The Potential Gay-Marriage Windfall

The phones started ringing at the Timberholm Inn in Stowe, Vt., in April, as soon as lawmakers voted to override a gubernatorial veto and allow same-sex marriage in the state. "It doesn't go into effect till Sept. 1, but people are thinking ahead," says the inn's co-owner, Susan Barnes. "We've got two same-sex weddings booked for October." Those bookings are good news for Barnes, who says the gay-friendly inn takes in a "couple of thousand" dollars with every wedding it hosts. And they are part of the reason some same-sex-wedding advocates are now pointing out a new legalization angle: the economic payoff. (Article continued below...)

In the five years since legalizing same-sex marriage, Massachusetts has gained $111 million in spending from gay weddings, according to a new study published by UCLA's Williams Institute, which studies sexual-orientation law and public policy. "That's money buying flowers, hotels, caterers, hiring a band—all the things that go into a wedding," explains M. V. Lee Badgett, a coauthor of the study.

Typically, same-sex couples spent about $7,400 per wedding, says Badgett, an economist who is also director of UMass Amherst's Center for Public Policy & Administration, and one in 10 couples spent more than $20,000. And then there were the wedding guests: "We estimated that each same-sex couple was associated with $1,600 in hotel-occupancy tax revenue," she says.

Promises of a gay-wedding payoff are hardly new: back in 2004, a U.S. Congressional Budget Office analysis predicted that the federal government would benefit by nearly $1 billion in increased tax revenue each year if same-sex marriages were legalized in all 50 states and recognized by the federal government.

Still, some economists urge caution in looking for same-sex wedding profits—in particular citing a kind of "first-mover advantage" that benefits states with early gay-marriage laws. (After similar laws were passed in neighboring states Vermont and Maine, New Hampshire became the latest state to legalize same-sex marriage on Wednesday, but the state might not gain as much as did Massachusetts, which has become a destination for gay couples from other states.)

"If you're the 50th state to allow [same-sex] weddings, you're not going to get as much of a bump as the first state," says Michael Steinberger, an assistant professor of economics at Pomona College who worked with the Williams Institute on the Massachusetts study. "There's going to be a bump, but it cannot be as big."

San Francisco's experience with same-sex weddings dates back five years, to early 2004, when Mayor Gavin Newsom allowed (and performed) gay weddings for about a month, until a state Supreme Court ruling put the kibosh on the nuptials. According to city budget documents, revenues from San Francisco's hotel tax spiked more than 15 percent in the 2003-04 fiscal year, the second-biggest jump in 19 years and well above the projected 5 percent increase.

Ted Egan, chief economist with the San Francisco controller's office, warns against attributing the entire jump to just one month of same-sex weddings. Still, he says, "It obviously had a positive impact."

Last year, Egan adds, the controller's office published an analysis estimating that same-sex weddings, officially legalized in California in June 2008, would bring in almost $20 million in spending over two years, and $1.7 million in additional taxes and fees. That revenue stream came to a halt in November, after California voters approved Proposition 8, a constitutional amendment banning same-sex marriage.

Opponents of gay marriage argue that the financial analysis misses the mark. "I think it's irrelevant," says the Rev. Jason McGuire, legislative director of New Yorkers for Constitutional Freedoms, a lobbying group that represents evangelical churches and Christian organizations and is fighting same-sex marriage legislation. "Marriage is more than just financial benefits," adds McGuire. "We shouldn't cheapen it by looking at it just as a financial commodity."

Still, during hard times, economic arguments seem to be gaining traction. Vermont innkeeper Barnes says she contacted her state representative, Republican Heidi Scheuermann, to ask her to support the bill. "She was initially going to vote against it," Barnes says. "I sent her an e-mail saying, 'First, it's the right thing to do, and No. 2, think of your constituents and how this will affect the economy in Stowe'."

Scheuermann voted yes on the bill both before and after the governor's veto.