Study: Arizona reeling from lost revenue in wake of immigration law

Arizona’s tough new immigration law has cost the state hundreds of millions of dollars in lost revenue, according to a study released this morning (pdf).

The study, commissioned by The Center for American Progress, was conducted by Elliott D. Pollack & Company, which The New York Times this morning referred to as a “respected” Arizona consulting firm.

The Center for American Progress, it should be noted, is a progressive organization opposed to laws like Arizona’s controversial SB 1070.

Arizona’s enactment of harsh anti-immigrant legislation… 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.

The study looked only at lost convention business and did not look at any offsetting factors such as lower costs for education or social services as some immigrants have left the state in response to the law.

But the study also does not consider any lost business beyond the convention business.

Since passing the law, many organizations, including cities and counties, have announced they will boycott the state.

Rage Against the Machine is one of many bands that has announced it will not perform in Arizona in protest of SB 1070.

Boycotts have also been announced by hundreds of musicians and performing artists.

In a conference call with reporters this morning, Lea Marquez Peterson, president and CEO of the Tuscon Hispanic Chamber of Commerce, said that Pima County alone in the past has generated about a billion dollars a year in business from Mexican tourists, much of which has dried up since the law was enacted.

In fact, Mexico’s Foreign Ministry earlier this year posted a travel advisory warning Mexican citizens that “they could be questioned for no reason at any moment” if they traveled to Arizona.

Marquez Peterson said that after the law passed she and other Hispanic business leaders traveled to Mexico to meet with tourism officials in an effort to convince them not to boycott Arizona. “We implored them to keep coming to Arizona,” she said. She said they emphasized that Hispanic-owned businesses would be hurt just as other businesses would. She said they found that Mexican officials were unwilling to encourage people to continue visiting Arizona.

“We said ‘please consider coming. Please consider those Hispanic-owned businesses that will be hurt, please consider bringing your group,’ but that was something they were not able to support,” she said.

“The small slice we did look at tells a pretty big story,” said Angela Kelley, vice president for immigration policy and advocacy at CAP.

“Laws like this are toxic to fragile state economies,” she said. She said there are currently 25 states “flirting with Arizona-like legislation.” She said many of those states, like Arizona, derive substantial revenue from conferences and CAP wants them to know what effect laws like Arizona’s might have on their convention business.

Also on the call was Julio Fuentes, president and CEO of the Florida State Hispanic Chamber of Commerce. He said he recently attended a large conference in Colorado, where he learned that Colorado had benefited substantially from organizations canceling conferences in Arizona and moving them to Colorado.

“Looking at this data from Arizona should definitely be of interest to those contemplating similar legislation in Florida,” he said. “Anyone thinking this would not hurt Florida are living in their own little fantasy land.”

“It is our hope that citizens from those states (considering legislation) will be on high alert” if politicians begin talking about Arizona-style legislation. “This is a time when states need to be focused on economic growth, and not permitting their fragile economies to get whacked off course by Arizona-type legislation,” Kelley said.

The study’s baseline information comes from Arizona Hotel and Lodging Association, which has reported about $15 million in lost convention business since the law was enacted.

Danny Court, senior economic analyst with Pollack, said the $15 million is a very conservative number for several reasons. He said it includes only information voluntarily supplied by members of the Association. He said some of the largest convention hotels do not belong to the Association and that some members chose–for competitive reasons–not to provide information about lost business.

“The general consensus was that $15 million was an under-representation of the lost business and that $45 million is still considered a conservative estimate of lost business,” Court said.

The $45 million is just the number associated with lost lodging spending. Using industry norms, he said, you can extrapolate $50 million in lost food and beverage spending, $13.4 million in lost entertainment spending, $14 million in lost in-state transportation spending and $18.8 million in lost retail spending. The total in lost business so far, the study concludes is just over $141 million.

That number reflects only business lost by conventions canceled to this point and conventions that would have been scheduled but weren’t. Some of that lost spending is money that would have been spent this year, but some of it is from conventions that were scheduled for 2011 and 2012.

Bookings through the Phoenix Convention and Visitors Bureau were down 35 percent in August on a year to year basis. If that 35 percent decline continues for an entire year, the study says there will be an additional $151 million in lost business. In a best case scenario, where business begins to pick up again soon, the study estimates additional lost convention business of $21.6 million.

He said when you factor in jobs lost by Arizona residents, reduced spending by those people, and reduced taxes collected, the total projected impact reaches around $500 million.

Marquez Peterson said she has heard of many Hispanic families who have left the state since the law was enacted. Articles in the Arizona Republic concur with that, saying the effect has been especially devastating for some landlords and owners of rental properties who have lost renters who were afraid to stay in Arizona.

“This is a very emotionally charged issue in Arizona,” Marquez Peterson said.

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About the Author

Scot Kersgaard

Scot Kersgaard has been managing editor of a political newspaper, editor and co-owner of a ski town newspaper, executive editor of eight high-tech magazines (where he worked with current Apple CEO Tim Cook), deputy press secretary to a U.S. Senator, and an outdoors columnist at the Rocky Mountain News. He has an English degree from the University of Washington. He was awarded a fellowship to study internet journalism at the University of Maryland's Knight Center for Specialized Journalism. He was student body president in college. He spends his free time hiking and skiing.

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