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Understanding Your Local Economy
Garen Evans
Outline
– Anatomy of a local economy– Data
• Demographics• Economics• Fiscal
– Issues• Commuting• Health
Local Economy
So what?
The Local Economy
• Why?– We live here.– We work here.– Leaders are expected to make informed
decisions.• Citizens, commuters, businesses, tourists• Potential entrepreneurs• Fiscal Governance
• Resources
• Consumers
• Producers
Local Economy• Resources:
– Air, water, land, minerals– People: labor force, children, students, retirees, tourists– Factors of production
• Producers:– Raw, processed, finished
• Consumers:– Intermediate– Final goods and services
Factors of Production
LAND
LABOR
CAPITAL
MANAGEMENT
Returns to Production
Land «« rent
Labor «« wages
Capital «« interest
Management «« profits
What Flows In?
Dollars from non-local purchases of locally produced goods and services.
• Manufactured goods and services• Agricultural commodities• Transfer payments• Tourism dollars
What Leaks Out?
Non-local spending
• Consumer goods and services• Non-locally purchased business inputs
– Recall the four factors of production
Measuring the Economy
• Composition– BLS: 12 industry super
sectors
• Indicators– Demographic
• Population, income
– Economic• Industry sales, jobs
– Fiscal• Revenues and
expenditures
BLS Industry Super Sectors
• Construction• Education and Health• Financial Activities• Government• Information• Leisure and Hospitality• Trade
• Manufacturing• Natural Resources
and Mining• Professional and
Business Services• Transportation and
Utilities• Other Services
Economic Indicators
Demographics
• Population– School-aged
• infrastructure
– Elderly• transfer payments: social security, Medicare, Medicaid
• Households– Owner-occupied– Important goal for low income communities
• Wealth accumulation
• Income:
Income
• Total Personal Income• Earnings
– Less contributions to social insurance
• Dividends, interest, and rent– Investment income– Capital income– Property income
• Transfer payments
Economics
• Industry Sales (output)
• Employment
• Labor IncomeWages and salaries + proprietors incomes
• Total Value Added (GDP)
Economics
• Industry Sales– Total Industrial Output
• All transactions
Farmer sells cow to butcher $0.50
Butcher sells meat to McDonalds $0.75
McDonalds sells hamburger $1.75
Total Sales………………………………. $2.00
Economics
• Total Value Added– Value of firms output less cost of intermediate
goods that the firm purchases.
Farmer$0.50
Butcher ($0.75-0.50) $0.25
McDonalds ($1.75-$0.75) $1.00
Total Value Added………………………. $1.75
Economics
• Employment: People & Jobs– Civilian Labor Force (CLF)
• Employed Persons• Unemployed Persons• Unemployment Rate = unemployed / CLF
– Place of Work Employment• Jobs
Oktibbeha County
• 1995-2004– Comparisons with region and state.– Population– Employment– Income– Sales– Commuting
Population
40,623
43,769
39,00039,50040,00040,50041,00041,50042,00042,50043,00043,50044,00044,500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Population Growth
1995-2004 2004-2010O ktibbeha 7.74% 2.21%Lowndes -0.01% 7.25%M ississippi 7.15% 4.81%
Population Growth
1.13%
-1.00%
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Lowndes Oktibbeha MS
Civilian Labor Force
Employed+
Unemployed
UNEMPLOYMENT RATEUnemployed / (Employed + Unemployed)
orUnemployed / Civilian Labor Force
Unemployment Rate
3.48
7.09
5.65
0.00
2.00
4.00
6.00
8.00
10.00
12.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Oktibbeha Lowndes MS
Civilian Labor Force
15,000
17,000
19,000
21,000
23,000
25,000
27,000
29,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Oktibbeha Lowndes
Where Do We Work?
-2,0004,000
6,0008,000
10,00012,000
14,00016,00018,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
AGRI MINE CONST MFG TRADE SVC TCPU FIRE
Jobs in the Top Three Sectors
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
MFG SVC TRADE
Job Growth by Sector1995-2004
80.4%
32.9%
48.0%
65.1%
-2.1%
-20%
0%
20%
40%
60%
80%
100%
120%
AGRI MINE CONST MFG TRADE SVC TCPU FIRE
Earning Trends by Sector ($M 2000)
$-$10$20$30$40$50$60$70$80$90
$100
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
MINE CONST MFG TRADE SVC TCPU FIRE
Earnings Growth1995-2004
105.5%
14.4%
37.0%
53.8%
71.5%
9.1%
278.3%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
MINE CONST MFG TRADE SVC TCPU FIRE
Income Components
Earnings64%
Dividens, Interest & Rent
19%
Transfer Payments
17%
Total Personal Income
$-
$200.0
$400.0
$600.0
$800.0
$1,000.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
DIR TP EARN
Revenues and Expenditures
• Revenues– Taxes, charges, fees, transfers, bonds
• Expenditures– Health, hospitals, education, public
welfare, highways, public safety: police and fire protection
Tax Revenues
Ad Valorem
“according to the value”
Property Taxes
Retail Sales
State Tax Levies
State Transfers
Property Taxes
• Assessed Value• Taxable Value
– 10% Residential Property– 15% Commercial Property– 30% Motor Vehicles, et al.
• Tax Rate: Millage
Millage Rate
• Millage Rate is the tax rate per $1000 of value.
• One Mill = 1/10th of One Cent(0.001)
Example – Class 1 Property
• Assessed Value: $120,000
• Taxable Value: $12,000 (120000/10)
• Millage Rate: 111.09
• Tax Levy: 12 * 111.09 = $1,333.08
Retail Taxes
• Mississippi collects 7% sales tax on many retail products.
• Eligible municipalities receive part of sales taxes collected in their jurisdiction
• 18.75%• City (ie., incorporated municipalities)
Retail Sales in 2000
• Oktibbeha County: $408 million
• $302 million in eligible municipalities:
• City Diversions:– Maben: $86,899– Starkville: $3,687,185– Sturgis: $40,838
Commuting
• Oktibbeha County– 18,401 total– 15,071 own-
commute– 3,330 out-commute
Out-commuters3,330
MS: 3,134AL: 73TN: 17LA: 26
Other: 80
In-Commuters
IN O UT NETM ississippi 3,557 3,134 423 Alabam a 92 73 19 Tennessee 26 17 9 Louisiana 16 26 (10) O ther 42 80 (38) Total* 3,733 3,330 403
Other Issues
1. Local infrastructure– Capacity
2. Health Care– Impact of poor health – a case study
1. Capacity Issues
Capacity5.76 Mgal/day
Average3.6 MGal/day
Peak4.4 Mgal/day
• Daily per-capita usage: 84 gallons (avg)
• Population growth: 2%– Exceed system cap by 2027– Exceed system peak by 2017
2. Health Issues
• Mississippi ranks highest for– Obesity– Heart Disease– Diabetes– Infant Mortality
• Employers – Educated workforce– Access to healthcare
Health = Wealth = Health = Wealth …
• “During the past 30 days, how many days did poor physical or mental health keep you from doing your usual activities?”
20.4% of all respondents8.1% of workers
Health $$$
$32.9 Million
Of LOST INCOME
$144 Million in present value losses accumulate over 30 years
Understanding Your Local Economy
Garen Evans