Every new firm that comes to town represents tradeoffs. There might be more jobs, but also more pollution or more strain on infrastructure and public services. That’s why Rolnick is opposed to state spending on programs like JOBZ. When it comes to spending public dollars, he says, the money should be used for sewers and fire departments, and the market—without public subsidies—should determine where companies locate.
The Public Shrugs
Lindall agrees that input-output modeling delivers an incomplete picture. Implan, he says, is meant to be “part of a decision process, but [impact studies] are not a make-or-break thing.”
That seems to have been the case in Beloit, Wisconsin, where plans for a new casino have been developing for the past seven years. Early in the process, in 2000, Minneapolis-based GVA Marquette Advisors did an economic impact study for the interested parties, the St. Croix Chippewa and Bad River Band tribes. It estimated that the casino would attract 4.9 million visitors a year and generate annual gross receipts of about $300 million.
An independent study commissioned by the City of Beloit, however, estimated the potential market at just 1.3 million visitors annually, with gross yearly receipts of only about $100 million.
GVA Marquette Advisors used Implan to calculate the casino’s projected impacts, and the study’s output multiplier of 1.38 seems reasonable. However, the two studies made very different assumptions when it came to inputs including market size.
GVA Marquette Advisors based its assumption on admission numbers for riverboat and racetrack casinos in the region. However, the independent report pointed out, those numbers did not distinguish between people merely taking a boat tour and those actually gambling.
GVA’s report also assumed that the Beloit casino would draw significant numbers of people from as many as 200 miles away. The independent report found this doubtful, given patterns for other casinos of similar size and accounting for competing casinos in the region.
In the end, says Beloit Assistant City Manager Steve Gregg, the conflicting economic projections didn’t seem to matter to voters, who overwhelmingly approved a referendum to build the casino in 2004. (The application is currently awaiting approval at the Bureau of Indian Affairs.) “I don’t think the distinction changed anyone’s minds,” Gregg says.
On the other hand, maybe voters just didn’t know how to assess the validity of either set of numbers.
