Economic Impact Analysis
Below is the letter (February 5, 1999) from John Hamilton, DCCA Research Office. The letter is followed by the results of the analysis.
REQUEST FOR ECONOMIC IMPACT ANALYSIS
"Dear Mr. Hamilton:
As per our telephone conversation, I have enclosed the Case for Support for the Korean War Veterans National Museum & Library. This document is being distributed nation-wide, and is also available in the Korean language for the Korean community within the United States and in South Korea. With it, I hope you will find information that should be helpful in conducting an Economic Impact Analysis of establishing the national museum in East Central Illinois. The Operational Feasibility Assessment found on pages 20-24 should especially be helpful for the analysis.
Based on comparable attendance figures (see page 11 of the Case for Support) for other military museums in the United States, the board of trustees expects the museum to receive at least 100,000 visitors per year when the museum and its convention center are fully-operational.
While 50,000 visitors will most likely be daytrippers, 25,000 are expected to stay overnight at least one night in Tuscola. Another 25,000 visitors are expected to attend reunion functions in the museum's convention center requiring overnight stays in Tuscola of at least three nights duration. Banquets will be held in the convention center, but reunion organizers must contract outside catering firms because the museum will not provide food service for meals. Admission fees of $4.00 per adult will be charged to enter the museum, but reunion-goers will receive discount admission fees. The museum store will sell gift items which will be taxable.
If you have any further questions to help with the Economic Impact Analysis, please feel free to contact me at 217-253-2535. The Korean War Veterans National Museum & Library web site is http://www.theforgottenvictory.org.
Thank you.
RESULTS - ECONOMIC IMPACT ANALYSIS
Letter (February 5, 1999) from John Hamilton to us. "An economic impact analysis of the proposed Korean War Museum is enclosed in response to your request. Your figures for visitors were combined with average tourist expenditure data to serve as the starting point of the analysis. If you have any questions please call me at 217-785-6117."
ENCLOSURE - KOREAN WAR MUSEUM ECONOMIC IMPACT ANALYSIS
Introduction
This is an economic impact analysis of a Korean War museum planned for Tuscola, Illinois. The analysis estimates the indirect effects resulting from 50,000 day-tripper visitor days and 100,000 overnight visitor days. Annual direct, indirect, and total operations impacts are presented.
The economic model used to estimate the indirect effects was developed by Regional Economic Models, Inc. (REMI). The REMI model uses historical data from 1969 to the present in estimating economic relationships. The REMI model is comprised of input/output (I/O) coefficients conjoined with a set of econometric forecasting equations.
The I/O table shows from which industries and in what percentage amount a given industry will buy its inputs, and to which industries the given industry will sell its output. The econometric equations add a time dimension and allow the model to show effects year by year in terms of dollars and jobs.
Annual Operations Employment
In addition to the direct employment created by the visitors expenditures, indirect employment will be created in other sectors of the economy. The indirect jobs are created when the businesses serving visitors purchase goods and services other than direct labor and when the businesses' employees spend their income. The direct employment includes 28 at the museum, 50 at eating and drinking establishments, 31 at other retailers, and 21 at motels for a total of 130. The labor multiplier is total employment divided by direct employment, and indicates that for each employee at a business receiving visitors' expenditures 0.82 additional jobs are created in the state economy for a total number of jobs created 1.82 times the direct employment.
Economic Impacts Direct Employment - 130; indirect employment - 107; total employment - 237; labor multiplier -1.82.
Annual Operations Income
The expenditures of the visitors attracted by the new museum are estimated to add $6.9 million to economy-wide personal income, of which $6.7 million is wages and salaries. The income multiplier is economy-wide wages and salaries resulting from the project divided by direct wages and salaries paid the workers at the tourism related businesses. The multiplier indicates that each dollar of wages paid at the tourism related businesses generates an additional $2.04 of wages in the state economy for a total wage and salary effect 3.04 times the direct wages.
Income Impacts (Dollars in Millions) Total personal income - $6.9; direct wages and salaries - $2.2; total wages and salaries - $6.7; income multiplier - 3.04.
Annual Operations Government Fiscal Impacts
State and local taxes are estimated by the Department of Commerce and Community Affairs Research Office using project parameters, REMI output, and U.S. Department of Commerce personal income and tax data.
State taxes are estimated at 5.7% of personal income, and local taxes at 5.3% of personal income. Government costs in the following table represent increased education, fire protection, police, etc. costs to government as a result of the economic activity due to this project.
Government costs are deducted from taxes to estimate net taxes produced by the tourism expenditures.
State and Local Government Fiscal Impacts (Dollars in Thousands) Taxes
(state) - $393 and (local) - $366; government costs (state) - $77 and (local) - $73; net taxes (state) - $316 and (local) - $293.
Summary
An additional 150,000 tourist days in Illinois are estimated to create 237 jobs in the state, a total of $6.9 million in Illinois personal income each year, and net surpluses of $316 thousand for the state government and $293 thousand for local governments each year.
Copyright © 1998 Korean War Veterans National Museum and Library