THE ECONOMIC IMPACT OF OKLAHOMA COOPERATIVE EXTENSION SERVICE VISITORS ON THE ECONOMY OF TULSA COUNTY, OKLAHOMA

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1 AE THE ECONOMIC IMPACT OF OKLAHOMA COOPERATIVE EXTENSION SERVICE VISITORS ON THE ECONOMY OF TULSA COUNTY, OKLAHOMA Suzette Barta - Extension Assistant, OSU, Stillwater (405) Susan Trzebiatowski Student Assistant, OSU, Stillwater (405) Phil Pratt - County Extension Director, OSU, Tulsa (918) Jack Frye - Area Extension Community Development Specialist, OSU, Ada (580) Mike D. Woods - Extension Economist, OSU, Stillwater (405) RURAL DEVELOPMENT OKLAHOMA COOPERATIVE EXTENSION SERVICE OKLAHOMA STATE UNIVERSITY March 2004

2 THE ECONOMIC IMPACT OF OKLAHOMA COOPERATIVE EXTENSION SERVICE VISITORS ON THE ECONOMY OF TULSA COUNTY, OKLAHOMA Suzette Barta Extension Assistant Room 527, Ag Hall Oklahoma State University Stillwater, OK Phil Pratt Tulsa County CED 4116 E. 15 th Tulsa, OK Susan Trzebiatowski Student Assistant Oklahoma State University Stillwater, OK Jack Frye Comm. Devel. Specialist PO Box 1378, 314 S. Broadway, Suite 101 Ada, OK Mike Woods Extension Economist Room 514, Ag Hall Oklahoma State University Stillwater, OK ABSTRACT This paper provides an impact study of meetings planned and conducted by the Oklahoma Cooperative Extension Service in Tulsa County. The report is based on data provided by the Tulsa County Extension office concerning the number of visitors to these meetings and conferences. Analysis of these visitors economic impact on the county's economy utilizes IMPLAN Model multipliers. "Oklahoma State University, in compliance with Title VI and VII of the Civil Rights Act of 1964, Executive Order as amended, Title IX of the Education Amendments of 1972, Americans with Disabilities Act of 1990, and other federal laws and regulations, does not discriminate on the basis of race, color, national origin, sex, age, religion, disability, or status as a veteran in any of its policies, practices or procedure. This includes but is not limited to admissions, employment financial aid, and educational services." "Readers may make verbatim copies of this document for non-commercial purposes by any means."

3 THE ECONOMIC IMPACT OF OKLAHOMA COOPERATIVE EXTENSION SERVICE VISITORS ON THE ECONOMY OF TULSA COUNTY, OKLAHOMA Economic development efforts are of great concern to local leaders in Oklahoma. Often, estimates of potential impacts are useful when analyzing economic development options. The overall purpose of this study is to measure the economic impact of visitors to Tulsa County who attend meetings and conferences planned or hosted by the Oklahoma Cooperative Extension Service. Specific objectives of the study are to: 1. Provide basic economic data for Tulsa County; 2. Summarize the estimated direct economic impact of the visitors to Tulsa County; 3. Review some basic concepts of community economics; and 4. Estimate the secondary impacts of the visitors to Tulsa. No recommendations will be made in this report. This report addresses economic impacts of visitors to Tulsa County. There may be additional benefits and/or costs not addressed in this report. The analysis conducted is based on assumptions and data provided regarding the total number of visitors and the number of visitor staying overnight in Tulsa. Basic Demographic and Economic Data Before discussing the impacts of the proposed development, it is useful to review some basic data for Tulsa County. These data provide current economic and social trends existing in the county. The ORIGINS system and data supplied by the Census Bureau are utilized in this section. 1 1 ORIGINS is the State's web-based database provided jointly by Oklahoma State University, Oklahoma University, and the Oklahoma Department of Commerce. 1

4 Table 1 provides population estimates for cities and communities in Tulsa County. Total county population is shown to increase from 504,963 in 1990 to 563,299 in 2000, an 11.6% increase for the decade. All communities show some degree of increase for the decade. Many of the communities have the notation, (pt), next to their name. This indicates that only part of the city or town is in Tulsa County. For instance, Broken Arrow crosses over into Wagoner County. Even the City of Tulsa itself crosses over into other counties; however, over 98% of Tulsa s population is in Tulsa County. Table 2a lists employment by type and source for Tulsa County using SIC Code sector definitions. From , total employment only declined once from 1998 to Table 2a also shows that services, retail, and manufacturing are important sectors for Tulsa County employment. Table 2b shows Tulsa County employment data for 2001 using NAICS sector definitions. Except for total employment, data from 2000 and before cannot be compared to data from According to Table 2b, employment totaled 434,019 in Retail trade, manufacturing, and health care and social assistance are important employment sectors for the county. Labor force data from the Oklahoma Employment Security Commission for Tulsa County are listed in Table 3, and labor force data for Oklahoma are listed in Table 4. Unemployment rates for Tulsa County ranged from a low of 2.83% percent in 1996 to a high of 6.12% percent in 2003 (although the 2003 figure is considered preliminary.) Oklahoma s unemployment rate for 2003 is shown to be 5.3% (preliminary data). Table 5 provides personal income data by major source from 1996 to Per capita personal income in 2001 was $34,935 while total personal income in 2001 was about $19.8 billion. Note that the adjustment for residence for Tulsa County is negative. This indicates 2

5 that many people commute to Tulsa County to work from other counties, and thus take their income home with them. Table 6 lists sales tax collections for communities in Tulsa County that collect a sales tax. The City of Tulsa has actually seen a decline in sales tax collections since At a tax rate of 3.0%, Tulsa collections for FY 2003 totaled over $176.7 million, but are down from $190.5 million in Collinsville, Jenks, and Sand Springs have also declined some in the last two years. 3

6 TABLE 1 POPULATION TULSA COUNTY, OKLAHOMA, 1990, 2000 AND % Change Bixby (pt) 9,396 13,201 15, % Broken Arrow (pt) 53,257 68,231 71, % Collinsville (pt) 3,731 4,072 4, % Glenpool 6,943 8,123 8, % Jenks 7,721 9,557 10, % Liberty (pt) % Lotsee % Mannford (pt) na na Owasso (pt) 11,562 18,502 20, % Sand Springs (pt) 15,879 17,172 17, % Skiatook (pt) na 1,676 1,779 na Sperry , % Tulsa (pt) 362, , , % City of Tulsa (all counties) 367, , , % Turley CDP* na 3,231 na na Remainder of County 31,020 34,675 34, % County Total 504, , , % * Census 2000 designation: (Census Designated Place) A statistical area defined for a census as a densely settled concentration of population that is not incorporated but which resembles an incorporated place in that it can be identified with a name. SOURCE: U.S Census Bureau 4

7 TABLE 2a EMPLOYMENT BY MAJOR SECTOR FOR TULSA COUNTY, 1996 to 2000 (Industry Definitions Based on SIC Definitions*) Total Employment 388, , , , ,315 Farm Employment 1,132 1,155 1,155 1,151 1,188 Ag Services, Fishing, Forestry 3,400 3,504 3,401 3,633 3,664 Mining 10,556 11,140 11,001 11,175 10,598 Construction 17,992 18,548 19,820 21,541 21,910 Manufacturing 44,896 46,371 47,400 45,616 44,662 Transportation/Public Utilities 29,181 30,332 33,734 33,297 34,481 Wholesale Trade 21,337 22,316 22,904 22,286 22,192 Retail Trade 68,987 70,268 70,882 71,954 73,680 Finance/Insurance/Real Estate 28,217 30,275 32,439 30,927 32,496 Services 128, , , , ,219 Government 33,845 34,136 34,999 35,219 36,225 Federal 4,198 4,208 4,226 4,163 4,237 Military 2,699 2,726 2,735 2,761 2,797 State and Local 26,948 27,202 28,038 28,295 29,191 * Except for Total Employment, do not compare to data for

8 TABLE 2b EMPLOYMENT BY MAJOR SECTOR FOR TULSA COUNTY, 2001 (Industry Definitions Based on NAICS Definitions*) Item 2001 Total employment 434,019 Farm employment 1,231 Forestry, fishing, related activities, and other 282 Mining 8,893 Utilities 3,336 Construction 23,214 Manufacturing 44,214 Wholesale trade 18,406 Retail trade 49,068 Transportation and warehousing 18,229 Information 16,226 Finance and insurance 21,217 Real estate and rental and leasing 15,631 Professional and technical services 27,580 Management of companies and enterprises 6,101 Administrative and waste services 37,296 Educational services 6,952 Health care and social assistance 43,023 Arts, entertainment, and recreation 5,629 Accommodation and food services 28,926 Other services, except public administration 22,121 Government and government enterprises 36,444 Federal, civilian 3,779 Military 2,817 State and local 29,848 * Except for Total Employment, do not compare to data for years prior to

9 TABLE 3 LABOR FORCE DATA FOR TULSA COUNTY, 1990 to 2003 Labor Force Employed Unemployed Unemployment Rate , ,900 11, , ,823 14, , ,218 14, , ,809 16, , ,923 15, , ,978 11, , ,783 8, , ,791 9, , ,683 9, , ,715 9, , ,527 8, , ,710 10, , ,123 15, * 305, ,621 18, * Preliminary data, 11 months of data SOURCE: Oklahoma Employment Security Commission 7

10 TABLE 4 LABOR FORCE DATA FOR OKLAHOMA, 1990 to 2003 Labor Force Employed Unemployed Unemployment Rate ,513,830 1,427,886 85, ,499,931 1,399, , ,520,842 1,433,458 87, ,529,458 1,435,792 93, ,544,263 1,454,355 89, ,546,260 1,473,612 72, ,576,628 1,512,603 64, ,599,866 1,533,898 65, ,624,039 1,550,571 73, ,654,805 1,597,865 56, ,651,783 1,601,242 50, ,670,783 1,607,042 63, ,693,142 1,616,783 76, * 1,708,555 1,617,355 91, * Preliminary data, 11 months of data. SOURCE: Oklahoma Employment Security Commission 8

11 TABLE 5 PERSONAL INCOME BY MAJOR SOURCE FOR TULSA COUNTY, Income by place of residence ($000) Personal income 14,413,84415,413,10217,068,13917,504,44518,867,92419,812,945 Nonfarm personal income 14,406,16615,406,21217,065,29117,499,10318,865,42619,808,777 Farm income 7,678 6,890 2,848 5,342 2,498 4,168 Population (persons) 537, , , , , ,140 Per capita personal income (dollars) 26,797 28,229 30,778 31,164 33,464 34,935 Derivation of personal income ($000) Earnings by place of work 12,320,90313,348,01314,755,44915,314,96116,344,09217,166,410 less: Personal contrb. for social insurance 808, , , ,803 1,031,112 1,112,302 plus: Adjustment for residence -1,469,942-1,588,735-1,742,596-1,834,849-1,945,414-1,981,228 equals: Net earnings by place of residence 10,042,11710,879,52112,055,27612,489,30913,367,56614,072,880 plus: Dividends, interest, and rent 2,687,417 2,709,471 3,134,961 3,081,913 3,469,131 3,522,249 plus: Transfer payments 1,684,310 1,824,110 1,877,902 1,933,223 2,031,227 2,217,816 Earnings by place of work ($000) Components of earnings Wage and salary disbursements 8,698,592 9,515,97610,449,49210,806,52111,427,09612,056,819 Other labor income 1,152,930 1,101,774 1,162,805 1,161,626 1,236,900 1,329,528 Proprietors' income 2,469,381 2,730,263 3,143,152 3,346,814 3,680,096 3,780,063 Farm proprietors' income 5,477 4, ,682 (L) 1,277 Nonfarm proprietors' income 2,463,904 2,725,814 3,142,684 3,344,132 3,680,068 3,778,786 (L): Less than $50,000, but the estimates for this item are included in the totals. 9

12 TABLE 6 SALES TAX COLLECTION BY TOWN AND CITY FOR TULSA COUNTY FY Bixby@3.0% $1,854,161 $2,055,161 $2,184,989 $2,833,160 $3,127,714 $3,355,595 $3,501,950 $3,994,947 Broken Arrow@3.0% $12,455,303 $13,417,628 $14,122,756 Broken Arrow@3.5% (8) $10,747,150 (4) $6,212,220 $20,558,003 $22,197,700 $22,885,923 $23,861,966 Collinsville@2.0% $377,202 $434,477 $436,951 $473,240 (5) $204,109 Collinsville@3.0% (7) $450,615 $806,132 $806,515 $778,872 Glenpool@3.0% $668,777 $770,794 $814,663 $906,861 $988,498 Glenpool@4.0% (11) $971,620 (1) $117,519 $1,496,892 $1,520,733 Jenks@3.0% $1,420,594 $1,718,396 $1,812,948 $2,138,212 $2,292,006 $2,652,482 $2,605,139 $2,538,795 Owasso@3.0% $3,932,207 $4,488,368 $4,944,293 $5,533,211 $6,075,427 $7,425,400 $9,246,668 $9,671,900 Sand Springs@3.5% $5,550,946 $5,906,614 $6,307,840 $6,686,057 $6,939,597 $7,217,559 $7,346,216 $7,018,732 Sperry@3.0% $106,527 $110,977 $118,083 $132,641 $140,703 $158,416 $178,445 $196,052 Tulsa@3.0% $152,206,233 $157,828,233 $167,765,344 $174,696,839 $179,135,266 $190,489,487 $187,803,280 $176,738,148 (*) Denotes number of months for which sales tax was collected at the rate shown. SOURCE: Annual Reports, Oklahoma State and Municipal Sales and Use Taxes. Fiscal Year Ended June 30,

13 Some Basic Concepts of Community Economics Industries or businesses that produce goods primarily for sale outside the economy are called basic industries. They are important components of all economic systems. Two other major components of economic systems are service firms and households. Figure 1 illustrates the major flows of these two sectors within any economy. Basic industries purchase labor from households and reimburse them with dollars. Other inputs used by basic industries are purchased from local service firms. Local service firms also provide goods and services to households (consumers). Naturally, each of these three sectors of an economy purchase goods and services from outside the economy. Local transactions determine the relationships that exist among the various firms in an economy. Basic industries generate employment in order to provide a product for Oklahomans and others. Employees purchase goods and services from retail and service businesses. As earnings occur in these businesses, they hire additional employees and buy more inputs from other businesses. Visitors to an economy boost the dollars that are circulating in the retail and service sectors, which can lead to the hiring of even more employees and the purchase of even more inputs from other businesses. The total impact of any industry on an economy consists of direct, indirect, and induced impacts. Direct impacts are the immediate or "direct" effects of the impacting industry; for example, the jobs created to fill certain positions within the firm. Indirect impacts are the "second-round" effects that occur in the business sector as a result of the input purchases made by the impacting industry. Induced effects are the changes brought about by the increased consumer spending due to the initial direct and the following indirect effects. 11

14 Figure 1 Overview of Community Economic System Inputs $ $ Basic Industry Products Labor $ $ Inputs Households Goods & Services Services $ 12

15 The above discussion indicates how basic industries serve as the foundation of an economy and how households and service firms are necessary to make the economy function. Service industries account for a substantial part of the outputs of most economies. But, as Figure 1 shows, much of the service industries' output supports the local basic industries and households. Mathematical techniques can be used to measure the relationships between basic industries, households, and services. A measure used in economics to describe the effects of an increase or decrease in economic activity is called a multiplier. A Type III multiplier is used for this study. A Type III multiplier is defined as "the ratio between direct employment (income) and the direct, indirect, and induced employment (income)." A Type III income multiplier of 1.5 indicates that if one dollar is generated by the direct activity, then 0.50 additional dollars are generated due to business (indirect) and household (induced) spending. IMPLAN is a computerized database and economic model developed by the U.S. Forest Service. IMPLAN is used in this study to generate appropriate multipliers for analysis. For further details regarding this methodology see the references listed at the end of this report. 13

16 Direct, Indirect and Induced, and Total Impacts of Visitors on Tulsa County The economic activity generated by the visitors to Tulsa County is described in this section. Ten meetings or conferences are expected to take place in Tulsa County from October 2003 through July These meetings will be either planned or hosted by the Tulsa County Extension office. Attendance at the ten events is expected to total 5,390 and approximately 1,110 of those visitors are expected to stay overnight for either 1, 2 or 3 nights. The total nights spent in Tulsa by these visitors is expected to total 2,385. This information is summarized in Table 8. Estimated expenditures by these visitors are summarized in Table 9. The Oklahoma state employee rate for lodging is currently $57 per night. This value was used to calculate total spending on lodging. The state per diem rate of $31 per day was used to estimate daily spending for each of the visitors. Total spending by both daytime and overnight visitors to Tulsa is estimated to be $342,560 for the ten events shown in Table 8. The direct and secondary (indirect and induced) impacts of visitor expenditures are summarized in Table 10. These impacts result annually at the county level. Most impacts will occur in the city where the spending took place, but there will be some effect throughout the whole county. Again, actual or direct spending by visitors is estimated to be $342,560. Additional income in the amount $476,861 will be generated in the county through indirect and induced effects. The total effect of visitor spending is estimated to be $819,421. The level of taxable sales in Tulsa County associated with the visitor s expenditures is estimated at $538,741 with county sales tax revenues of $2,209 (at a rate of 0.41%). The City of Tulsa is expected to collect $19,912 (at a rate of 3.0%) as a result of the visitors spending. This information is summarized in Table

17 TABLE 8 Expected Visitors to Tulsa: October 2003 July 2004 Expected Expected Expected Nights Total Nights Event Attendance Overnight Guests Stayed per Visitor stayed in Tulsa Oklahoma Turfgrass Conference Winter Tax Institute Tulsa Farm Show 3, Hort Industries Show KOMA Cattle Conference State Soybean Expo Southern Association of Agriculture Scientists and Horticulture Scientists Oklahoma Dietetic Association Spring Convention Family Matters Conference Summer Tax Institute TOTAL 5,390 1,110 2,385 15

18 TABLE 9 SUMMARY OF ESTIMATED VISITOR EXPENDITURES Number Cost per Night* Cost per Day* Total Lodging Spending Total Day Spending Total Spending Daytime Guests 4,280 $0 $31 $0 $132,680 $132,680 Overnight Stays 2,385 $57 $31 $135,945 $73,935 $209,880 TOTAL $135,945 $206,615 $342,560 * Based on the state per diem rate and the state allowed lodging rates. TABLE 10 DIRECT, INDIRECT, AND TOTAL IMPACTS OF VISITORS TO TULSA Direct Indirect & Induced Total (1) Lodging Expenditures $135,945 $198,344 $334,289 Daytime Retail Expenditures $206,615 $278,517 $485,132 TOTAL $342,560 $476,861 $819,421 (1) IMPLAN Type III Personal Income multipliers: Selected Retail, Accommodations and Lodging 16

19 TABLE 11 COUNTY AND CITY SALES TAX GENERATED BY VISITORS TO TULSA Direct Indirect & Induced Total (1) County Retail Sales Generated (1) $342,560 $196,181 $538,741 County Sales Tax Collection (2) $1,404 $804 $2,209 City of Tulsa Retail Sales (3) $277,474 $386,257 $663,731 City of Tulsa Sales Tax Collections (4) $8,324 $11,588 $19,912 (1) Based on County Retail Sales to Personal Income Ratio of 41.14% (2) Based on County Sales Tax rate of 0.41% (3) Based on assumption that 81% of Tulsa County s retail activity takes place in the City of Tulsa. (4) Based on city sales tax rate of 3.0%. 17

20 SUMMARY The economic impacts of visitors to meetings and events sponsored by the Oklahoma Cooperative Extension Service in Tulsa County have been estimated in this report. Income impacts were presented as well as estimated taxable sales. Total economic impact of the visitors to Tulsa County equals $819,421. This results in sales tax collections for the county in the amount of $2,209 and for the city of Tulsa in the amount of $19,912. Other benefits and/or costs may exist which were not included in this study. It should also be noted that the estimates are based on assumptions provided regarding visitor counts and overnight stays. For further information about this report contact the authors. 18

21 REFERENCES Allen, C.W., Woods, M.D., and Doeksen, G.A., A Methodology for Assessing the Impacts of Business Activity, Stillwater: Oklahoma State University, Agricultural Experiment Station, B-793, November Alward, G., et.al., Micro IMPLAN Software Manual, Judy Olson, ed (St. Paul: Regents of the University of Minnesota), Willoughby, C.W., et. al., The Economic Impact of a Proposed Correction Facility on the Economy of Jackson County, Oklahoma. Stillwater. Oklahoma State University, Agricultural Economics, AE-9771, November