Michigan Lottery Advertising

The Issue: Current appropriations for lottery advertising are at $18.6, which represents 0.8 percent of total sales. The increase would put the margin at a full 1 percent of total sales. The Governor has recommended that the State Legislature increase appropriations for lottery advertising.

History: The State Lottery was established with the purpose of generating revenue to support Michigan’s school systems. The current state budget requires additional revenue for the State School Aid Budget or cuts must be made to the state per pupil allowance. Time and time again, increases in advertising have led to substantial increases in Michigan Lottery revenue.

Legislative Action: Governor Jennifer Granholm, in her fiscal year 2011 budget recommendation, has proposed several reforms directed at increasing sales, and thus revenue for the School Aid Fund. Among those measures, she has called for a $7 million increase in Lottery advertising.

Industry Views: Broadcasters agree that advertising works to dramatically increase Lottery sales and applauds the Governor’s decision to recommend an increase in ad spending.

Governor’s FY 2010-11 Budget Proposal

The Issue: Michigan has experienced unprecedented revenue declines in the wake of the national economic recession. To cope with a FY 2010-2011 budget deficit of $1.7 billion, Governor Granholm has offered a budget that she believes provides reforms that will make government more efficient and cost effective, and through tax changes and restructuring, creates a more conducive environment for businesses to grow and create jobs. The Governor’s budget priorities are focused on education, jobs, health care and protecting families.

History: Michigan’s economy has undergone a fundamental transformation, losing almost a million jobs in the last decade. The state budget has seen deficits every year for the past decade. Even with many spending cuts, implemented efficiencies and reforms enacted to protect state services, the state budget continues to present an on-going challenge.

Legislative Action: While no major legislative action has occurred, the Governor sets out many initiatives the legislature will debate in the coming months. The Governor proposes that the legislature go to a two-year budget cycle, making projections more accurate. The Governor is also calling for $566 million in cuts through state worker pension/pay concessions, reduced prisoner populations and Department of Community Health spending cuts, among others. The budget calls for the restoration of the Michigan Promise College Scholarship. Also of note, a total of $5 million in additional lottery revenue is generated for the School Aid Fund via expanded advertising. Her budget also seeks to combine the departments of Natural Resources and Environmental Quality, and the departments of Information Technology and Management and Budget.

Lastly, the Governor proposes a significant restructuring of the tax system. She recommends lowering the existing state sales and use tax rate from 6 percent to 5.5 percent, while expanding the sales and use tax to consumer services. And while the restructured tax would include all consumer services, the Governor excludes health care, education, new construction, real estate and services directly connected to business operations. The Governor’s Tax proposal also includes elimination of the Michigan Business Tax surcharge, by cutting it in half in 2011, and phasing it out completely in 2012.

Industry Views: Broadcasters applaud the Governor’s move to increase funding for Lottery advertising. Broadcasters were also pleased that the Governor has carved out business-to-business transactions from the State Sales Tax expansion. Preliminary analysis of the proposal was recently made public, indicating that advertising and marketing are considered business-to-business transactions.

Right of Publicity

The Issue: House Bill 5964 seeks to establish that an individual has a transferable property interest in his or her right of publicity for his or her lifetime plus 50 years. “Right of publicity" is defined as the right to control commercial use of a personality's attributes, including an individual's name, voice, signature, image, likeness, or persona and includes distinctive characteristics of the individual's appearance, gestures, or mannerisms. A violator could be sued, and would have to give the plaintiff (which could be an estate or assignee of the right of publicity) any of the profits from the commercial use or merchandising of any of the attributes. A court could also impound merchandise that misappropriates an attribute.

History: Many argue that Michigan’s current laws protecting a celebrity’s persona are inadequate. Moreover, they argue better language is needed to protect a celebrity’s persona from unauthorized commercialization after the celebrity is deceased. Representative Pam Byrnes (D-Lyndon Township) has introduced legislation in both the 94th and 95th legislatures to provide legal protections for a celebrity’s persona.

Legislative Action: Representative Pam Byrnes has introduced House Bill 5964 to create certain rights in attributes and/persona of an individual that may have commercial value based on the individual’s celebrity. Representative Byrnes has hosted, and MAB has participated in, numerous workgroup sessions to work out consensus language.

As a result, language has been included to grant immunity to news and entertainment mediums. Broadcasters are explicitly defined as entities receiving the exemption.

Industry Views: References to celebrity are important to newscasts or entertainment programming. Liability for use would involve possible First Amendment violations, and would be unacceptable to Michigan’s broadcast industry. However, with the addition of the language that clearly and explicitly exempts news and entertainment mediums, Michigan’s broadcasters maintain a neutral position on House Bill 5964.

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