Center for American Progress,
a
Stop the Conference
The Economic and Fiscal Consequences of Conference
Cancellations Due to Arizona’s S.B. 1070
Marshall Fitz and Angela Kelley November 2010
Research and econ
-WWW.AMERICANPROGRESS.ORG
Center for American Progress
en
Stop the Conference
The Economic and Fiscal Consequences of Conference
Cancellations Due to Arizona’s S.B. 1070
Marshall Fitz and Angela Kelley November 2010
Research and economic analysis conducted by Elliott D. Pollack & Company
Contents | 1 Executive summary
4 Methodology and assumptions
4 Background
5 Assumptions
6 Economic impact methodology
7
Fiscal impact methodology
10 Losses from reported cancellations
10 Cancellation and spending assumptions
11 Economic losses
11. Fiscal losses
13 Losses from future booking declines
13 Visitor assumptions and scenarios
14 Economic losses
15 Fiscal losses
16 Incremental effects
17 Conclusion
18 About the authors and acknowledgements
20 Endnotes
Executive summary
Arizona's enactment of harsh, anti-immigrant legislation—S.B. 1070—sparked
an incendiary national debate over the role of states in making and enforcing
immigration policy.’ Some states and localities rushed to copy Arizona's draconian
approach; others adopted resolutions condemning Arizona’s intolerance. But
all states would be wise to consider the practical implications of their decisions
before following Arizona any further down the proverbial garden path.
Passage of the Arizona legislation triggered a fierce, national public-opinion backlash
against the state and led many national organizations and opinion leaders to call for
economic boycotts.” Arizona's business community, especially those in the tourism
industry, anticipated and feared this type of response to S.B. 1070.* And the conven-
tion industry felt the effects of this backlash immediately when major groups and
associations started canceling events and conventions in the state. Arizona’s Hotel
and Lodging Association publicly reported a combined loss of $15 million in lodg-
ing revenue due to meeting cancellations just four months after the bill’s passage.*
Our extensive research estimates that the actual lost lodging revenue from these
cancellations is at least three times that amount: $45 million. That estimate provides
a basis for calculating other losses in visitor spending. Analyzing average food and
beverage, entertainment, in-town transportation, and retail sales brings the com-
bined loss of estimated conference attendee spending up to a startling $141 million.
The economic and fiscal consequences of conference cancellations
Total losses from cancellations and Losses from conventions already cancelled Potential losses from future convention
booking declines + $141 million in lost direct spending by booking declines
+ $217 million in lost direct spending by convention attendees + $76 million in lost direct spending by con-
convention attendees * 2,761 lost jobs vention attendees
+ 4,236 lost jobs * $86.5 million in lost earnings * 1,475 lost jobs
+ $133 million in lost earnings * $253 million in lost economic output * $46 million in lost earnings
+ $388 million in lost economic output + $9.4 million in lost tax revenues + $135 million in lost economic output
+ $14.4 million in lost tax revenue * $5 million in lost taxes
1 Center for American Progress | Stop the Conference
This significant hit to direct visitor spending could not come at a worse economic
time for Arizona and yet these numbers still vastly understate the overall conse-
quences of these cancellations for the state’s economy. Cancelled meetings and
conferences over the next two to three years would have supported nearly 2,800
jobs. The cancellations will trigger more than a quarter billion dollars in lost eco-
nomic output and more than $86 million in lost wages.
The losses will hurt the state’s businesses and workers as well as the state’s budget
through lost economic activity and sales and bed taxes from convention attendees.
‘The state will also lose income taxes on now-lost salaries, and sales taxes on goods
and services that would have been purchased with those earnings. The ripple
effect of the meetings and conventions that have already been cancelled adds up
toa fiscal setback of more than $9 million in lost tax revenue over the next two to
three years.
But the economic and fiscal consequences don’t stop there. It is highly likely that
decisions not to book conventions in Arizona will continue for some time. In
fact, bookings through the Convention and Visitors’ Bureau in July and August
2010 were down 35 percent from the same period in 2009 according to reviewed
bookings and leads data.‘ Large convention bookings typically occur several years
in advance, and many organizations and associations will be making booking deci-
sions over the course of the next year.
‘The report examines a range of possible future booking scenarios since many
factors could alter trends in the bookings decline. The first, high-range scenario
assumes that the decline in future bookings will continue at this rate for the next
year, which would produce the greatest economic loss. A low-range scenario
assumes that no further decrease in bookings will continue, which would lead to
the smallest economic and fiscal losses.
A mid-range scenario that splits the difference between the high- and low-range
possibilities estimates that Arizona businesses will lose $76 million in direct rev-
enue from decisions not to book in Arizona in the future. That loss translates into
1,475 lost jobs, $46 million in lost wages, $135 million in lost economic output,
and $5 million in lost tax revenues. That is in addition to the losses already trig-
gered by cancelled bookings.
‘These convention cancellations represent only a portion of Arizona's economic
losses due to this legislation. These findings do not encompass other economic
2. Center for American Progress | Stop the Conference
setbacks, such as leisure travel cancellations, or boycotts from other municipalities
and the entertainment industry. For example, Los Angeles, Austin, and St. Paul
have all approved boycotts of Arizona and dozens more have stopped just short of
a boycott, condemning S.B. 1070 and urging the state to repeal the law.® Mexico's
Foreign Ministry warned Mexican nationals that they could be “questioned for
no reason at any moment” in a travel advisory posted in April.’ And hundreds
of artists, including Kanye West and Rage Against the Machine, have joined ina
performance boycott of Arizona called The Sound Strike.*
This report also does not capture other types of economic consequences such as
workers and families that have reportedly left the state, or disrupted productivity
at businesses whose employees are targeted by the law.’ There are also signifi-
cant budgetary concerns such as the substantial litigation costs that are already
mounting for the state.'°
Yet even the narrow and targeted scope of this report shows that Arizona is
facing severe economic and fiscal consequences. This report provides a clear
window into the potentially catastrophic impacts of pursuing harsh, state-based
immigration policies and should give other state legislatures pause before pursu-
ing such measures.
3. Center for American Progress | Stop the Conference
Methodology and assumptions
Background
The Center for American Progress retained Elliott D. Pollack & Company to
perform a study into the economic and fiscal consequences of the tourism boycott
that occurred in response to the passage of S.B. 1070.
‘The report's scope is extremely limited in that it only considers the effects of lost
tourism from meetings and conventions. The figures reported within this analy-
sis do not take into consideration any other potentially negative consequences,
such as leisure travel cancellations, municipal business boycotts, entertainment
boycotts such as concert cancellations, and other losses. The analysis also does not
address any changes in state expenditure obligations.
‘The study focuses on the economic and fiscal consequences from:
Existing cancellations: lost tourism due to conventions that have already made the
decision to cancel or relocate their meetings
Future booking declines: potential ongoing losses from decisions not to book
conferences and conventions in the near future
Incremental cancellations: a method for estimating further future lost bookings or
cancellations if more data about cancellations become public
‘The economic impact analysis examines the regional implications of cancellations
in terms of output, earnings, and job creation. The fiscal impact analysis evaluates
public revenue losses from conference cancellations.
The economic losses reported in this document are only attributable to lost
convention travel and do not include losses associated with cancelled concerts,
personal tourism travel, future labor shortages, tax base declines, or savings associ-
ated with reduced government obligations.
4 Center for American Progress | Stop the Conference
Assumptions
Numerous articles in the media actively tracked associations and meetings that
announced intentions to cancel or no longer consider Arizona for their upcoming
conventions as a way to register opposition to S.B. 1070."' The initial purpose of
this analysis was to collect as much information from known cancellations by con-
tacting convention centers, hotels, and the associations themselves. An exhaustive
effort to initiate contact and make inquiries revealed that only a limited number
would agree to an interview, and those that did were reticent in divulging informa-
tion. Some organizations and hotels or convention centers were willing to share
comments on the issue, but they withheld the specifics on most meetings.
Industry experts explained that these reactions are with good reason due to the
competitiveness of the industry. The relationships that convention centers, hotels,
and visitors bureaus have with existing and potential clients are proprietary.
Revealing such information creates a risk of lost business if competing meeting
spaces in other regions across the country are aware of the specific relationship
and directly target those associations through marketing efforts.
‘The limited data that is available, however, made it possible to model potential
impacts and to estimate a rough scale of losses.
Market segment focus
Large association convention business appears to have been most affected by the
national backlash. This is especially true for organizations whose members or mis-
sion statements value diversity or civil rights.
Travel statistics for other travel segments, such as leisure travelers and corporate
entities, have not shown significant losses so far. But the number of reported sta-
tistics is only just beginning to reflect possible consequences from the opposition
to S.B. 1070.
A review of Smith Travel Research statistics shows, for example, a significant
drop-off of occupancy growth after June of this year.’” The statistics for the month
of June largely track the year-to-date statistics. The Phoenix metro area ranked
fifth out of the top 25 metropolitan markets in June 2010 for percent growth in
occupancy among all customer segments, 11th for transient occupancy growth
5 Center for American Progress | Stop the Conference
(leisure travelers), and eighth for group occupancy growth (convention delegates
and other large parties). The year-to-date statistics (January through June) show
Phoenix at sixth for total occupancy growth, 12th in transient occupancy growth,
and fifth in group occupancy growth. In other words, the figures for the month of
June largely tracked occupancy levels for the Phoenix metro area throughout the
first half of 2010.
‘These figures change dramatically in the month of July. Phoenix dropped to 22nd
in transient occupancy growth that month, 25th out of 25 in group occupancy
growth, and 25th in total occupancy growth. It was one of only four markets to
post a decline in occupancy for transient lodging and one of only two markets to
post a decline in group occupancy. And it was the only metropolitan market to
post a decline in total occupancy growth. These declines were so severe that they
caused the city’s year-to-date rankings to decline significantly. From June to July,
the Phoenix market dropped from 12th to 17th in year-to-date transient occu-
pancy growth, from fifth to eighth in group occupancy growth, and from sixth to
12th in total occupancy growth.
Recent statistics like these, along with the feedback from tourism industry repre-
sentatives, indicate that the new immigration law has initiated real consequences
that will be realized over the next several years.
Economic impact methodology
The economic impact analysis examines the economic implications of confer-
ence activity losses in terms of output, earnings, and employment. There are
three different types of economic impact for each of these groups: direct, indirect,
and induced. For instance, direct employment consists of permanent jobs held
by construction workers and employees within commercial buildings. Indirect
employment refers to those jobs created by business:
s that provide goods and
services essential to the operation or construction of the convention enterprise.
‘These businesses range from manufacturers (who make goods) to wholesalers
(who deliver goods). Spending by direct and indirect employees on items such as
food, housing, transportation, and medical services creates induced employment
in all sectors of the economy throughout the metropolitan area. The analysis in
this study captures these secondary effects as well as the direct and indirect effects.
6 Center for American Progress | Stop the Conference
The analysis develops multipliers to estimate the indirect and induced impacts of
various direct economic activities. The Minnesota IMPLAN Group developed
the multipliers used in this study.'* The economic impact is categorized into three
types of impacts:
+ Employment: the change in total wage, salary, and self-employed jobs. These
include both part-time and full-time workers.
+ Earnings: the change in direct, indirect, and induced employees’ personal
income, earnings, or wages. Earnings include total wage and salary payments as
well as benefits of health and life insurance, retirement payments, and any other
non-cash compensation.
* Economic output: the change in economic activity, which relates to the gross
receipts for goods or services generated by a company’s operations.
All dollar figures are expressed in 2010 dollars unless otherwise stated.
Fiscal impact methodology
‘The fiscal impact analysis studies the public revenues associated with conference
activity losses. It analyzes local, county, and state governments’ primary revenue
sources—taxes—to determine how an activity may affect the various jurisdic-
tions. The analysis excludes special districts or other local tax entities.
The fiscal impact figures cited in this report are generated from information
provided by a variety of sources including the U.S. Bureau of the Census, the U.S.
Department of Labor, the Internal Revenue Service, the state of Arizona, the
Arizona Tax Research Association, and the U.S. Consumer Expenditure Survey.
Spending related to tourist activity creates beneficial fiscal effects for a region. The
primary revenues to governmental entities can be calculated from the assumptions
of the study. The major revenue sources for Arizona would include sales taxes and
bed taxes collected directly from convention delegates. These revenues have been
calculated from the assumptions of the study.
Employees who work within industries that receive and are supported by the
conference attendees’ spending dollars would spend part of their salaries on local
7 Center for American Progress | Stop the Conference
goods and services. The employees would thus also contribute to state revenues,
which are ultimately shared with local cities and counties. This report refers to
these revenues as secondary impacts, which include:
Sales tax: The state, county, and local governments in Arizona charge sales tax on
retail goods, which is officially called the transaction privilege tax. Arizona’s sales
tax rate is temporarily 6.6 percent.'* Portions of this tax are redistributed through
revenue sharing to counties and cities throughout Arizona based on population.
‘These tax rates are also applied to the spending of direct, indirect, and induced
employees. This report calculates the projected extent of retail spending and
resulting sales tax receipts based on data from the U.S. Consumer Expenditure
Survey.
Bed tax: Arizona imposes a bed tax on hotel rooms. This rate replaces the sales tax
and is currently set at 6.5 percent.
State shared revenues: Each county and city in Arizona receives a portion of
state revenues from four different sources: state sales tax, state income tax (cities
only), vehicle license tax, and highway user tax. The formulas for allocating these
revenues are primarily based on population.
State income tax: Arizona collects taxes on personal income. The tax rate used
in this analysis averages about 1.6 percent for earnings.'’ These percentages
are based on the state’s most recently available income-tax data and the pro-
jected wage levels of jobs created by construction and operations. Our analy-
sis applies this tax to wages and earnings from direct, indirect, and induced
employment. Portions of this tax are redistributed through revenue sharing to
cities throughout Arizona based on population.
State unemployment tax: Unemployment insurance tax for employees is 2.7
percent on the first $7,000 of earned income.'* Our analysis applies this factor
to the projected wages and earnings of direct, indirect, and induced employees.
HURF taxes: Arizona collects specific taxes for the Highway User Revenue
Fund. Our analysis covers both the registration fees and the motor vehicle fuel
tax. The motor vehicle fuel tax is $0.18 per gallon and is calculated based on
a vehicle traveling 12,000 miles per year at 20 miles per gallon."” Registration
fees average $66 per employee in Arizona." Our analysis applies these factors
8 Center for American Progress | Stop the Conference
to the projected direct, indirect, and induced employee count. Portions of
these taxes are distributed to cities and counties throughout Arizona based on
a formula that includes population and the origin of gasoline sales.
Vehicle license tax: The vehicle license tax is a personal property tax placed
on vehicles at the time of annual registration. Our analysis applies this factor
to the projected direct, indirect, and induced employee count. The average tax
used in this analysis is $325 and portions of the total collections are distrib-
uted through the Highway User Revenue Fund.” Cities and counties share the
remaining funds in accordance with population-based formulas.
‘The above tax categories represent the largest sources of revenues generated to
city, county, and state governments. This analysis reports state revenues and con-
siders gross tax collections and does not differentiate among dedicated purposes
or uses of such gross tax collections.
9 Center for American Progress | Stop the Conference
Losses from reported cancellations
Preliminary figures released to the media do not represent the full breadth of lost
economic activity associated with convention cancellations. The reported $15
million figure actually represents only an estimated one-third of hotel spending
and does not include total visitor travel spending. Lost direct spending within the
state actually totals an estimated $141.4 million. This translates into $9.4 million
in lost state tax collections, nearly 2,800 lost jobs, $87 million in lost earnings, and
$253 million in lost economic output over a period of two to three years.
Cancellation and spending assumptions
Some members of the Arizona Hotel and Lodging Association, or AZHLA,
have reported a combined loss of $15 million in lodging revenue due to meeting
cancellations attributed to the passage of S.B. 1070.” This is an extremely limited
estimate of losses by many accounts.
‘There are strong reasons to conclude that the “losses” figure is well understated.
Not every hotel in Arizona is a member of AZHLA. One of the largest resort
hotels, JW Marriott Desert Ridge Resort and Spa, which has 950 hotel rooms
and 240,000 square feet of meeting space, is not a member and would not have
reported any meeting cancellations to the association." AZHLA also did not
undertake an exhaustive effort to poll all of its member hotels in order to create a
comprehensive list of meeting cancellations. The organization just compiled a list
of cancellations that were voluntarily reported to it.”
The topic is also controversial, and so very few individuals were willing to go on
record in terms of reporting lost lodging activity in the state. This was true of local
professionals in the tourism field, as well as the individual organizations that ini-
tially reported to boycott Arizona only to later refuse an interview for this report.
We estimate based on industry feedback that the $15 million estimate represents
approximately one-third of the true lodging revenues that will be lost some time
during the next couple of years.
10 Center for American Progress | Stop the Conference
This report uses travel spending surveys and economic impact modeling to esti-
mate total spending losses based on a loss of $45 million (three times the initial
$15 million estimate) in just lodging spending over a partial year. We also calcu-
TABLE 1
Visitor assumptions
Lodging $45,000,000
late total visitor spending using lodging spending as a base for the calculation. Food and beverage $50,100,000
This figure drives the cumulative economic and tax revenue losses. Total spending rertainment iasasee
includes food and beverage, entertainment, in-town transportation, and retail .
In-town transportation $14,100,000
spending from lost convention delegates. We estimate that this spending would
$18,800,000
Retail
have reached $141.4 million. (see Table 1)
Total $141,400,000
Source: Arizona Office of
Tourism; ACVB; EDPCo
Economic losses
TABLE 2
Economic consequences of lost
tourism to Arizona, in 2010 dollars
Total spending from lost conference attendees could have sup-
ported more than 1,937 direct jobs. These attendees would have
also created an additional 824 indirect and induced jobs for a total
impact of 2,761 jobs spread over multiple years. Those workers Impact type Jobs Wages Economic output
would have received $86.5 million in wages and the overall eco- aca 71937 48044000 $141511,000
nomic impact would have totaled $253.0 million within the state. paivaet: 358 $17,689,000 $53,225,000
(see Table 2) Induced 466 $19,904,000 $58,293,000
Total 2,761 $86,537,000 $253,029,000
Fiscal losses SEEr [gies copa elon sate heave Peso hee
figures.
Source: Eliot D. Pollack & Company; IMPLAN,
Spending and employment generate revenues that would ultimately
flow to the state of Arizona. The county and municipality in which the spending
was going to occur would also see benefits from collecting tax revenues. Local gov-
ernments combined accrue roughly half of what the state collects as an approxi-
mate rule of thumb.
Some revenues are more direct and definable than others. This analysis defines
revenues as either primary or secondary, depending on their source and how the
dollars flow through the economy into government tax accounts. Some revenues,
such as construction sales taxes, are definable, straightforward calculations
based on the value of construction. This study defines these revenues as primary
revenues. Secondary revenues, on the other hand, flow from the wages of those
direct, indirect, and induced employees who are supported by the project, as well
as revenues that the states distribute from various tax categories.
11. Center for American Progress | Stop the Conference
Revenue projections are based on direct spending as well as typical wages of the
employees supported by the spending, their spending patterns, and other assump-
tions outlined earlier in this report.
The direct spending of more than $141 million in travel-related expenses would
generate $3.9 million in sales tax for the state of Arizona, $2.0 million in bed
taxes, and an additional $3.6 million in secondary revenues generated from
employees that would have spent their disposable income from wages in the
state. This totals $9.4 million in lost state tax collections that can be attributed
to the cancellations. These losses would be realized primarily in fiscal years 2011
and 2012. (see Table 3)
TABLE 3
Fiscal consequences of lost tourism to Arizona, in 2010 dollars
Primary revenues Secondary revenues from employees
Direct sales tax. Direct bed tax Employees sales tax Income tax Vehicle license tax Unemployment tax Bi bale
Direct $3,890,000 $1,966,900 $963,300 $575,500 $125,200 $366,200 $179,600 $8,066,700
Indirect N/A N/A $247,900 $259,500 $23,100 $67,600 $33,200 $631,300
Induced N/A N/A $297,500 $292,000 $30,100 $88,100 $43,200 $750,900
Total $3,890,000 $1,966,900 $1,508,700 $1,127,000 $178,400 $521,900 $256,000 $9,448,900
“Total may not equal sum of impacts due to rounding. All dolar figures are in constant dollars. Inflation has not been included in these figures, All of the above figures do not include revenues distributed to counties,
cities, and towns. All oft
based on Arizona's current economic structure and tax rates,
Source: Elliott D.Pallack & Company; IMPLAN; Arizona Department of Revenue; Arizona Tax Research Association
12. Center for American Progress | Stop the Conference
above figures are representative of major revenue sources for the state of Arizona, Figures are intended only as a general guideline as to how the state could be affected The above figures are
Losses from future booking declines
Bookings through the Phoenix Convention and Visitors Bureau were down 35
percent in August 2010.” A worst-case scenario assumes that the decline in book-
ings will continue for a full year. A best-case scenario assumes that no further
decrease in bookings will occur. And a mid-range scenario falls in between these
two extreme scenarios.
‘The mid-range scenario that we adopted to calculate totals finds that Arizona will
lose $75.6 million in total visitor spending. This translates into an estimated 1,475
lost jobs, $135.2 million in lost economic activity, and $5.0 million in lost state tax
collections. Lost tax collections rise to $10.1 million under the worst-case scenario.
‘These figures relate only to Phoenix-area activity and should be considered a con-
servative estimate of true, statewide lost future economic activity.
Visitor assumptions and scenarios
It is very likely that opposition to the legislation will depress large-association
convention activity for some time going forward. Many large associations are run
by a board of directors that meets only periodically throughout the year to vote
on items on their agenda. One industry expert stated that these meetings typically
occur in June and December each year.” The concern is that these boards could
cancel booked events after the next round of association meetings.
‘The following modeling exercise examines the potential that continued depressed
convention activity could have on Arizona's economy. This example utilizes the
Phoenix Convention Center as the scenario. The Phoenix Convention Center is the
largest convention center in the state of Arizona and is often the only option within
the state to accommodate large meetings that reach multiple thousands of delegates.
‘The modeling took into consideration three scenarios of differing percentage
declines in bookings. The declines were calculated against the 309,729-person del-
egate total at the Phoenix Convention Center in 2009. The “high-range” scenario
13 Center for American Progress | Stop the Conference
illustrates the results ofa 35 percent decline that extended TABLE4
from the preliminary two months of results into one
full year of reduced activity. The “mid-range” scenario
Visitor assumptions
2009 convention delegates: 309,729
assumes that losses continue to occur but at a much more High-range Mid-range Low-range
a. i scenario scenario —_— scenario
optimistic rate, resulting in half of the initial reported
1 fall The“ 2 . Loss of bookings 35% 18% 5%
losses over one full year. The “low-range” scenario con- Delegates 108,405 54,203 15,486
cedes minimal loss and assumes business will pick back Spending per delegate $1,395 $1,395 $1,395
up immediately, resulting in a net loss of approximately $ Total spending $151,225,184 $75,612,592 $21,603,598
percent over one full year. (see Table 4) Lodging $48,089,609 $24,044,804 $6,869,944
Food and beverage $53,587,000 $26,794,000 $7,655,000
Entertainment $14,332,671 $7,166,335 $2,047,524
Associations may make decisions over the next year but In-town transportation $15,095,662 $7,547,831 $2,156,523
the resulting loss will be over alonger timeframe, from as _Retail $20,120,000 $10,060,000 $2,874,000
Total $151,224,941 $75,612,970 _ $21,602,992
short as 14 months up to several years.
Source: Arizona Office of Tourism; ACVB; Phoenix Convention Center; EDPCo
Economic losses
Economic losses center primarily on job creation and the impact
that those employees would have on the economy. Lost spending
under the high-range scenario would have supported approximately
2,070 jobs after accounting for all lost activity. Indirect and induced
employment generated by the direct spending would add about 880
jobs for a potential employment impact of 2,951 total jobs. These
jobs would have paid out nearly $92.5 million in wages to the direct,
indirect, and induced employees in generated conference attendee
spending. Total lost economic output would reach nearly $270.4
million under this scenario. (see Table S$)
The mid-range scenario assumes exactly half of the lost business in
the high-range scenario, so it follows that the losses would be half as
large. Lost opportunity for employment would total 1,475 jobs, pay-
ing out $46.2 million in wages, and equaling $135.2 million in lost
economic activity within the state.
The low-range scenario would amount to 422 lost jobs, which would
have paid $13.2 million in wages and produced $38.6 million in
economic activity.
14 Center for American Progress | Stop the Conference
TABLES
Economic consequences of lost
tourizm to Arizona, in 2010 dollars
High-range scenario
Impacttype Jobs Wages Economic output
Direct 2,070 $52,304,000 $151,225,000
Indirect 382 $18,904,000 $56,878,000
Induced 498 $21,271,000 $62,294,000
Total 2,951 $92,479,000 _$270,397,000
Mid-range scenario
Impacttype Jobs Wages Economic output
Direct 1,035 $26,152,000 $75,613,000
Indirect 191 $9,452,000 $28,438,000
Induced 249 $10,635,000 $31,148,000
Total 1,475 $46,239,000 _$135,199,000
Low-range scenario
Impacttype Jobs Wages Economic output
Direct 296 $7,472,000 $21,603,000
Indirect 55 $2,700,000 $8,124,000
Induced 71 $3,038,000 $8,900,000
Total 422 $13,210,000 $38,627,000
'e sum of the impacts due to rounding, All dollar
Inflation has not been included in these figures.
Source: Elliot D. Pollack & Company; IMPLAN,
Fiscal losses
Future reductions in convention delegates and their spending will result in lost
opportunities for the state to collect tax revenue. The state would collect primary
revenues from sales and bed taxes. Secondary revenue, which is generated by
employee spending, includes sales, income, vehicle license, unemployment, and
gasoline taxes.
‘The high-range scenario estimates that Arizona will lose approximately $10.1
million in tax revenue. Most of this will be in the form of sales taxes and bed taxes.
‘The mid-range scenario estimates a loss of more than $5.0 million in tax revenue.
And the low-range scenario would mean more than $1.4 million in lost state tax
revenue. (see Table 6)
TABLE 6
Fiscal consequences of lost tourism to Arizona revenues, in 2010 dollars
High-range scenario
Primary revenues
Secondary revenues from employees
DIRIGO. DIRTY ENRRCER GER incanviaN vendcnenes Unemplopmencesd NUBEMelend, “fotatennual
registration tax revenues
Direct $4,157,000 $2,102,000 $1,029,400 $615,000 $133,800 $391,300 $191,900 $8,620,400
Indirect N/A N/A $264,900 $277,300 $24,700 $72,300 $35,500 $674,700
Induced N/A N/A $317,900 $312,100 $32,200 $94,100 $46,200 $802,500
Total $4,157,000 $2,102,000 $1,612,200 $1,204,400 $190,700 $557,700 $273,600 $10,097,600
Mid-range scenario
Primary revenues Secondary revenues from employees
Divecisdlestan. Hiredtbediae Emplayecdcolesitioe incotnetinn Wehidlellcansetax Unemploymentie: CUREMetand: — “TBtnlaaniiAl
registration tax revenues
Direct $2,078,500 $1,051,000 $514,700 $307,500 $66,900 $195,600 $96,000 $4,310,200
Indirect N/A N/A $132,500 $138,700 $12,400 $36,100 $17,700 $337,400
Induced N/A N/A $158,900 $156,000 $16,100 $47,100 $23,100 $401,200
Total $2,078,500 $1,051,000 $806,100 $602,200 $95,400 $278,800 $136,800 $5,048,800
Low-range scenario
Primary revenues Secondary revenues from employees
Direct sales tax Direct bed tax Employees sales tax Income tax Vehicle license tax Unemployment tax HURFfueland Total annual
registration tax revenues
Direct $593,800 $300,300 $147,100 $87,900 $19,100 $55,900 $27,400 $1,231,500
Indirect N/A N/A $37,800 $39,600 $3,500 $10,300 $5,100 $96,300
Induced N/A N/A $45,400 $44,600 $4,600 $13,400 $6,600 $114,600
Total $593,800 $300,300 $230,300 $172,100 $27,200 $79,600 $39,100 $1,442,400
“Total may not equal sum of impacts due to rounding. All dollar figures are in constant dollars. Inflation has not been included inl
cities, and towns All ofthe above figures are representative of major revenue sources for Arizona. Figures are intended only as a general guideline as to how the state could be impacted. The above figures are based on
Arizonaia current economic structure and tax rates,
Source: Eli
Pollack & Company; IMPLAN; Arizona Department of Revenue; Arizona Tax Research Association
15 Center for American Progress | Stop the Conference
se figures. All of the above figures do not include revenues distriouted to counties,
Incremental effects
This analysis also formulated an incremental estimate to help
quantify lost economic activity in the event that more data about
cancellations become public in the future. We form assumptions
based on multiple surveys that have been conducted for conven-
tion delegates. The economic and fiscal consequences represent
the hypothetical impact of every 10,000 lost delegates to an
Arizona conference or convention. (see Table 7)
This analysis provides several tools for expressing the same data.
For instance, the economic impact of losing 10,000 conference
attendees is a loss of 260 jobs. Those 260 jobs also represent
almost $8.0 million in lost wages and nearly $23.0 million in
total economic losses due to the ripple effect throughout the
economy. Alternatively, the total fiscal impact represents taxes
levied on conference attendees—direct sales tax and direct bed
tax—as well as indirect taxes from employment. Tax collections
decrease by approximately $800,000 for every 10,000 conference
attendees that the state loses.
16 Center for American Progress | Stop the Conference
TABLE 7
Impact per 10,000 conference attendees
to Arizona, in 2010 dollars
Assumptions
Average length of stay 3.1 days
Spending/person/day $450
Average spending/person $1,395
Total direct spending $13,950,000
Economic losses
Jobs 260
Wages $7,906,000
Economic output $22,794,000
Fiscal losses
Direct sales tax $418,400
Direct bed tax $87,800
Secondary revenues from employment $323,700
Total fiscal losses $829,900
“Assumptions ftom Arizona Office of Tourism, Smith Travel Research, Dean
Associates, and Eliot D, Pollack & Company research.
he total may not equal the sum of the impacts due to rounding. All dollar
figures are in constant dollars (inflation has not been included). All ofthe above
figures are representative of the major revenue sources for Arizona and are
intended only as a general guideline as to how the state could be impacted by
lost tourism. The above figures are based on the current economic structure and
tax ates of the state
Elliot D. Pollack & Co, IMPLAN; AZ Dept of Revenue; AZ Tax Research
Conclusion
State and local governments have good reason to be frustrated with the federal
government's failure to produce a rational, legal immigration system. But Arizona's
approach of enacting its own “attrition through enforcement” immigration policy
is costly and counterproductive.”’ Not only has a federal judge blocked much of
the legislation as unconstitutional but this report also shows that the national
backlash it triggered has significantly harmed the state’s economy.”
Even focusing narrowly on just one sector—the state’s important convention
industry—we find that the consequences are severe. National opposition to the
legislation has produced or will produce hundreds of millions of dollars in lost
direct spending in the state and diminished economic output. That, in turn, will
lead to thousands of lost jobs and more than $100 million in lost salaries.
Other states considering immigration legislation should pause before rush-
ing to adopt measures like S.B. 1070 and understand the potentially disastrous
economic and fiscal consequences of such a decision. This report illuminates
just one of the many unintended and costly consequences that can result from
proceeding down this path.
17 Center for American Progress | Stop the Conference
About the authors
Marshall Fitz is Director of Immigration Policy at American Progress. Before hold-
ing his current position he served as the director of advocacy for the American
Immigration Lawyers Association where he led the education and advocacy
efforts on all immigration policy issues for the 11,000-member professional bar
association. He has been a leader in national and grassroots coalitions that have
organized to advance progressive immigration policies.
Fitz has been one of the key legislative strategists in support of comprehensive
immigration reform and has served as a media spokesperson on a broad array
of immigration policy and legislative issues. He has appeared on national and
regional television and radio stations including MSNBC, CNN, BBC, C-SPAN,
Fox News, and NPR; been quoted extensively across the spectrum of interna-
tional, national, and local publications; and presented at national conferences and
universities on immigration matters. He has also advised numerous members of
Congress on immigration policy, politics, and strategy and helped draft major
legislation. He currently serves on the boards and steering committees of other
national organizations focused on immigrant rights and immigration policy.
Marshall is a graduate of the University of Virginia School of Law and served on
the Virginia Law Review. After graduation he clerked for Judge Bruce M. Selya on
the U.S. Court of Appeals for the First Circuit. In the following years he practiced
immigration law in Washington, D.C., at Hogan & Hartson, LLP.
Angela M. Kelley, a well-known authority on the policy and the politics of immi-
gration, joined American Progress in 2009 as Vice President for Immigration
Policy and Advocacy.
As Vice President, Angela applies her 20 years of experience in the immigration
field to the Center's stepped-up immigration initiative, overseeing and coordinat-
ing the Center's work in this area.
Throughout her career, Angela has been at the forefront of policy debates regard-
ing changes in immigration policy and the historic creation of the Department of
Homeland Security following the 9/11 terrorist attacks.
Angela's sharp and credible political analyses make her a frequent speaker before
other policy groups and she is often asked by news organizations to comment on
policy and political developments related to immigration. She is regularly quoted
18 Center for American Progress | Stop the Conference
by all of the major national and regional news organizations including The New
York Times, The Washington Post, and Politico, and also has appeared on national
television and radio networks including PBS, MSNBC, Fox, and NPR.
Before joining the Center in 2009, Angela served as director of the Immigration
Policy Center—the research arm of the American Immigration Law
Foundation—which provides policymakers, academics, the media, and the gen-
eral public with access to accurate information about the effects of immigration on
the US. economy and society.
Prior to that, Angela was deputy director at the National Immigration Forum
where she headed its legislative, policy, and communications activities and
oversaw its operations. During her service at the forum, Angela was a front-line
negotiator as Congress debated in 2006 and 2007 proposed comprehensive immi-
gration reform legislation.
Other major legislative work by Angela included the Legal Immigration Family
Equity Act of 2000, which, among other things, extended the period during which
undocumented workers and family members could be sponsored for perma-
nent residence. The LIFE Act also expanded eligibility for permanent residence
to some individuals who had been denied benefits under the Haitian Refugee
Immigration Fairness Act and the Nicaraguan Adjustment and Central American
Relief Act. Angela was previously part of the successful NACARA and HRIFA
campaigns to secure immigration benefits for certain Nicaraguans, Cubans,
Salvadorans, Guatemalans, and Haitians.
Angela began her career as a staff attorney for Ayuda, a local services agency in
Washington, D.C., representing low-income immigrants on immigration and fam-
ily matters.
She is a graduate of George Washington University Law Center and was a fellow
with Georgetown University’s Women’s Law and Public Policy Program.
The daughter of Bolivian and Colombian immigrant parents, Angela is the mother
of two young girls.
19 Center for American Progress | Stop the Conference
Acknowledgments
The Center for American Progress is grateful to the Ford Foundation for its generous
and continuing support which made this important research and report possible.
The report authors also extend their sincere appreciation to James Rounds and
Daniel Court of the economic consulting firm Elliott D. Pollack & Company who
provided superb ground-level research and economic analysis which provided
the foundation for this report. We also thank the following Center for American
Progress colleagues who were instrumental in driving this report to completion:
Michael Ettlinger, Michael Linden, and Adam Hersh for guiding us through the
economic analysis; Ann Garcia and Maria Flores for their research contributions,
and Ed Paisley and Annie Schutte for their framing suggestions and edits.
20 Center for American Progress | Stop the Conference
Endnotes
Support Our Law Enforcement and Safe Neighborhoods Act, SB. 1070,
Arizona Senate 49th Legislature, available at httoy//www.azleg.aov/
legtext/49leq/2r/bills/sb1070s.pdf.
fho is boycotting Arizona?" azcentral.com, August 27, 2010, avail-
able at http/Avwwazcentral.com/business/articles/2010/05/13/201
(0051 3immigration-boycotts-list.html
3 Glenn Hamer and others, “Biz leaders: Let's talk about the real
solution; Arizona Capitol Times, July 9, 2010, available at htto//
azcapitoltimes.com/news/2010/07/09/biz-leaders-let%E2%80%99s-
12. Smith Travel Research Monthly Hotel Review, available at http://
www.strglobal.com/.
Customized modeling done by Elliott D. Pollack & Company.
=
Nicholas Riccardi, ‘Arizona voters approve sales-tax increase,’ Los
Angeles Times, May 19, 2010, available at htto/articles.atimes.
com/2010/may/19/nation/la-na-arizona-tax-20100519.
Arizona Department of Revenue, “2009 Annual Report” (2009), avail-
able at http://wwwazdor.qov/Portals/0/AnnualReports/F¥09%20
talk-about-the-real-solution/,
Annual%20Report web.pdf.
Arizona Department of Economic Security, “Employer Handbook on
Unemployment insurance Tax available at https//www.azdes.aov/
Arizona Department of Transportation, “Highway User Revenue
(2010), available at http://
4 Associated Press, Arizona Immigration Law Killing Tourism, Costing 16
State Millions’ The Huffington Post, August 3, 2010, available at
http://wwwhuffingtonpost.com/2010/08/03/arizona-immigration- main.aspx?menu=3168id=4185,
law-k_n_669242.html
7
5 Elliott D. Pollack & Company. Fund - Fiscal Year 2010 Year-End Report
wwwazdot.gov/Inside ADOT/fms/PDF/hurf10.paf.
6 Associated Press, L.A. approves boycott of Arizona,’ MSNBC.
‘com, May 12, 2010, available at http://www.msnbemsn.com/
id/37113818/; Sarah Coppola, “Austin cuts off business and travel
ties with Arizona,’ Houston Chronicle, May 14, 2010, available at
http://www.chron.com/disp/story.mpl/metropolitan/7004482.html;
‘Andy Birkey, “Coleman announces St. Paul boycott of Arizona” The
‘Minnesota Independent, April 28, 2010, available at http://minneso-
taindependent.com/58209/coleman-announces-st-paul-boycott-of-
atizon:
7 Secretaria de Relaciones Exteriores, “Travel alert,’ April 27, 2010,
available at http://www.sre.gobmx/csocial/contenido/comunica-
dos/2010/abr/ep_121eng.html
8 "The Sound Strike’ available at http://wwwthesoundstrike.net/.
9 Daniel Gonzélez, “Arizona's illegal immigrants departure affecting
businesses,’ The Arizona Republic, June 29, 2010, available at http/
www.azeentral, com/arizonarepublic/news/articles/2010/06/29/2010
(0629arizona-immigration-law-affecting-businesses.htm
Ginger Rough, ‘Ariz. immigration law's legal costs could top $1
million," USA Today, September 3, 2010, available at http/Awww.
usatoday.com/news/nation/2010-09-03-arizona-lawsuits N.htm.
“Who is boycotting Arizona?" azcentral.com
Arizona Department of Transportation, “Financial Management Ser-
vices: Highway User Revenue Fund’ available at httpy/wwwaazdot,
gov/Inside_ADOT/fms/Hurfund.asp,
Arizona Department of Transportation, “Motor Vehicle Division: Title
and Registration’ available at http:/Avww.azdot.qov/mvd/fags/
scripts/FAQsResponse.asp?Category=0&Keyword=registration%20
fee.
20 AP,“Arizona Immigration Law Killing Tourism, Costing State Millions."
21 Interviews of AZHLA representatives conducted by Elliott D. Pollack
& Company.
22 Ibid,
23 Interviews conducted by Elliott D. Pollack & Company.
24 Interview conducted by Elliott D. Pollack & Company.
25. Support Our Law Enforcement and Safe Neighborhoods Act, S.B. 1070,
pl
26 United States of America v. State of Arizona, No. CV 10-1413-PHX-SRB,
July 28, 2010, available at http://www.scribd.com/doc/34998325/U-
S-v-Arizona-Order-on-Motion-for-Preliminary-Injunction.
21. Center for American Progress | Stop the Conference
The Center for American Progress is a nonpartisan research and educational institute
dedicated to promoting a strong, just and free America that ensures opportunity
for all. We believe that Americans are bound together by a common commitment to
these values and we aspire to ensure that our national policies reflect these values.
We work to find progressive and pragmatic solutions to significant domestic and
international problems and develop policy proposals that foster a government that
is “of the people, by the people, and for the people.”
Center for American Progress
REET, NW, 10TH
