'The money is starting to flow again' in time for holidays

Mobile Register
11/26/03

"Economists can look at whatever they want.  In the South, weather is what makes the difference," said Hagmaier, who's had a 36-year career with the Plano, Texas-based retail chain, including 11 years in Mobile.

Hagmaier himself is expecting only modest sales growth- 2 to 3 percent- over last year's holiday season, which was one of the best in the Mobile store's 29-year-history.

That's slightly below the 3 to 5 percent increase predicted across the Mobile area by Semoon Chang, a University of South Alabama economist.  Chang said he based his estimate on a recovering national economy, lower unemployment in Mobile County and a series of big construction projects led by the $162 million RSA Battle House tower in downtown Mobile.

"The money is starting to flow again," Chang said Tuesday. 

Terminal proposal linked to Florida's need for gas

Mobile Register
07/27/03
by Lee Davidson, Business Reporter

Mobile economy is looking better

Mobile Register
06/19/03
By Jeb Schrenk Staff Reporter

Mobile's gross receipts tax collections climbed more than 5 percent in May, compared with last
May, breaking a 10-month negative trend. The county's collections also increased. "It's about time," said Semoon Chang, a consultant and University of South Alabama economist. "We're starting to see some signs that the economy is rebounding." Chang noted that countywide employment figures for January through March also are up, and the news comes as the stock market is posting a moderate rebound. Even with May's gross receipts, revenue is down this fiscal year compared with last year. City officials expressed cautious optimism, though, saying they see May's numbers as a positive sign, but they would not go so far as to call it the start of a trend. "It's going to take several months of trend to guarantee we have an uptick," said Mobile Mayor Mike Dow. Dow pointed to April's gross receipts collections, which were down less than 1 percent compared with April 2002, as another indication of a possible turnaround.

A gross receipts tax is similar to a sales tax and is Mobile's largest single revenue source. City Councilman Ben Brooks, chairman of the Finance Committee, said he still expects city revenue to be down at the end of the fiscal year, but an improvement over the next several months could mean a healthier fiscal 2004. "We want to see a pattern set in before we say we've bottomed out, we've turned around," Brooks said.

The latest figures show: Despite May's increase, gross receipts collections inside the city are still down 2.5 percent for the year compared with fiscal 2002. Gross receipts collections inside the police jurisdiction a three-mile-wide belt around the city did not increase in May and are down 5.4 percent for the year. There had been strong growth over the last several years in the jurisdiction. In fact, gross receipts collections inside the city were down each year for 2000, 2001 and 2002, but business activity in the police jurisdiction pushed overall revenue into slight gains for each of those years. Since January, however, collections in the police jurisdiction have dropped in one month by more than 20 percent compared with the same months the prior year.

Chang said the drop could be the result of a slowdown in construction and development in the jurisdiction, though, he said, a few more months of data will be needed to be sure. Regardless, Chang said, the main budget figures to watch in judging the Mobile area's economic health are gross receipts collections inside the city and the county's collections. The county's collections are up by just over 7 percent in May compared with May 2002. The increase is the largest since at least October 2001. We've been trying to figure out what to attribute this to," said county Finance Director Michelle Herman. She said the county is still down about 4 percent for the year, and a few more months of positive collections will be needed before declaring any change in trends. "While we're very happy we're moving in the right direction, we still don't see the light at the end of the tunnel," Herman said. Overall city revenue is down 1.7 percent for the year. Overall city expenditures are down 5.4 percent for the year. "That's very intentional," said Dow, citing vacant positions that have gone unfilled.

Chang said there are signs of improvement. He said several major projects, including construction of the RSA tower downtown, have not gone into full swing yet. Revenue, Chang predicted, will fluctuate over the next six months. "Overall it will go up, but it will be a bumpy ride," he said.
 

Choctow Point Terminal Project Impacts Mobile Economy
Alabama State Port Authority Releases Study

Alabama State Port Authority
February 4, 2003

The Alabama State Port Authority released today Mobile area estimates on the economic impact derived from the Authority's Choctaw Point Terminal project. Dr. Semoon Chang, Director for the Center of Business and Economic Research at the University of South Alabama (USA), conducted the study, titled Economic Impact of the Choctaw Point Intermodal Facility on the Mobile Area. The study identifies project related jobs creation, tax receipts and retail sales expenditures. James K. Lyons, Director and CEO, Alabama State Port Authority, advised, "earlier studies conducted on the Choctaw Point project did not address local economic impact. We had also received numerous inquiries during our environmental impact study process on the project's local benefit potential. In that these question needed addressing, we asked Dr. Chang to assess the intermodal facility project and produce his findings."

The USA study identifies Mobile area impacts on construction of the Choctaw Point Terminal site, container yard and multi-user intermodal facility only. Lyons added, "this study measures only the impact of initial phases of Choctaw Point Terminal and does not address the impacts generated from ongoing Alabama State Docks cargo activities or its expansion and modernization programs elsewhere in the Port."

Between the years 2002 and 2006, Dr. Chang estimates the project will create over $83 million in retail expenditures and 552 in 2003, 1,345 in 2004, 1,425 in 2005 and 596 in 2006 construction-related jobs. Total tax revenues for Mobile County, City of Mobile, State of Alabama, and public schools are estimated to exceed $7.5 Million over the five-year construction period, the study reported.

The USA study also projects long-range employment and tax benefits to the community based on the operations of the container yard and intermodal facility only. Dr. Chang estimates by the year 2015 the direct and indirect employment created by the Alabama State Docks alone for operation of the Choctaw Point container and intermodal facility is estimated to be 483 with an annual wage impact of $16,295,454. By that same year, annual tax revenues from the 483 jobs are projected to exceed $421,000 per year for the City of Mobile and Mobile County coffers with an additional $861,552 tax revenues for the State of Alabama and public schools. Dr. Chang also cites additional impacts on newly created private sector service industries. By 2015, these service sector industries will create 1,696 jobs including the multiplier effect, with annual wages totaling over $57 million and combined state and local tax benefits of over $4.5 million per year. Service sector industries include shipping lines, trucking companies, service and repair industries, logistics firms and suppliers. Although not estimated in the study to avoid any speculation, Dr. Chang says, “I strongly believe that new businesses with additional economic impact will be attracted to the Value-Added & Distribution area of the facility once the facility is fully operational.”

Expansion at Docks to be boon for city, says study
New Choctaw Point terminal would create about 2,000 more Docks and private sector jobs

Mobile Register
01/28/03
Lee Davidson 

The Alabama State Docks' Choctaw Point terminal, once fully operational, should bring $1.2 million in taxes into the city annually, according to a University of South Alabama study released Monday.

The study addresses the local economic impact of the Docks' proposed container port at Choctaw Point, south of downtown Mobile.

"This is a long-term development that can bring some pretty good sustained jobs that will be here and stay here and help our community strengthen," said Docks Director James Lyons.

The facility jobs would pay $12 to $15 an hour, Lyons estimated.

Each year more than 20 million tons of cargo move through the Alabama State Docks, stretching along five miles of shoreline. Leading commodities include coal, aluminum, iron, steel and forest products.

A proposed facility at Choctaw Point, south of the main Docks complex, would allow Mobile to enter the container shipping business in a big way, Lyons said, something it hasn't done in the past. Containers are large boxes that can hold almost anything and can be moved from ship to rail to truck with relative ease.

The $300 million project has yet to receive necessary environmental permitting and all of its funding. The Docks will receive some of that money from the state government, and it will be handed out incrementally.

Lyons said the state is providing $100 million over the next several years, with the rest of the money coming from grants, private donations and the Docks' own savings.

Economist Semoon Chang, director of the Center for Business & Economic Research at the University of South Alabama, conducted the study, which was commissioned by the Docks about three months ago.

In the year 2015, the study predicts, the facility will employ 483 Docks workers, with another 1,696 in supporting operations in the private sector. That represents about $73 million in wages for the 2,000 or so employees, the study stated.

The people from the private sector would work in feeder industries that crop up in Mobile to support the container terminal. They could be shipping companies that handle primarily container cargo or truck lines or service and repair companies involved directly with containers, according to the study. The project will employ 1,425 people during its peak construction year, 2005.

Lyons, who said the project is on schedule, said the construction phase alone should have a tax impact of $3 million locally, with a $4.5 million tax impact for the state.

Lyons said the fully operational facility should generate $1.2 million annually for the city, nearly $700,000 a year for the county and about $439,000 for Mobile's school system.

Chang said he took information for the study from the Docks, from other U.S. ports and from an already commissioned feasibility study on the project.

In Gulf ports, he said, container shipping has increased an average of 6.5 percent annually from 1995 to 2001. Nationwide, ports average an annual growth rate of about 6 percent, he said.

"It's not too late to get into the container business," Chang said. "We're in the middle of a rapidly expanding container business."

Lyons said the State Docks' overall facility has an estimated $3 billion annual economic impact on Alabama and is linked to more than 100,000 jobs statewide.

Building nearby McDuffie Island Coal Terminal was a $200 million investment that took place over more than 20 years, Lyons said, adding that diversifying the Docks' capabilities is critical to its financial stability.

"By far, this is the most significant project we've undertaken at the Docks," Lyons said.

Economic Outlook:  Little Change Predicted for 2003

Mobile Area Chamber of Commerce, The Business View
01/02/03

Modest growth - that's this year's prediction for the local economy, according to Semoon Chang PhD, director of the Center for Business and Economic Research at the University of South Alabama.

Chang is hanging his 2003 forecast on the same project list expected to boost last year's economy - the new downtown office building and renovation of the Battle House Hotel by Retirement Systems of Alabama, Mobile Public School System's building program and the Choctaw Point container facilities at the State Docks.

All are expected to get underway this year, and will create a modest growth rate of 1-3 percent in 2003.  "We need these projects to provide the big push for the local economy," says Chang. 

After a decade-long growth rate of 5-6 percent, Mobile's booming economy dipped in mid-2000.  "Many businesses have suffered through slow growth.  This year, we'll see the trend reverse," says Chang.

The good news for the labor market is that it will lag behind several months. Chang expects employment to rise by the third quarter.

The area's economy is dependent on what happens nationally.  In an article by the chief economist for American Express, Dan Laufenberg writes, "The U.S. economy is expanding, but not booming."  The article was published on the American Express Web site, www.americanexpress.com. 

He expects the national economy to "accelerate slightly in 2003" and describes potential U.S. military intervention in Iraq "as a wild card whose immediate consequences would likely be detrimental to the economy - at least in the short term."

Laufenberg forecasts that 2002 will measure 3.1 percent growth rate when the final figures are submitted. 

Editors of The Kiplinger Letter also anticipate a national growth rate of 3 percent, and say that if holiday sales are weak the Federal Reserve "may cut interest rates again early in 2003." 

With a strong Democratic delegation in Washington, The Kiplinger Letter predicts Republicans "will have to compromise to win tax cuts next year."  Look for a bipartisan package that includes cuts to stimulate business spending such as "faster depreciation of business assets and higher limits on expensing assets."

Semoon's Solutions

Local education improvements and tax reform are critical to Mobile's ability to maintain a strong economy, says Chang.

He believes the struggle with K-12 education is taking its toll.  "When schools are good, people make their own jobs."

The Technology and Research Park at the University of South Alabama is designed to capitalize on local talent and university expertise says Brent Ericson, the Chamber's research and technology director.  "Match these efforts with the technologies and business opportunities expected from USA's Cancer Research Institute, and the future economic picture looks robust."

When it comes to tax reform, Chang says the first step is to make the system simpler.  Businesses currently fill out three different tax forms for the city, county and state.  Exemptions are different for each government entity, which Chang says encourages cheating.  He also believes we have too many exemptions and are too dependent on sales tax.