The arrival of summer also means the arrival of state fair season--unless you're in Detroit.

While balancing the budget last year, Michigan Gov. Jennifer Granholm axed the subsidy for the nation's oldest state fair, forcing it to shut down. She decided that compared to the core functions that state government pays for--education, health care and public safety--it couldn't compete. Many Michigan lawmakers agreed. "The reality of the situation is that our state is in, shall we say it politely, financial ruins," says Rep. Bill Rogers. "I hate to term them as luxury items, but that's what they are."

Like Michigan, many states are facing structural deficits and reassessing what government should and shouldn't do. More states could conclude that fairs are luxuries they can't afford.

Jim Tucker, president and CEO of the International Association of Fairs and Expositions, says that would be a mistake. Tucker's case is that fairs aren't just about Ferris wheels and corndogs. He argues that fairs teach city dwellers about the importance of farming. Tucker also points out that state fairgrounds often serve as venues for other events, much like arenas and convention centers, which also are often subsidized by governments.

For states, the best of both worlds would be to have a fair without having to pay for it. The Texas fair already operates without state funding. A second fair in Michigan's Upper Peninsula that lost state funding will continue as a private venture. Rogers is supporting legislation to bid out the rights to the Michigan fair that formerly was based in Detroit.

Whether that's a realistic strategy in Michigan or elsewhere is an open question. In South Dakota last year, lawmakers slashed the fair's funding from $768,000 to $400,000. The fair survived by reducing its advertising and entertainment budgets, and by raising some fees. This year, the Legislature rewarded the fair by cutting its budget by another $100,000.

Jerome Hertel, the fair's manager, says he'll have no choice but to delay capital spending and equipment purchases. Even after doing that, bad weather could force the fair to go back to the South Dakota Legislature to ask for more money. Hertel thinks the current level of state subsidy is unsustainable, but he's not giving up. "The state fair has survived wars and the Great Depression," he says, "and we'll survive this too."