As I’ve followed the discussion of the potential relocation of the National Western Stock Show and the six proposals for tax increment financing at various new tourist venues around the state, I’m troubled by the misunderstanding that permeates much of the discussions.
Let me approach the issue from an economist’s point of view.
First, we need to remember that tourism is Colorado’s third-largest basic industry. In other words, only manufacturing and mining bring more new dollars into the state. It is new dollars generated by sectors such as manufacturing ($18 billion), mining ($11.6 billion), tourism ($8.8 billion) and agriculture ($2.4 billion) — any good or service sold outside of Colorado’s borders — that produce the multiplier effects that provide jobs for the rest of us.
If the Stock Show moves from Denver to Arapahoe County, will some of the hotel rooms filled and dollars spent shift between counties? Absolutely! Does that mean Denver County will necessarily be worse off? Nonsense! It is quite possible — indeed probable — that so many more tourists will come to the metro area and spend so much more money that both counties (along with the rest of the metro area) will see more hotel rooms filled, new jobs generated and tax revenues increased.
When evaluating the impact of a new tourist attraction on the state, should we look only at new tourists and their spending in that particular venue? Certainly not! A tourist to a new attraction in Pueblo might also stop in Colorado Springs. One to Montrose might drive on to Durango or Grand Junction. One to Glendale drop a few dollars in LoDo. A majority of tourists who come to the state already spend time and money in metro Denver.
What is wrong with the current conversation? First of all, we need to look at new tourist days, not at new tourists. It doesn’t matter if a new tourist comes to the state or a tourist already here spends an additional day or two. Both have the same economic impact. And clearly a tourist who stays four days has a bigger impact than one who stays two or three days. If that tourist is here on business but brings the family along to enjoy the new attraction, that adds to the impact. If the tourists then travel to other existing sites in Colorado, they also benefit.
Second, as the proposals for relocating the stock show or awarding tax increment financing are evaluated, we need to look carefully at the impact on all of Colorado’s taxpayers, not just those in a small area. Let’s bring the maximum number of new dollars to Colorado — dollars that will provide new jobs and finance more and better state services. The legislature will divide the new tax revenues up as it sees fit.
My favorite economic developer (whose initials are TC and whom we are lucky to have in Colorado) has always said: First let’s get the business; then we can fight about how to divide it up. He’s right! Make decisions to attract the most tourists. We’ll all be better off.
Tucker Hart Adams is a senior partner at Summit Economics and former chief economist for US Bank’s Rocky Mountain region.
