Illinois State Fair continues to struggle with finances

SPRINGFIELD -- Over a nine-year period ending in 2009, the Illinois State Fair cut its annual loss nearly in half.

But according to the most recent audit available of fair finances, the 10-day event still lost nearly $2.8 million two years ago. Some officials question that expense at a time when state government continues to struggle with paying its bills and just enacted a budget that makes cuts to dozens of human-service programs.

The 2011 state fair begins Friday.

"I love the state fair, and I'll be back again, but you have to be running it in a revenue-neutral way," said Sen. Matt Murphy of Palatine, the Senate Republicans' point man on the state budget.

Murphy thinks that can be accomplished if Gov. Pat Quinn signs a gaming expansion bill that would allow slot machines at the fairgrounds.

"It might be a way to make up some revenue," Murphy said. "We could actually stop subsidizing it."

Short of that, though, making the fair revenue-neutral almost certainly would mean paying more to get in.

"The first thing we would do is jack up the admission fee. It wouldn't be an incremental increase," said Illinois State Fair manager Amy Bliefnick.

Two years ago, the fair increased adult admission fees to $5, which Bliefnick said is still the lowest in the nation. A survey by the fair's staff found a majority of fairs charge in the $8-to-$10 range for adults, although the admission fee in Texas is $16. The average is $8.75, Bliefnick said, adding that it may be time for Illinois to consider another increase.

"Incremental increases have to be done," she said.

Lost vendors?

Vendors would also be hit in an effort to make the fair pay for itself.

"Then you jack up the admission for vendors," Bliefnick said, although that would likely have a ripple effect.

"We increase our fees, and the guy who sells hotdogs increases their fees," she said.

Jim Cullers, whose family has sold fries at the fair for 66 years, agreed with that assessment.

"It (higher fees) would cut into the profit, obviously," Cullers said. "Eventually you have to pass those costs on to the customer."

Mary Crifasi has five locations for Smiley's Food & Novelties, a family operation that's been at the fair for 89 years. Between merchandise for the stands, booth rental and fees for parking permits and the like, Crifasi estimates she has $18,000 invested before she makes her first sale.

"You've got to take in a lot of money," she said. "If prices go up dramatically, it would be rough to make it there."

Crifasi said she thinks admission fees need to go up "a little bit," but agreed even that has limits.

"If the gate rises too much, the family that has four or five kids might stay away," she said. "Or you might go, but don't spend any money."

Cullers said higher vendor fees might also have an unintended consequence. It takes a couple of years for a new vendor to start making money, he said, so higher fees might discourage new vendors from setting up shop.

We're not Dallas

Last year, the Illinois Policy Institute released a paper critical of the state fair's money-losing record. It suggested Illinois look to the privately run State Fair of Texas for lessons in how to run a fair without government assistance.

The State Fair of Texas is operated by a not-for-profit corporation. In 2010, it cleared nearly $8.4 million.

But there are large differences between the fairs in Texas and Illinois, starting with location. The Texas fair is in Dallas, part of one of the largest metropolitan areas in the country.

"Our state fair is in Springfield. If you put this in Chicago, of course your attendance is going to be higher," Bliefnick said.

The Texas fair leases a 277-acre city park for the run of the 24-day fair, said Sue Gooding, vice president of public relations for the State Fair of Texas. The site reverts to a park after that.

Within the park are seven museums, most of which have free admission if you buy a ticket to the fair. The largest auto show in the Southwest takes place at the fair, as does a college-rivalry football game at the Cotton Bowl football stadium in the park. Chevrolet underwrites the entertainment main stage, which is free with a fair admission.

"Part of the way we are able to do this is sponsor support," Gooding said. "A sponsor will recognize it will be very important that they will reach a large audience."

Gooding acknowledges that the Illinois and Texas fairs have obvious differences.

"I don't advocate that our business model is the one for every fair," Gooding said. "Your history has a lot to do with it, your location. It would be wrong of us to think this would work everywhere."

Still, Murphy is intrigued by the idea.

"A private-sector operator is a creative option," Murphy said. "I'd be interested to see how that works."

Year-round expense

Department of Agriculture spokesman Jeff Squibb said the basic fair budget is about $5.1 million, with approximately $800,000 coming from the state's general checkbook account for awards and premiums.

"We're talking about less than $1 million in potential savings to the state if the fair were eliminated or canceled," Squibb said. "The fair itself generates the revenues that pay a majority of its bills."

In 2009, the last year covered by an auditor general's report, the fair generated $4.2 million in revenue. (Squibb said another $200,000 to $250,000 in sales tax revenue is also generated, but does not show up in the fair receipts figure, because that money goes directly to the state's general fund.)

That same year, though, expenses were listed at slightly more than $7 million for a deficit of nearly $2.8 million. The expenses include nearly $2.4 million in "allocated costs," which are the state fair's share of maintaining the fairgrounds year-round.

"If you take out those buildings and grounds expenses, the fair is close to break-even," Squibb said. "If you talk about the state subsidizing the fair, that is the single largest subsidy."

Squibb said those costs wouldn't disappear if the state fair disappeared.

"This is a state-owned facility. We have an obligation to maintain it. The personnel would still be on the payroll, and they would still be mowing grass and repairing the roofs and doing the other activities to maintain a state-owned facility," Squibb said.

Auditor General William Holland said the expenses need to be accounted for.

"You can't just ignore the numbers," Holland said. "Those buildings are part of the state fair."

Moreover, he said, the allocated costs are the state fair's own numbers, based on a study it commissioned to determine what they should be.

"It wasn't a study Bill Holland did. These are their statements," Holland said.

Missing in Michigan

Eliminating the state subsidy for a fair can have catastrophic results. Michigan did that last year, and the state fair was canceled. There won't be one this year, either, and there are no plans for a fair in 2012 or 2013, said Kurt Weiss, spokesman for the Michigan Department of Technology, Management and Budgets.

"It is basically over," Weiss said. "There is no move to revive it"

Not everyone thinks the state fair needs to be self-sustaining.

"We are promoting the largest industry (farming) in Illinois," said Rep. Raymond Poe, R-Springfield. "The fair does a lot for ag awareness. We're promoting an industry that is very vital."

Bliefnick said discussions about making the fair self-sustaining also overlook the economic benefits of the fair. A 2008 study said the state fair had a $36 million economic impact on Sangamon and Menard counties, including $13 million for wages and salaries. The fair is in the process of updating the study.

"Maybe we don't do enough to talk about the economic impact," Bliefnick said.

Doug Finke can be reached at (217) 788-1527.

The numbers

Here are revenue and expense reports for the Illinois State Fair since the 2001 fiscal year:

Year Revenues Expenditures Annual Loss

2001 $3,546,101 $8,450,201 $4,904,100

2002 $3,633,450 $8,497,470 $4,864,020

2003 $3,853,851 $7,102,159 $3,248,308

2004 $3,557,915 $7,350,255 $3,792,340

2005 $4,140,914 $7,454,718 $3,313,804

2006 $3,978,764 $7,810,259 $3,831,495

2007 $3,933,192 $7,368,697 $3,435,505

2008 $4,155,167 $7,884,084 $3,728,917

2009 $4,209,311 $7,008,029 $2,798,718

Source: Illinois auditor general reports

2011 Illinois State Fair

This year's Illinois State Fair starts Friday and runs through Sunday, Aug. 21. The Twilight Parade and a free preview night will be Thursday.

The Illinois State Fairgrounds is open from 7 a.m. to midnight for the duration of the fair. Buildings are open from 9 a.m. to 9 p.m.

General admission for ages 13 and older is $5. Children ages 5 to 12 get in for $2, while those under 5 are admitted free. Admission for senior citizens (60 and older) is $2.

Vehicle parking for a single day on the fairgrounds is $7.