Professional Documents
Culture Documents
April 2017
by
THE
PERRYMAN GROUP
254.751.9595 info@perrymangroup.com www.PerrymanGroup.com
The Potential Impact of Social Policy Legislation on Business Activity: i
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Contents
Introduction..................................................................................................................... 1
Conclusion ......................................................................................................................14
Executive Summary
Every year, millions of visitors to Texas spend billions of dollars in the state. The
Perryman Group recently estimated that when multiplier effects are
considered, the total, indirect benefits of travel and tourism industries include
more than $128.9 billion in annual gross product and 1.4 million permanent
jobs in Texas (as of 2016). In addition, travel and tourism was found to generate
an estimated $7.0 billion in yearly State tax revenue and $3.3 billion in local tax
revenue across the state. The San Antonio area is among the most popular
destinations in Texas for travelers; The Perryman Group estimates that travel
and tourism generates $13.3 billion in annual gross product, 145,500 jobs, and
$127.2 million in tax receipts each year in the local area.
The Texas legislature is considering action which would restrict bathroom
access based on the gender on an individuals birth certificate. Opponents
criticize the bill as discriminatory toward transgender persons, and such social
policy can have a detrimental effect on tourism by decreasing the
attractiveness of an area to event planners and potential visitors.
The Perryman Group estimated the overall potential losses to the travel and
tourism industry in Texas and the San Antonio area associated with the social
policy currently under consideration.
For Texas, reductions in travel and tourism activity would likely initially result
in a gross product loss of over $3.3 billion per year as well as the loss of over
35,600 full-time equivalent (FTE) jobs (based on 2016 levels of activity), with
annual losses of $176.4 million in State revenue and $84.3 million in local fiscal
resources. With the law in effect for a period of time, these losses could be
expected to rise to over $5.5 billion in gross product per year, almost 59,600
jobs, $295.2 million in annual lost State revenue and $141.1 million in
foregone local fiscal resources.
For the San Antonio-New Braunfels Metropolitan Statistical Area, the initial
impact on business activity was estimated to be a loss of gross product of
$411.8 million annually as well as a loss of almost 4,650 jobs, with estimated
lost tax receipts to local government entities in the area totaling $11.3 million
per year. At maturity, the losses could be expected to rise to $689.2 million in
gross product, almost 7,780 jobs, and $18.9 million in lost tax receipts to local
governments in the area. Even losing a single large convention or event could
result in notable losses.
The Potential Impact of Social Policy Legislation on Business Activity: 1
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Introduction
The Perryman Group has studied travel and tourism in Texas on a number of
occasions and recently estimated that when multiplier effects are considered,
the total, indirect benefits of travel and tourism industries include more than
$128.9 billion in gross product each year and 1.4 million permanent jobs in
Texas. In addition, travel and tourism was found to generate an estimated $7.0
billion in State tax revenue and $3.3 billion in local tax revenue across the state
each year.
The San Antonio area is among the most popular destinations in Texas for
travelers. In 2015, person-stays to the area topped 34 million and was rising
significantly over time.2 The areas attractions are numerous, including the San
Antonio River Walk, historic missions including the Alamo, museums, theaters,
amusement parks, historic Market Square, a vibrant arts scene, and much more.
The Perryman Group estimates that travel and tourism generates $13.3 billion
in annual gross product, 145,500 jobs, and $127.2 million in annual tax receipts
in the local area.
1
D.K. Shifflet & Associates, Ltd., Year-End 2015 Texas Tourism Visitor Profile, Accessed April 3, 2017,
https://travel.texas.gov/tti/media/PDFs/2015-Texas_2.pdf, page 8.
2
D. K. Shifflet & Associates, Ltd., Year-End 2015 Texas Tourism Regions and MSA Profile: South Texas Plains
Region, Accessed April 3, 2017, https://travel.texas.gov/tti/media/PDFs/2015-South-Texas-Plains_1.pdf,
page 35.
The Potential Impact of Social Policy Legislation on Business Activity: 2
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
not apply to privately owned facilities. On the other hand, the Texas bill
includes penalties, which were not a part of the original North Carolina statute.
Regardless of their stated purpose, controversial laws can reduce travel and
tourism. Any law with the potential to reduce attendees, for example, can cause
professionals who organize conferences and events to avoid that location. In
addition, scheduling an event in a location with a law that is considered to be
offensive by some groups can be interpreted as support for the policy, and
some organizations will choose to avoid locations with controversial laws in
order to avoid the appearance of approval of the public policy.
3
Pofeldt, Elaine, Its Complicated, The Meeting Professional, October 2016, MPIWeb.org,
www.mpiweb.org/docs/default-source/press/social-issues-feature.pdf.
4
See, for example, Jurney, Corrine, North Carolinas Bathroom Bill Flushes Away $630 Million in Lost
Business, Forbes, Nov. 3, 2016, https://www.forbes.com/sites/corinnejurney/2016/11/03/north-carolinas-
bathroom-bill-flushes-away-750-million-in-lost-business/#5b9393d34b59; Glum, Julia, The HB2, Anti-LGBT
Laws Effect: List of Concerts, Events Canceled in North Carolina, Mississippi, International Business Times,
April 20, 2016, http://www.ibtimes.com/hb-2-anti-lgbt-laws-effect-list-concerts-events-canceled-north-
carolina-mississippi-2356695; and Dalesio, Emery P. and Jonathan Drew, AP Exclusive: Price Tag of North
Carolinas LGBT law: $3.76B AP, March 27, 2017,
http://bigstory.ap.org/article/fa4528580f3e4a01bb68bcb272f1f0f8/ap-exclusive-bathroom-bill-cost-north-
carolina-376b.
The Potential Impact of Social Policy Legislation on Business Activity: 4
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Moreover, there is some concern that other proposed measures before the
legislature could lead to other forms of discrimination.6 Nevertheless, the
methods used in the present study seek to adjust for such differences and
provide a conservative estimate of the potential impact.
Two scenarios are examined with regard to economic impact. The first deals
with the initial effects, while the second focuses on losses once the laws have
been effect a few years. In all cases, only a minority of travel will be impacted,
but the impacts are likely to increase over time. At the outset, some travelers
will be unaware of the restrictions or will have made reservations or other
commitments that would be difficult to change. Similarly, with regard to
conventions and similar events, many groups book facilities years in advance
and cannot move venues in the immediate future, but will modify locations in
later years. In both instances, both leisure and convention travelers are
examined.
5
See for example, Ura, Alexa, Stadium exemption in bathroom bill wont be enough, opponents say, The
Texas Tribune, February 16, 2017, https://www.texastribune.org/2017/02/16/texas-bathroom-bill-
exemptions-wont-be-enough-opponents-say/; and Mansoor, Sanya, Texas cities predict dozens of cancelled
events if bathroom bill passes, The Texas Tribune, March 23, 2017,
https://www.texastribune.org/2017/03/23/dozens-national-meeting-planners-may-take-texas-their-list/.
6
Fikac, Peggy, Beyond the Bathroom Bill, More Legislation Raises Worries, Houston Chronicle, April 2, 2017,
http://www.houstonchronicle.com/news/local/article/Beyond-the-bathroom-bill-more-legislation-raises-
11044951.php?t=e6791b7152438d9cbb&cmpid=twitter-premium
The Potential Impact of Social Policy Legislation on Business Activity: 6
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Initial Effects
With regard to the initial impact, TPG made use of a large survey of thousands
of leisure travelers recently completed (in 2016) by the research department of
the US Travel Association in conjunction with Kantar TNS, one of the leading
market research firms in the country as well as other standard travel and
economic data. Among other findings, this analysis permits estimates of the
minimum losses to other states that could be expected in four states that have
recently enacted varying types of similar laws perceived to discriminate against
the LBGT community (Louisiana, Mississippi, North Carolina, and Indiana).7
This information was used to develop a preliminary estimate of the likely initial
effects on Texas given the size of the Texas tourism market relative to these
states. Given the diversity of the restrictions in the various states and the fact
that the survey measured the effects of individuals who actually changed plans
in response to the laws, it is likely that this estimate would be reliable. As an
added measure of conservatism, however, TPG used the lower bound of the
95% confidence interval, thus creating a high probability that the effects are
understated. The results are also generally consistent with information
provided by various tourism executives in the state.8
7
U.S. Travel Association Brief, LGBT Writeup Consumer & Business, July 2016; U.S Travel Association Summer
Board Meeting 2016, Travel Bans & Boycotts Research ; Dow, Roger, Travel Should Be the BridgeNot the
Ammoin Americas Culture Wars, U. S. Travel Association, November 16, 2016,
https://www.ustravel.org/news/travel-should-be-bridge%E2%80%94not-ammo%E2%80%94-
america%E2%80%99s-culture-wars ).
8
See for example, Ura, Alexa, Stadium exemption in bathroom bill wont be enough, opponents say, The
Texas Tribune, February 16, 2017, https://www.texastribune.org/2017/02/16/texas-bathroom-bill-
exemptions-wont-be-enough-opponents-say/; and Mansoor, Sanya, Texas cities predict dozens of cancelled
events if bathroom bill passes, The Texas Tribune, March 23, 2017,
https://www.texastribune.org/2017/03/23/dozens-national-meeting-planners-may-take-texas-their-list/.
9
Pofeldt, Elaine, Its Complicated, The Meeting Professional, October 2016, MPIWeb.org,
www.mpiweb.org/docs/default-source/press/social-issues-feature.pdf.
The Potential Impact of Social Policy Legislation on Business Activity: 7
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Longer-Term Effects
For the longer-term effects, TPG estimated leisure travel implications by
examining the net effects of those in the traveler's survey who would avoid
states with restrictions and the convention losses based on the net group of
meeting planners who indicated they would not book meetings in these
locales.10 In both instances, there was some offset from those more likely to
visit or book a convention in areas with such restrictions. As in the prior
simulations, the lower bound of the 95% confidence interval was employed to
determine the inputs. In addition to the factors noted above, the estimates used
in the present analysis contain numerous other conservative assumptions
which are discussed at length in Appendix B. Results by metropolitan area,
congressional district, and Texas Legislative district are provided in Appendix
D.
Texas Losses
The Perryman Group estimates that reductions in travel and tourism activity
would initially result in a gross product loss of over $3.3 billion per year as well
as the loss of over 35,600 full-time equivalent (FTE) jobs (based on 2016 levels
of activity), with annual losses of $176.4 million in State revenue and $84.3
million in local fiscal resources.
With the law in effect for a period of time, these losses could be expected to rise
to over $5.5 billion in annual gross product and almost 59,600 jobs. The yearly
losses in State revenue are estimated to be $295.2 million, with a $141.1
million yearly decrease in local fiscal resources.
10
Pofeldt, Elaine, Its Complicated, The Meeting Professional, October 2016, MPIWeb.org,
www.mpiweb.org/docs/default-source/press/social-issues-feature.pdf.
The Potential Impact of Social Policy Legislation on Business Activity: 8
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
In addition, representative illustrations were provided for the San Antonio area
of the impacts of (1) the loss of a major national or international convention and
The Potential Impact of Social Policy Legislation on Business Activity: 9
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
(2) the potential loss of the 2018 National Collegiate Athletic Association
(NCAA) Men's Basketball Championship (commonly known as "The Final
Four").
The Perryman Group estimates the initial impact on business activity in the San
Antonio-New Braunfels Metropolitan Statistical Area (MSA) would be a loss of
gross product of $411.9 million each year as well as a loss of almost 4,650 jobs.
The fiscal impact on San Antonio would also be significant, with estimated lost
tax receipts totaling $11.3 million per year. At maturity, the losses could be
expected to rise to $689.2 million in annual gross product and almost 7,780
jobs, while lost tax receipts to local governments total $18.9 million per year in
the San Antonio area.
The Potential Impact of Social Policy Legislation on Business Activity: 10
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Other Considerations
It has been asserted by proponents of the legislation that the adverse impacts
constitute less than 0.5% of the state economy. The results of the current study
support that contention, as all of the indicators measured are below that
threshold. Nonetheless, the losses are quite profound, resulting in billions of
dollars foregone output each year and tens of thousands of full-time equivalent
jobs.
Moreover, this analysis is limited to the effects on the tourism and travel sector.
Other potential negative outcomes are also probable. For example,
discriminatory laws of this nature often bring extensive litigation, which
compels the use of taxpayer resources for legal fees and related costs. Of much
greater consequence are the potential economic development implications. At
The Potential Impact of Social Policy Legislation on Business Activity: 12
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
least one technology company has cancelled plans to locate in a state with such
policies, while numerous others have expressed support for the anti-
discrimination position and even filed supporting briefs for that position in
pending lawsuits.11 Similarly, many millennials are opposed to these types of
law restrictions, which could impact their location decisions.12Thus, although
not a part of the scope of the current study, there are issues that extend well
beyond tourism which could fundamentally alter the potential growth path of
the state.
11
See for example, Jurney, Corrine, North Carolinas Bathroom Bill Flushes Away $630 Million in Lost
Business, Forbes, Nov. 3, 2016, https://www.forbes.com/sites/corinnejurney/2016/11/03/north-carolinas-
bathroom-bill-flushes-away-750-million-in-lost-business/#5b9393d34b59; Chmielewski, Dawn, The 68
companies (including Apple) that are taking North Carolinas anti-LGBT law to court, Recode, July 8, 2016,
https://www.recode.net/2016/7/8/12128698/apple-cisco-intel-salesforce-68-companies-north-carolina-
anti-lgbt-law-hb2; and Dalesio, Emery P. and Jonathan Drew, AP Exclusive: Price Tag of North Carolinas
LGBT law: $3.76B AP, March 27, 2017,
http://bigstory.ap.org/article/fa4528580f3e4a01bb68bcb272f1f0f8/ap-exclusive-bathroom-bill-cost-north-
carolina-376b.
12
See for example, Crescente, Fernanado, For Millennials, a consensus on transgender bathroom use, USA
Today College, August 17, 2016, http://college.usatoday.com/2016/08/17/millennial-opinion-transgender-
bathrooms/.
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A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
The process for estimating the direct losses associated with the restrictive policy is described
within the report, with additional detail in the Appendices. Once the direct stimulus was quantified,
the associated multiplier effects were measured using The Perryman Groups input-output
assessment model (the US Multi-Regional Impact Assessment System, which is described in further
detail in the Appendices to this report) developed by the firm about 35 years ago and consistently
maintained and updated since that time. The model has been used in hundreds of analyses for
clients ranging from major corporations to government agencies. It uses a variety of data (from
surveys, industry information, and other sources) to describe the various goods and services
(known as resources or inputs) required to produce another good/service. This process allows for
estimation of the total economic impact (including multiplier effects) of the decreased spending due
to the proposed restrictive policy. The models used in the current analysis reflects the specific
industrial composition and characteristics of the Texas and San Antonio-New Braunfels
Metropolitan Statistical Area economies.
These total economic effects are quantified for key measures of business activity:
Total expenditures (or total spending) measure the dollars changing hands as a result of the
economic stimulus.
Gross product (or output) is production of goods and services that will come about in each area
as a result of the activity. This measure is parallel to the gross domestic product numbers
commonly reported by various media outlets and is a subset of total expenditures.
Personal income is dollars that end up in the hands of people in the area; the vast majority of
this aggregate derives from the earnings of employees, but payments such as interest and rents
are also included.
Job gains are expressed as permanent jobs for ongoing effects or person-years of employment
for transitory or cumulative effects. Because some tourismrelated jobs are temporary or part-
time in nature, results are given on a full-time equivalent basis.
Monetary values were quantified on a constant (2016) basis. See the Appendices to this report for
additional information regarding the methods and assumptions used in this analysis.
The Potential Impact of Social Policy Legislation on Business Activity: 14
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Conclusion
Travel and tourism are important sources of economic activity in Texas and, in
particular, the San Antonio area. Millions of people visit the state for business
or pleasure each year, generating billions in economic activity and tax receipts
to the State and to local governments.
With its numerous attractions and high level of tourism and travel, the San
Antonio area would be particularly hard hit by restrictive public policy. The
initial impact would include an estimated yearly loss in gross product of $411.8
million and almost 4,650 jobs, with losses rising to $689.2 million annually in
gross product and almost 7,780 jobs over time.
Evidence from other states which have passed restrictive public policy indicates
that the costs in terms of conventions, sporting events, and entertainment are
very real. The research structure in this analysis is conservative in its
assessment, but nonetheless reveals that Texas and San Antonio could expect
to see substantial economic and fiscal losses if legislation perceived to be
discriminatory in nature is enacted.
The Potential Impact of Social Policy Legislation on Business Activity: 15
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Appendices
The Potential Impact of Social Policy Legislation on Business Activity: 16
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
The Perryman Group (TPG) is an economic research and analysis firm based in
Waco, Texas. The firm has more than 30 years of experience in assessing the
economic impact of corporate expansions, regulatory changes, real estate
developments, public policy initiatives, and myriad other factors affecting business
activity. TPG has conducted hundreds of impact analyses for local areas, regions,
and states throughout the United States. Impact studies have been performed for
hundreds of clients including many of the largest corporations in the world,
governmental entities at all levels, educational institutions, major health care
systems, utilities, and economic development organizations.
Dr. M. Ray Perryman, founder and President of the firm, developed the US Multi-
Regional Impact Assessment System (USMRIASused in this study) in the early
1980s and has consistently maintained, expanded, and updated it since that time.
The model has been used in hundreds of diverse applications and has an excellent
reputation for reliability. The Perryman Group has analyzed the economic and
fiscal aspects of a broad range of corporate locations, infrastructure projects,
mixed-use real estate developments, and regulatory changes.
The Perryman Group has performed a number of studies of economic and fiscal
effects of travel and tourism and has analyzed the effects of numerous hotels and
convention centers, as well as entertainment venues including amusement parks
such as Fiesta Texas, Six Flags, and Sea World as well as racetracks, sports
stadiums, and arts venues. The firm has conducted multiple analyses of the
economic benefits of travel and tourism in Texas as well as related topics.
The firm has extensive experience in analyzing the economic and fiscal effects of
public policy and has also been active in key public policy initiatives concerning
economic development and policy in Texas and provided detailed regional
forecasts for the state for the past 35 years.
The Potential Impact of Social Policy Legislation on Business Activity: 17
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
There are two essential steps in conducting an input-output analysis once the
system is operational. The first major endeavor is to accurately define the levels of
direct activity to be evaluated. In the case of a prospective evaluation, it is
necessary to first calculate reasonable estimates of the direct activity.
In this instance, estimates of travel and tourism spending maintained by the State
were used in developing estimates of total economic activity. Updates to 2016
were based on most recent forecasts from the Texas Econometric Model,
described in a subsequent section of this Appendix, which Dr. Perryman developed
beginning in the late 1970s. Detailed data series regarding economic activity in key
tourism-related segments were utilized in generating local-area estimates.
The methods used to develop the initial preliminary direct impact estimates were
described in the report. In addition to the conservative assumptions previously
described, it should be noted that these computations also embody additional
elements of conservatism.
First, all scenarios are implemented based on estimated tourism volumes for 2016,
while they would likely be applied to a larger base in future years. Second, they do
not account for any business travel curtailment other than conventions. Third, they
do not include any losses in international travel.
Fourth, they do not embody any losses of tourism related expenses for in-state
travel. Some of this type of reduction would likely occur as a result of major
The Potential Impact of Social Policy Legislation on Business Activity: 18
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Fifth, the scenarios in the current study do not account for the loss of major sports
events (other than a representative illustration for San Antonio that is separate
from the overall impacts). Many major sports organizations are limiting
championships and playoffs in states with restrictions. Texas has been very
successful in recent years in attracting such high-profile events. Thus, the scenarios
offered in the present study reflect a conservative assessment of the potential
effects of so-called "bathroom" legislation.
Once the direct effects are estimated, the second major phase of the analysis is the
simulation of the input-output system to measure overall economic effects of these
incremental outlays. The present study was conducted within the context of the
USMRIAS which was developed and is maintained by The Perryman Group. This
model has been used in hundreds of diverse applications across the country and
has an excellent reputation for accuracy and credibility. It has been peer-reviewed
on numerous occasions. The systems used in the current simulations reflects the
unique industrial structure and characteristics of the Texas and San Antonio-New
Braunfels MSA economies.
13
See for example, Glum, Julia, The HB2, Anti-LGBT Laws Effect: List of Concerts, Events Canceled in North
Carolina, Mississippi, International Business Times, April 20, 2016, http://www.ibtimes.com/hb-2-anti-lgbt-
laws-effect-list-concerts-events-canceled-north-carolina-mississippi-2356695.
The Potential Impact of Social Policy Legislation on Business Activity: 19
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Another pattern that arises in response to any direct economic activity comes from
the payroll dollars received by employees at each stage of the production cycle. As
workers are compensated, they use some of their income for taxes, savings, and
purchases from external markets. A substantial portion, however, is spent locally
on food, clothing, health care services, utilities, housing, recreation, and other
items. Typical purchasing patterns in the relevant areas are obtained from the Cost
of Living Index (COLI) maintained by the Council for Community and Economic
Research, a privately compiled inter-regional measure which has been widely used
for several decades, and the Consumer Expenditure Survey of the US Department of
Labor. These initial outlays by area residents generate further secondary activity
as local providers acquire inputs to meet this consumer demand. These consumer
spending impacts are known as the induced effect. The USMRIAS is designed to
provide realistic, yet conservative, estimates of these phenomena.
Sources for information used in this process include the Bureau of the Census, the
Bureau of Labor Statistics, the Regional Economic Information System of the US
Department of Commerce, and other public and private sources. The pricing data
The Potential Impact of Social Policy Legislation on Business Activity: 20
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
The third gauge of economic activity used in this evaluation is Personal Income. As
the name implies, Personal Income is simply the income received by individuals,
whether in the form of wages, salaries, interest, dividends, proprietors profits, or
other sources. It may thus be viewed as the segment of overall impacts which flows
directly to the citizenry.
The fourth measure, Retail Sales, represents the component of Total Expenditures
which occurs in retail outlets (general merchandise stores, automobile dealers and
The Potential Impact of Social Policy Legislation on Business Activity: 21
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service stations, building materials stores, food stores, drugstores, restaurants, and
so forth). Retail Sales is a commonly used measure of consumer activity.
The final aggregates used are Permanent Jobs and Person-Years of Employment.
The Person-Years of Employment measure reveals the full-time equivalent jobs
generated by an activity. It should be noted that, unlike the dollar values described
above, Permanent Jobs is a stock rather than a flow. In other words, if an area
produces $1 million in output in 2015 and $1 million in 2016, it is appropriate to
say that $2 million was achieved in the 2015-2016 period. If the same area has 100
people working in 2015 and 100 in 2016, it only has 100 Permanent Jobs. When a
flow of jobs is measured, such as in a construction project or a cumulative
assessment over multiple years, it is appropriate to measure employment in
Person-Years (a person working for a year). This concept is distinct from
Permanent Jobs, which anticipates that the relevant positions will be maintained
on a continuing basis. Because the reduction in travel and tourism continues (and
typically expands) each year, the Permanent Jobs measure is appropriate for the
initial and longer-term portions of the current analysis. For the specific events, the
person-years measure is appropriate because the transitory nature of the negative
stimulus.
The USMRIAS also includes a fiscal model that provides estimates of State and
local tax revenues.
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A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Overview
The Texas Econometric Model was developed by Dr. M. Ray Perryman, President
and CEO of The Perryman Group (TPG), more than 30 years ago and has been
consistently maintained, expanded, and updated since that time. It is formulated in
an internally consistent manner and is designed to permit the integration of
relevant global, national, state, and local factors into the projection process. It is
the result of more than three decades of continuing research in econometrics,
economic theory, statistical methods, and key policy issues and behavioral
patterns, as well as intensive, ongoing study of all aspects of the global, US, Texas,
and Texas metropolitan area economies. It is extensively used by scores of federal
and State governmental entities on an ongoing basis, as well as hundreds of major
corporations. It is employed in the current analysis to project baseline future travel
and tourism effects.
The income segment of the model is divided into wage and non-wage components.
The wage equations, like their employment counterparts, are individually
estimated at the 3-digit North American Industry Classification System (NAICS)
level of aggregation. Hence, income by place of work is measured for
The Potential Impact of Social Policy Legislation on Business Activity: 23
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
The non-basic sectors are somewhat different in nature, as the strength of their
labor markets is linked to the health of the local export sectors. Consequently,
wages in these industries are related to those in the basic segment of the economy.
The relationship also includes the local labor market measures contained in the
basic wage equations.
Note that compensation rates in the export or basic sectors provide a key
element of the interaction of the regional economies with national and
international market phenomena, while the non-basic or local industries are
strongly impacted by area production levels. Given the wage and employment
equations, multiplicative identities in each industry provide expressions for total
compensation; these totals may then be aggregated to determine aggregate wage
and salary income. Simple linkage equations are then estimated for the calculation
of personal income by place of work.
The non-labor aspects of personal income are modeled at the regional level using
straightforward empirical expressions relating to national performance, dynamic
responses, and evolving temporal patterns. In some instances (such as dividends,
rents, and others) national variables (for example, interest rates) directly enter the
forecasting system. These factors have numerous other implicit linkages into the
system resulting from their simultaneous interaction with other phenomena in
national and international markets which are explicitly included in various
expressions.
The output or gross area product expressions are also developed at the 3-digit
NAICS level. Regional output for basic industries is linked to national performance
in the relevant industries, local and national production in key related sectors,
The Potential Impact of Social Policy Legislation on Business Activity: 24
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
relative area and national labor costs in the industry, dynamic adjustment
parameters, and ongoing changes in industrial interrelationships (driven by
technological changes in production processes).
Several other components of the model are critical to the forecasting process. The
demographic module includes (1) a linkage equation between wage and salary
(establishment) employment and household employment, (2) a labor force
participation rate function, and (3) a complete population system with endogenous
migration. Given household employment, labor force participation (which is a
function of economic conditions and evolving patterns of worker preferences), and
the working age population, the unemployment rate and level become identities.
The population system uses Census information, fertility rates, and life tables to
determine the natural changes in population by age group. Migration, the most
difficult segment of population dynamics to track, is estimated in relation to
relative regional and extra-regional economic conditions over time. Because
evolving economic conditions determine migration in the system, population
changes are allowed to interact simultaneously with overall economic conditions.
Through this process, migration is treated as endogenous to the system, thus
allowing population to vary in accordance with relative business performance
(particularly employment).
Real retail sales is related to income, interest rates, dynamic adjustments, and
patterns in consumer behavior on a store group basis. It is expressed on an
inflation-adjusted basis. Inflation at the state level relates to national patterns,
indicators of relative economic conditions, and ongoing trends. As noted earlier,
prices are endogenous to the system.
The Potential Impact of Social Policy Legislation on Business Activity: 25
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Once the initial simulations are completed, they are merged into a single system
with additive constraints and interregional flows. Using information on minimum
regional requirements, import needs, export potential, and locations, it becomes
possible to balance the various forecasts into a mathematically consistent set of
results. This process is, in effect, a disciplining exercise with regard to the individual
regional (including metropolitan and rural) systems. By compelling equilibrium
across all regions and sectors, the algorithm ensures that the patterns in state
activity are reasonable in light of smaller area dynamics and, conversely, that the
regional outlooks are within plausible performance levels for the state as a whole.
The iterative simulation process has the additional property of imposing a global
convergence criterion across the entire multi-regional system, with balance being
achieved simultaneously on both a sectoral and a geographic basis. This approach is
particularly critical on non-linear dynamic systems, as independent simulations of
individual systems often yield unstable, non-convergent outcomes.
The Potential Impact of Social Policy Legislation on Business Activity: 26
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
It should be noted that the underlying data for the modeling and simulation
process are frequently updated and revised by the various public and private
entities compiling them. Whenever those modifications to the database occur, they
bring corresponding changes to the structural parameter estimates of the various
systems and the solutions to the simulation and forecasting system. The multi-
regional version of the Texas Econometric Model is re-estimated and simulated
with each such data release, thus providing a constantly evolving and current
assessment of state and local business activity.
This critical aspect of the forecasting methodology includes activities such as (1)
daily review of hundreds of financial and business publications and electronic
information sites; (2) review of major newspapers and online news sources in the
state on a daily basis; (3) dozens of hours of direct telephone interviews with key
business and political leaders in all parts of the state; (4) face-to-face discussions
with representatives of major industry groups; and (5) frequent site visits to the
various regions of the state. The insights arising from this fact finding are
analyzed and evaluated for their effects on the likely course of the future activity.
Another vital information resource stems from the firms ongoing interaction with
key players in the international, domestic, and state economic scenes. Such
activities include visiting with corporate groups on a regular basis and being
regularly involved in the policy process at all levels. The firm is also an active
participant in many major corporate relocations, economic development
initiatives, and regulatory proceedings.
distinct from what is captured by the econometric system is then factored into the
forecast analysis. For example, the opening or closing of a major facility,
particularly in a relatively small area, can cause a sudden change in business
performance that will not be accounted for by either a modeling system based on
historical relationships or expected (primarily national and international) factors.
The final step in the forecasting process is the integration of this material into the
results in a logical and mathematically consistent manner. In some instances, this
task is accomplished through constant adjustment factors which augment
relevant equations. In other cases, anticipated changes in industrial structure or
regulatory parameters are initially simulated within the context of the Multi-
Regional Impact Assessment System to estimate their ultimate effects by sector.
Those findings are then factored into the simulation as constant adjustments on a
distributed temporal basis. Once this scenario is formulated, the extended system
is again balanced across regions and sectors through an iterative simulation
algorithm analogous to that described in the preceding section.
The Potential Impact of Social Policy Legislation on Business Activity: 28
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Texas
The Estimated Annual Impact (at Maturity) of Losses in the Tourism Sector
Associated of the Proposed Social Policy Legislation Regarding Bathroom
Access on Business Activity in Texas
Total Gross Personal Employment
Expenditures Product Income (Permanent
Category (2016 Dollars) (2016 Dollars) (2016 Dollars) Jobs)
Agriculture ($222,708,667) ($60,807,188) ($39,544,467) (524)
Mining ($140,801,994) ($32,597,124) ($17,948,223) (88)
Construction ($188,827,875) ($100,704,726) ($82,986,966) (982)
Nondurable
($1,182,733,839) ($328,943,820) ($172,976,516) (2,462)
Manufacturing
Durable
($243,115,456) ($95,895,357) ($61,884,474) (735)
Manufacturing
Transportation
($1,581,540,883) ($911,468,585) ($578,027,248) (6,262)
and Utilities
Information ($288,893,906) ($171,947,499) ($82,795,374) (976)
Wholesale Trade ($354,266,395) ($239,708,663) ($138,218,150) (1,323)
Retail Trade
(including ($2,312,604,689) ($1,704,413,264) ($985,519,931) (26,168)
Restaurants)
FIRE ($1,352,893,888) ($361,357,785) ($140,708,346) (1,245)
Business
($356,539,573) ($223,057,860) ($181,958,057) (1,865)
Services
Health Services ($290,219,258) ($203,189,319) ($171,798,451) (2,391)
Other Services ($1,921,524,274) ($1,021,710,111) ($712,731,712) (14,571)
TOTAL ($10,436,670,697) ($5,455,801,301) ($3,367,097,915) (59,592)
SOURCE: US Multi-Regional Impact Assessment System, The Perryman Group
The Potential Impact of Social Policy Legislation on Business Activity: 30
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
San Antonio
The Estimated Annual Impact (at Maturity) of Losses in the Tourism Sector
Associated of the Proposed Social Policy Legislation Regarding Bathroom
Access on Business Activity in the San Antonio-New Braunfels
Metropolitan Statistical Area
Total Gross Personal Employment
Expenditures Product Income (Permanent
Category (2016 Dollars) (2016 Dollars) (2016 Dollars) Jobs)
Agriculture ($14,952,176) ($3,906,746) ($2,604,484) (35)
Mining ($4,156,157) ($994,135) ($487,992) (3)
Construction ($25,167,260) ($13,432,162) ($11,068,938) (131)
Nondurable
($112,966,289) ($35,455,964) ($19,113,620) (293)
Manufacturing
Durable
($20,136,194) ($8,179,731) ($5,205,231) (66)
Manufacturing
Transportation
($207,366,341) ($119,361,027) ($75,652,692) (819)
and Utilities
Information ($38,632,111) ($22,982,490) ($11,082,978) (131)
Wholesale Trade ($33,938,726) ($22,964,068) ($13,241,287) (127)
Retail Trade
(including ($310,550,359) ($228,797,960) ($132,280,314) (3,514)
Restaurants)
FIRE ($154,252,653) ($42,461,641) ($17,893,346) (160)
Business
($42,038,156) ($26,230,686) ($21,397,517) (219)
Services
Health Services ($38,387,032) ($26,866,347) ($22,715,744) (316)
Other Services ($258,753,605) ($137,610,888) ($95,909,111) (1,963)
TOTAL ($1,261,297,058) ($689,243,844) ($428,653,255) (7,777)
SOURCE: US Multi-Regional Impact Assessment System, The Perryman Group
The Potential Impact of Social Policy Legislation on Business Activity: 32
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
The Potential Impact of the Loss of the 2018 NCAA Men's Basketball
Championship Final Four Event on Business Activity in the San Antonio-
New Braunfels Metropolitan Statistical Area
Total Gross Personal Employment
Expenditures Product Income (Permanent
Category (2016 Dollars) (2016 Dollars) (2016 Dollars) Jobs)
Agriculture ($7,628,311) ($1,993,146) ($1,328,757) (17)
Mining ($2,120,391) ($507,188) ($248,964) (1)
Construction ($12,839,850) ($6,852,830) ($5,647,158) (65)
Nondurable
($57,633,218) ($18,088,948) ($9,751,400) (145)
Manufacturing
Durable
($10,273,097) ($4,173,141) ($2,655,608) (33)
Manufacturing
Transportation
($105,794,301) ($60,895,690) ($38,596,542) (403)
and Utilities
Information ($19,709,356) ($11,725,222) ($5,654,321) (65)
Wholesale Trade ($17,314,882) ($11,715,824) ($6,755,449) (62)
Retail Trade
(including ($158,436,793) ($116,728,298) ($67,486,860) (1,731)
Restaurants)
FIRE ($78,696,723) ($21,663,109) ($9,128,839) (79)
Business
($21,447,055) ($13,382,389) ($10,916,600) (108)
Services
Health Services ($19,584,322) ($13,706,691) ($11,589,134) (156)
Other Services ($132,011,089) ($70,206,416) ($48,930,975) (967)
TOTAL ($643,489,388) ($351,638,891) ($218,690,608) (3,831)
SOURCE: US Multi-Regional Impact Assessment System, The Perryman Group
The Potential Impact of Social Policy Legislation on Business Activity: 34
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
TOTAL STATE
($6,236,755,474) ($3,260,282,864) ($2,012,113,533) ($1,381,968,482) -35,611
IMPACT
*Metropolitan Division
SOURCE: US Multi-Regional Impact Assessment System, The Perryman Group
The Potential Impact of Social Policy Legislation on Business Activity: 36
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
The Estimated Annual Impact (at Maturity) of Losses in the Tourism Sector Associated
with the Proposed Social Policy Legislation Regarding Bathroom Access
on Business Activity in Texas:
Metropolitan Statistical Area (MSA) and Rural Texas Results
Total Gross Personal Retail Employment
Expenditures Product Income Sales (Permanent
MSA (2016 Dollars) (2016 Dollars) (2016 Dollars) (2016 Dollars) Jobs)
TOTAL STATE
($10,436,670,697) ($5,455,801,301) ($3,367,097,915) ($2,312,604,689) -59,592
IMPACT
*Metropolitan Division
SOURCE: US Multi-Regional Impact Assessment System, The Perryman Group
The Potential Impact of Social Policy Legislation on Business Activity: 37
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Total
Expenditures
House (2016 Dollars)
1 ($43,506,503)
2 ($41,416,338)
3 ($58,942,931)
4 ($40,690,984)
5 ($47,296,561)
6 ($70,759,460)
7 ($67,933,435)
8 ($38,948,099)
9 ($122,783,741)
10 ($283,367,161)
11 ($35,885,686)
12 ($28,926,964)
13 ($49,078,635)
14 ($86,280,964)
15 ($68,543,656)
16 ($68,543,656)
17 ($41,123,015)
18 ($35,289,413)
19 ($35,510,615)
20 ($40,992,530)
21 ($56,488,745)
22 ($67,232,740)
23 ($65,693,719)
24 ($75,216,145)
25 ($37,347,453)
26 ($54,605,837)
27 ($54,605,837)
28 ($54,605,837)
29 ($45,230,979)
30 ($61,637,926)
31 ($53,762,956)
32 ($90,755,500)
33 ($75,545,087)
34 ($94,459,806)
35 ($58,213,345)
36 ($56,751,560)
37 ($61,496,222)
38 ($60,032,026)
39 ($56,751,560)
40 ($56,751,560)
41 ($56,751,560)
42 ($56,152,233)
43 ($46,448,124)
44 ($37,009,695)
45 ($76,466,943)
46 ($84,318,972)
The Potential Impact of Social Policy Legislation on Business Activity: 44
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Total
Expenditures
House (2016 Dollars)
47 ($87,940,032)
48 ($87,940,032)
49 ($84,836,266)
50 ($84,318,972)
51 ($87,940,032)
52 ($37,451,450)
53 ($53,698,939)
54 ($49,519,333)
55 ($51,674,514)
56 ($7,452,095)
57 ($42,649,916)
58 ($40,085,941)
59 ($35,538,017)
60 ($48,453,117)
61 ($50,501,276)
62 ($43,625,122)
63 ($62,019,994)
64 ($62,019,994)
65 ($62,019,994)
66 ($77,767,499)
67 ($77,767,499)
68 ($38,950,937)
69 ($51,221,842)
70 ($77,767,499)
71 ($74,481,392)
72 ($62,466,784)
73 ($91,736,595)
74 ($35,726,504)
75 ($10,224,395)
76 ($10,224,395)
77 ($10,224,395)
78 ($10,224,395)
79 ($10,224,395)
80 ($53,193,173)
81 ($66,088,020)
82 ($64,512,207)
83 ($72,549,810)
84 ($91,573,550)
85 ($50,261,561)
86 ($42,314,217)
87 ($89,183,271)
88 ($27,512,711)
89 ($77,767,499)
90 ($82,097,501)
91 ($82,097,501)
92 ($82,097,501)
93 ($82,097,501)
The Potential Impact of Social Policy Legislation on Business Activity: 45
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Total
Expenditures
House (2016 Dollars)
94 ($82,097,501)
95 ($82,097,501)
96 ($82,097,501)
97 ($82,097,501)
98 ($82,097,501)
99 ($82,097,501)
100 ($91,038,828)
101 ($81,195,331)
102 ($91,038,828)
103 ($91,038,828)
104 ($91,038,828)
105 ($91,038,828)
106 ($62,019,994)
107 ($91,038,828)
108 ($91,038,828)
109 ($91,038,828)
110 ($91,038,828)
111 ($92,962,183)
112 ($91,038,828)
113 ($92,962,183)
114 ($92,962,183)
115 ($92,962,183)
116 ($91,830,421)
117 ($91,830,421)
118 ($91,830,421)
119 ($91,830,421)
120 ($91,830,421)
121 ($91,830,421)
122 ($91,830,421)
123 ($91,830,421)
124 ($91,830,421)
125 ($91,830,421)
126 ($83,188,787)
127 ($83,188,787)
128 ($83,188,787)
129 ($83,188,787)
130 ($83,188,787)
131 ($83,188,787)
132 ($83,188,787)
133 ($83,188,787)
134 ($83,188,787)
135 ($83,188,787)
136 ($37,451,450)
137 ($81,208,101)
138 ($81,208,101)
139 ($81,208,101)
140 ($81,208,101)
The Potential Impact of Social Policy Legislation on Business Activity: 46
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas
Total
Expenditures
House (2016 Dollars)
141 ($83,188,787)
142 ($83,188,787)
143 ($83,188,787)
144 ($83,188,787)
145 ($83,188,787)
146 ($83,188,787)
147 ($81,208,101)
148 ($81,208,101)
149 ($81,208,101)
150 ($81,208,101)
TOTAL ($10,436,670,697)
NOTE: In cases in which a county was part of more than one district, allocations are based on the percentage of the population residing in a district. This co
SOURCE: US Multi-Regional Impact Assessment System, The Perryman Group
The Potential Impact of Social Policy Legislation on Business Activity: 47
A Case Study of Actions Which Could Adversely Affect Tourism in the San Antonio Area and Texas