able to weather this perfect storm. "but smaller fairs suffered the most, and the impact was different from fair to fair. But every fair was effected. Fairs rely on the state government as a partner and they lost that partner."

Many fairs took a new approach towards finding revenue stream - fundraising. "Fairs are nonprofits and a lot of the fair boards really stepped up their fundraising," said Chambers. "All fairs rely on some charitable donations, but a lot of them increased their efforts and had great success."

Unlike fairs in the Prairie State, Golden State fairs received good news when FY 2016 started. The governor approved a $10 million allocation for fair funding. "Every fair has been struggling through the second depression, which is what I call the great recession," said Chambers. "This restoration of some funding is a step in the right direction. California fairs have made it through the other side." 

California fairs are by far the largest constituency in the Western Fairs Association - but belt-tightening by other states in the region also took place. "Every state cut some funding, but not as severely as California," said Chambers.

NYS Restoration
New York is another state taking an approach opposite to Illinois. Democratic Governor Andrew Cuomo, had restored some fair funding that was cut prior to 2013. According to Jola Szubielski, Director of Public Information, Department of Agriculture and Markets, "The current state budget provides $500,000 in Fair Premium Reimbursements for agricultural competitions at county fairs across the state through the Department," said Szubielski. " This is a 47 percent increase in reimbursement funding from 2013."

She added, "As for the State Fair, capital budgets for the Great New York State Fair have more than tripled in the last few years.  In addition, as part of this year's budget, Governor Cuomo dedicated $50 million to a major renovation project at the Fairgrounds."

Small & Sudden
While more of a pin-prick than the Illinois bloodletting, FY16 brought bad news for Florida Fairs. According to Tom Umiker, President of the Florida Federation of Fairs and Manager of the Hillsborough County Fair, Republican Governor Rick Scott used his line-item veto powers to eliminate $200,000 in a Premium Fund, "doled out on a percentage basis to fairs for awards and premiums awarded at fairs. It's been part of the budget for umpteen years and fairs have relied on it." He estimated that umpteen years amounts to more than 20. 

Umiker said that most Florida fairs have become self-sustaining and state funding for fairs had dried up years ago, except mainly for this one item. Larger fairs had not used the funds, but about 50 fairs in Florida will lose thousands of dollars. The impact on fairs while not negligible, will likely not devastate most fairs. "Fairs are going to have to get more community support or raise fees to make up for the loss," he said. "The problem most fairs have already stretched their budgets as thin as they can go."

He added that Scott is a lame duck governor and cannot run again. "The budget passed with this item in the budget. I fully expect it be restored in the next budget by the next governor."

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