Retirees Key To Region’S Economic Stability

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Payson and the other communities impacted by the Rodeo-Chediski Fire need to diversify their economies, according to a recent study.

Conducted by Thomas, Warren and Associates, a Valley firm that specializes in economic studies and policy consulting, the study encompassed not only the communities that suffered physical damage from the largest wildland fire in Arizona history, but all of those in a nine-town region where resulting economic hardships were suspected. Besides Payson, towns included in the study are Eagar, Holbrook, Pinetop-Lakeside, Show Low, Snowflake, Springerville, St. Johns and Taylor.

“Nothing within Gila County or Apache County was physically burned, but there were economic impacts that reached down into our area,” said Scott Flake, director of the Payson Regional Economic Development Corporation.

In its introduction, the study notes that economic impacts on the area were both obvious and subtle.

“The most visible economic impact was the physical destruction caused by the fire,” the study said. “It consumed nearly half-a-million acres and destroyed 467 residences ...”

But local economies were also impacted in less dramatic ways.

“The fire disrupted most trade and commerce for almost 30 days, devastating the region’s economy,” the study said. “The loss of sales tax revenue and jobs from displaced residents, lost businesses and reduced tourism may be even more significant than the physical damage.”

Confluence of economic forces

Adding to the area’s woes, the fire occurred at a time when other factors were impacting local economies. These, the study noted, included “the nation’s economic condition, the long-lasting drought in the Southwest, forest closures, road closures, and closure and threatened closure of several state parks.”

And the fire occurred at a time when affected tourism-dependent communities enjoy their highest levels of economic activity.

“June and July business activity accounts for about 20 percent of total annual sales tax collections for this region,” according to the study.

As part of the study, Thomas, Warren and Associates obtained counts of visitors at state parks in the region. Attendance at the Tonto Natural Bridge State Park between Payson and Pine was down 33.74 percent in June and 44.91 percent in July.

Sales tax revenue declines over 2001 totals ranged from a low of 4 percent in St. Johns to more than 26 percent in Taylor. While the rest of the communities studied were in the 5 to 10 percent range, Payson and Show Low suffered decreases in the 13 to 14 percent range.

For Payson, the decrease translated to a loss of nearly $700,000 in sales tax revenues compared to 2001.

While Gene Warren, president of Thomas, Warren and Associates, went into the study without expectations, he was not entirely surprised by the results.

“We knew there were going to be impacts from the aspects of the fire that got a lot of publicity the burned homes and the forest that was burned,” Warren said. “But we also suspected from talking to Scott Flake and others in the area that there were going to be more subtle but significant impacts in areas like sales tax revenue.”

Diversify or die

The last section of the study provides recommendations for affected communities to reduce the future impact of such major events as the Rodeo-Chediski Fire. In a word, the message is “diversify.”

“The fire is what made it obvious, but it would be economically sound even without the fire to try and diversify,” Warren said. “Revenues (in the communities studied) tend to be cyclical, so you’d be better off having something that is smoother that doesn’t depend on having a good summer season or a good snow season.”

Specifically, the study recommends pursuing the following alternatives:

  • Since tourism will remain “the foundation of the region’s economy,” greater emphasis should be placed on regional and collaborative tourism marketing efforts by the economic development organizations and chambers of commerce serving the area. Such efforts should focus on spreading the tourism season over the entire year rather than just the months of May, June, July, August and September.
  • The local work force, now “consistent with lower and medium level technologies,” needs to be upgraded through college training programs to meet most employers’ requirements.
  • Technology parks that focus on light manufacturing and assemblage should be developed in association with such training programs.
  • “Perhaps the greatest opportunity for new economic growth comes from attracting retirees to the region,” the study concluded.

Retirees an economic gold mine

Thomas, Warren and Associates has done several studies of the impact of retirees on several states, including Arizona, Florida and Louisiana. What those studies have repeatedly shown is that “retirement is probably the most cost-effective type of economic development,” Warren said.

Warren says his firm believes that a primary purpose of economic development is to draw new amenities into a community “to expand its base and options.”

“Retirees do that,” he said. “If you attract retirees, the amenities that serve them and also serve everybody else the grocery stores, medical facilities and restaurants will follow.”

Another advantage to a strong retiree base is that it puts minimal strain on local resources.

“The costs to the state are primarily health care costs, while the local community gets a lot of the benefits in terms of sales tax revenues, income tax returned to cities while bearing none of the costs,” Warren said. “The cities make out like bandits.”

Multiple applications

Flake said the study results will be put to good use on several fronts.

“We’ll look at the recommendations and take them into consideration,” he said. He ticked off several ways information generated by the study will be beneficial:

  • It helps justify the $75,000 spent by the town council on advertising to bring tourists back to the area.
  • It also helps justify the assistance the Small Business Development Center at Pima Community College-Rim Country Learning Center has been trying to obtain for local businesses.
  • It may also help the town obtain grants.

The study also should influence the state Legislature and governor’s office to go easy on the communities impacted by the fire as budget balancing strategies are devised, Warren believes.

“They’ve talked about withholding some of the shared revenues and I think these results, especially in terms of sales tax revenues, would be a strong argument that these cities be excluded,” he said.

Warren’s company did the study free of charge. Warren presented the study’s findings to the town council Thursday evening.

The Rodeo Fire was started June 18 and the Chediski Fire June 20. The two fires merged June 22, and eventually caused $28 million in damage. It cost more than $43 million to battle the blaze, which was finally 100 percent contained July 7.

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