Issuu on Google+

Economic Impact Analysis A four-year economic growth and prosperity initiative for Whitfield County

October 2012

1|P a g e

The Research and Analysis Division on NCDS Inc.


TABLE OF CONTENTS Economic Impact of Grow Greater Dalton 2.0 Program a. b. c. d.

Job Impact Earnings’ Impact Tax Revenue Analysis Bank Deposit Analysis

2 2 3 5 6

Appendix I: Methodology and Limitations

7

Appendix II: About NCDS and the Economic Strategy Center

8

2|P a g e


ECONOMIC IMPACT ANALYSIS Grow Greater Dalton 2.0 is a four – year regional economic growth acceleration initiative focusing on business attraction and expansion. One of initiative’s main goals is the creation of 1,000 new direct jobs. These new jobs will play a significant role in boosting Whitfield County’s’ economy as each new job will ripple through the economy generating additional "indirect” and “induced” jobs, as well as the associated income and state/local tax revenue. The ripple effect of these jobs is computed based on regional multipliers. These multipliers show the effect of the addition of one job or one dollar in any given industry to the employment and earnings of all industries. Sections “a” through “d” show the projected impact of new jobs in local spending, sales tax revenue and bank deposits.

a. Impact of New Jobs Table 1. Economic Impact of Jobs DIRECT IMPACT1 JOBS EARNINGS (PAYROLL)

1,000 $37,500,000

INDIRECT2 & INDUCED3 IMPACT 500 $16,976,010

DISPOSABLE PERSONAL INCOME4 PERSONAL CONSUMER EXPENDITURES5 DEPOSIT POTENTIAL FOR AREA FINANCIAL INSTITUTIONS6

TOTAL IMPACT 1,500 $54,476,010 $46,685,940 $38,982,760 $20,541,814

1

Direct Impact: Impact generated directly from the jobs created with the assistance of the new initiative. Indirect Impact: the changes in employment, income, and output (business sales) in various industry sectors of the local economy supplying goods and services to the companies that expanded. 3 Induced Impact: captures the ripple effect of increased household and/or institutional income. 4 Disposable Personal Income: Personal Income less Personal Tax and Nontax Payments 5 Personal Consumer Expenditures: Percentage of Disposable Personal Income less Interest, Personal Transfer Payments, and Personal Savings 6 Deposit Potential: Personal Savings Rate less Deposit Leakage Estimate with Area Turnover 2

The above calculations computed based on the following inputs: 

Creation of 1,000 new direct jobs in the following target industries: o Plastics and chemical o Advanced manufacturing o Datacenters o Automotive suppliers o Targeted retail o Distribution o Food processing o Renewable energy

The direct payroll is calculated based on an average annual wage rate of $37,500.

3|P a g e

For every direct job, created as result of program’s attraction and expansion efforts, another .5 job will be created in the local economy. Every dollar earned, as result of the new jobs, is expected to generate an additional $0.45 in earnings for the region’s citizens.


ďƒź

The impact is calculated with IMPLAN, an economic model reflecting Whitfield County’s economy.

b. Earnings/Expenditure Impact Earnings associated with creation of 1,500 total jobs are projected to be spent as shown in Table 2. The expenditure detail determines the estimated annual impact to regional companies - with knowledge of their regional market share - due to the job creation activities of Grow Greater Dalton 2.0 program. The local spending in each category was derived from the Consumer Expenditure Survey conducted by the Bureau of Labor Statistics and provides information on the buying habits of American consumers and data on their expenditures in four regions (Northeast, Midwest, South, and West). Table 2. Distribution of Projected Average Annual Expenditures ($38,982,760)

Categories (Major/Minor) FOOD Food at Home Food Away from Home ALCOHOLIC BEVERAGES HOUSING Shelter Owned Dwellings

Amount

Percentage

$4,989,793 $2,948,968 $2,040,825 $272,879 $13,137,190 $7,172,906 $4,612,178

12.8% 59.1% 40.9% 0.7% 33.7% 54.6% 64.3% 54.9 % 25.1 % 19.9 % 29.0% 6.7% 25.8% 6.8% 46.4% 1.8% 31.8% 13.3% 6.3% 31.0% 69.0% 3.9% 9.4% 3.4% 17.2% 35.8% 48.8% 49.0% 2.2% 29.4% 30.5%

Mortgage Interest & Charges

$2,532,086

Property Taxes

$1,157,657

Main., Repair, Insurance

$917,824

Rented Dwellings Other Lodging Utilities, Fuels and Public Services Natural Gas Electricity Fuel oil and Other Fuels Telephone Services Water and Other Public Services Household Operations Personal Services Other Household Expenses Housekeeping Supplies Household Furnishings and Equipment APPAREL TRANSPORTATION Vehicle Purchases Cars and Trucks, New Cars and Trucks, Used Other Vehicles Gasoline and Motor oil Other Vehicle Expenses

$2,080,143 $480,585 $3,389,395 $230,479 $1,572,679 $61,009 $1,077,828 $450,790 $827,643 $256,569 $571,074 $512,350 $1,234,896 $1,325,414 $6,705,035 $2,400,402 $1,171,396 $1,176,197 $52,809 $1,971,280 $2,045,036

4|P a g e

of Expenditures of Food of Food of Expenditures of Expenditures of Housing of Shelter Owned Dwellings Owned Dwellings Owned Dwellings of Shelter of Shelter of Housing of Utilities of Utilities of Utilities of Utilities of Utilities of Housing of Household of Household of Housing of Housing of Expenditures of Expenditures of Transportation of Vehicle Purchase of Vehicle Purchase of Vehicle Purchase of Transportation of Transportation


$636,006 $912,086 $253,584 $243,359 $288,316

Maintenance and Repairs Vehicle Insurance Vehicle Rental, Leases, Licenses Finance Charges Public Transportation

ďƒź

31.1% 44.6% 12.4% 11.9% 4.3%

of Vehicle Expenses of Vehicle Expenses of Vehicle Expenses of Vehicle Expenses of Transportation

CATEGORIES (Major/Minor)

Amount

Percentage

HEALTH CARE Health Insurance Medical Services Physician's, Dental & Clinical Services Hospital Nursing Home Home Health Services Other Drugs Medical supplies ENTERTAINMENT PERSONAL CARE PRODUCTS PERSONAL INSURANCE & PENSIONS Life/ Other Personal Insurance Pensions and Social Security CASH CONTRIBUTIONS READING EDUCATION TOBACCO PRODUCTS/SMOKING SUPPLIES MISCELLANEOUS

$2,689,810 $1,589,678 $583,689 $200,789 $218,300 $50,197 $16,927 $97,476 $433,059 $83,384 $2,027,104 $506,776 $4,210,138 $252,608 $3,957,530 $1,442,362 $77,966 $623,724 $350,845 $623,724

6.9% 59.1% 21.7% 34.4% 37.4% 8.6% 2.9% 16.7% 16.1% 3.1% 5.2% 1.3% 10.8% 6.0% 94.0% 3.7% 0.2% 1.6% 0.9% 1.6%

Totals may not add up due to rounding

5|P a g e

of Expenditures of Health Care of Health Care of Medical Services of Medical Services of Medical Services of Medical Services of Medical Services of Health Care of Health Care of Expenditures of Expenditures of Expenditures of Insurance of Insurance of Expenditures of Expenditures of Expenditures of Expenditures of Expenditures


ďƒź

Personal consumption expenditures are computed from total earnings generated minus tax and nontax payments.

c. Tax Revenue Analysis Job creation efforts of Grow Greater Dalton 2.0 program will generate state and local sales tax revenue. Based on estimated consumer expenditures of $39 million, the sales tax impact is estimated to be approximately $0.9 million. The table below shows a detailed breakdown of the estimated tax revenue yielded from consumer spending generated as result of the new payroll. Table 3. Estimated Sales Tax Revenue Categories

Amount

Consumer Expenditures

$38,982,760

Taxed Consumer Expenditures

$21,988,288

State Sales Tax Revenue

$761,573

Local Option Sales Tax Revenue

$219,883

Total Estimated Sales Tax Revenue

$981,456

Note: Tax rates provided by Georgia Department of Revenue



The estimated taxed expenditures were derived from the net personal consumption expenditures, excluding tax-exempt categories: 6|P a g e


o Food at home (exempt from state sales tax only) o Prescription drugs 

The estimated sales tax revenue is based on: o State sales tax rate of 4%. o Local option sales tax rate of 1%.

7|P a g e


d. Bank Deposit Analysis The bank deposit analysis calculates the individual bank’s deposit potential based on its market share. It is based on the “Deposit Potential for Area Financial Institutions” generated from Impact of New Jobs (page 2). The dollar value of Grow Greater Dalton 2.0 program to individual banks is determined based on estimated deposits of $20,541,814 generated from the new payroll. This analysis is specific to Whitfield County. Table 5. Estimated Deposits of Local Banks Banks in Whitfield County, GA Branch Banking & Trust Company Wells Fargo Bank First Bank of Dalton Regions Bank Bank of America FSG Bank Alliance National Bank Synovus Bank Certus Bank Community & Southern Bank SunTrust Bank First National Community Bank Covenant Bank & Trust TOTAL Total area FDIC deposits Share of total FDIC market represented Non-FDIC market estimate (CU) *

Current Market Share (including non-FDIC) $389,674,000 21.75% $326,018,000 18.20% $160,372,000 8.95% $150,678,000 8.41% $146,998,000 8.21% $131,924,000 7.36% $116,911,000 6.53% $72,381,000 4.04% $57,639,000 3.22% $34,191,000 1.91% $26,506,000 1.48% $23,096,000 1.29% $15,280,000 0.85% $1,651,668,000 92.2% $1,651,668,000 100.0% 7.8% 2011* Deposits

Deposits to Local Banks $4,468,362 $3,738,424 $1,838,974 $1,727,813 $1,685,615 $1,512,763 $1,340,610 $829,987 $660,942 $392,066 $303,942 $264,840 $175,215 $18,939,552

Data as of June 30, 2011

Notes: ♦ This figure does NOT include commercial accounts, which magnify this estimate. ♦ Bank deposits and market share data obtained from the FDIC. ♦ The Credit Union market share (of 7.8%) represents the state of Georgia’s market share (Source: The Credit Union National Association.)

8|P a g e


APPENDIX I: OVERVIEW OF METHODOLOGY Regional economic impact analysis focuses on what investors in economic development programs demand: measurability, accountability, and return on their investment. In order to estimate economic impacts of job creation, the model translates the change in initial employment into changes in employment and earnings from other interdependent sectors. These effects are defined as follows: ♦ Direct Impacts represent the change in jobs and earnings attributable to a change in demand or supply. Specifically, direct impacts are numbers resulting from the new jobs created in Whitfield County. ♦ Indirect Impact represents the impact (e.g. change in employment or earnings) caused by changes in a specific industry. ♦ Induced impact captures the ripple effect of increased household and/or institutional income. The spending of the wages and salaries of the direct and indirect employees on items such as food, housing, transportation and medical services creates induced employment in all sectors of the economy. ♦ Total impact is the sum of the direct and indirect impact. The total effect measures the impact of an activity as it “ripples” throughout the region’s economy. Regional economic impact analysis results interpreted within the limitations of the study itself. These limitations include: 1. All benefits accrue to the local economy. The economic development practitioner realizes that the benefits of job creation rarely accrue solely to the immediate area. The methodology used in this study cannot precisely state the geographic parameters to which these benefits accrue; however, it assumes that the majority of benefits accumulate within Whitfield County. 2. Program’s impact calculated based on the current structure of the regional economy. Annual impacts may increase and decrease over time as changes occur within the regional economy. 3. Economic success naturally occurring in a region does not find its way into this type of analysis. In addition, the model does not use macro economic measures to describe an area’s economic health.

9|P a g e


APPENDIX II: ABOUT NCDS AND THE ECONOMIC STRATEGY CENTER National Community Development Services, Inc. (NCDS) is a pioneer in nonprofit, community-based fundraising. Since 1977, NCDS has raised over $1.5 billion for more than 500 organizations, in 44 states across the U.S. The Economic Strategy Center is the economic research and analysis division of NCDS. ESC combines the economic principles of the statistics, finance and investment fields to provide powerful, persuasive arguments for public and private sector investment in nonprofit programs and organizations. The ESC focuses specifically on applying state-of-the-art tools and techniques for evaluating the past, present and future economic impacts of policies, programs, facilities and industries. The ESC’s analytical expertise is supported by thorough, in-depth research, utilizing an array of local and national sources. The Economic Strategy Center has provided research and economic analysis services to hundreds of organizations throughout the U.S. The ESC performs studies in each client's region to identify economic trends and measure each program’s economic impact in the local economy. The ESC produces relevant, realistic, results-oriented proof of an organization’s effectiveness by quantifying its return on investment (ROI). The ESC helps clients address three types of issues: • •

Market Analysis - How will my organization be affected by changes in the economy? What should I do to respond to them? Cost/Benefit Analysis - What will be the economic impact/benefits and costs of my project/program? What should I do to maximize net value? What is the best way to communicate our value? Economic Strategy - How can my project/program affect business growth and attraction? How can I best target my efforts?

The ESC has the skill and broad experience in turning complex data into information that leads to strategic decisions and the realization of aggressive goals. The ESC’s products provide clear, yet sophisticated analysis customized to meet the particular needs of each organization. The ESC is an accredited member of the American Economic Association, National Association for Business Economics, C2ER - The Council for Community and Economic Research (formerly ACCRA) and International Economic Development Council. For more information visit www.ncdsinc.net/ESC.htm

10 | P a g e


Economic Impact Analysis