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 Income Wages 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$0.50 Butcher($ )$0.25 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 –Comparisons with region and state. –Population –Employment –Income –Sales –Commuting

Population

Population Growth

Civilian Labor Force Employed + Unemployed UNEMPLOYMENT RATE Unemployed / (Employed + Unemployed) or Unemployed / Civilian Labor Force

Unemployment Rate

Civilian Labor Force

Where Do We Work?

Jobs in the Top Three Sectors

Job Growth by Sector

Earning Trends by Sector ($M 2000)

Earnings Growth

Income Components

Total Personal Income

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 = 1/10 th of One Cent (0.001)

Example – Class 1 Property Assessed Value: $120,000 Taxable Value: $12,000 (120000/10) Millage Rate: Tax Levy: 12 * = $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-commuters 3,330 MS: 3,134 AL: 73 TN: 17 LA: 26 Other: 80

In-Commuters

Other Issues 1. Local infrastructure –Capacity 2. Health Care –Impact of poor health – a case study

1. Capacity Issues Capacity 5.76 Mgal/day Average 3.6 MGal/day Peak 4.4 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 respondents 8.1% 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