2019 Tax Preference Performance Reviews Aerospace Tax Preferences

The Washington Joint Legislative Audit and Review Committee (JLARC) utilized the REMI model to ensure that tax preferences benefited the aerospace industry. The tax preferences, initially enacted in 2003, had three public policy objectives in the legislation: The first was to reduce the cost of doing business in Washington; the second encouraged the continued presence of the aerospace industry; and the third provided jobs with good wages and benefits. In 2013, an additional objective was added: maintain and grow Washington’s aerospace industry workforce. To reach these goals, there are three preferential business and occupation (B&O) tax credits, two sales and use tax exemptions, a property tax exemption, and a leasehold excise tax exemption. These preferences improved Washington’s competitive position by cutting the industry’s effective tax rate by at least 50%.

The REMI model analyzed the effectiveness of the tax incentives in accordance to the stated objectives. The results indicated that the original objectives from 2003 were easily met, though the newest objective to maintain and grow the aerospace industry in Washington was unclear. This may be due to Boeing leaving Washington which contributed to the decrease of employment in the state. This report was concluded with additional recommendations to aid in JLARC’s objectives.

Preliminary Report-2019 Tax Preference Performance Reviews-Aerospace Tax Preferences [Full PDF]

 

The Economic Impact of Fire Damage on Wyoming’s Economy from a Business Perspective

The U.S. faces one of the worst fire problems on a per capita basis in the industrial world. According to the U.S. Fire Administration, the losses from hurricanes, tornadoes, floods, earthquakes, and other natural disasters average only a fraction of damage from fires, annually. Smaller, sparsely populated states such as Wyoming are not immune to fire devastation; recently, the state experienced some well publicized and destructive fires. Last year, in Powell, a fire broke out in a dormitory at Northwest College that left several students temporarily homeless and caused severe damage to the building. This dormitory fire has initiated the installation and appropriation for enhanced fire safety in all the community colleges and University of Wyoming dormitories.

Utilizing Regional Economic Models, Inc. (REMI) Policy Insight, the economic impact of fire on Wyoming’s economy can be estimated. REMI is a regional economic forecasting and policy analysis model that includes cause and effect relationships. For this analysis, a 169 economic sector, single region REMI model for Wyoming was exercised. REMI maintains a baseline forecast and when a shock is introduced into the economy it can estimate the changes that occur in that forecast for each year that shock is inputted. The economic model provides an opportunity to see the direct as well as indirect changes that occur to Wyoming’s economy due to this shock. REMI allows the flexibility of running different simulations to view various perspectives and scenarios. For this analysis, two different types of business scenarios were examined using the REMI model to show how Wyoming’s economy may be affected by fire damage. The basis behind each simulation is that employment in a firm and industry would be reduced due to a fire outbreak.

4WY Economic Analysis Division – Economic Impact of Fire Damage on Wyoming’s Economy from a Business Perspective (AUG 2005) – Full PDF

Economic Impact of Establishing Amazon Headquarters in New York State

Amazon has recently considered opening a new headquarters in North America. The Empire State Development has retained Regional Economic Models, Inc. (REMI) to evaluate the potential economic and fiscal impacts of locating the headquarters in New York City, where Amazon expects to make a major investment of $3.7 billion in the construction and fit-out of new facilities over 15 years and to employ 40,000 workers by 2033.

REMI uses a New York State-specific version of its economic and fiscal impact model Tax-PI to perform the impact analysis. The model inputs data on direct investment, employment, and compensation provided by Empire State Development on behalf of Amazon. The analysis runs from the beginning of the build-out in 2019 to 10 years after the end of the build-out in 2043.

The rise in personal income, consumption, and business activity in New York State generated by Amazon’s new headquarters would expand the state’s tax base, so state revenues increase. REMI Tax-PI was used to forecast the project’s impacts on the state’s tax base, revenue, individual income taxes, GDP and other economic variables.

Economic Impact of Establishing Amazon Headquarters in New York State [full PDF]

Proposed Amendments to the Exhaust Emissions Standards and Test Procedures for 2024

On-road heavy-duty vehicles contribute significantly to California’s poor air quality with elevated levels of ozone and particulate matter (PM or PM2.5). Statewide, about 12 million Californians live in communities that exceed the National Ambient Air Quality Standards for ozone and PM2.5. Exposure to PM2.5 and ozone are associated with an increased risk of premature mortality, which has been estimated to contribute to 7,500 premature deaths each year in California.  

Two areas of the state with the most critical air quality challenges are the South Coast and the San Joaquin Valley air basins. These regions are the only two areas in the nation with an “Extreme” classification for nonattainment with the federal ozone standard, and also experience some of the nation’s highest PM levels. Achieving federal air quality standards in these regions, as well as across the state, will provide essential public health protection by reducing hospitalizations for heart and lung-related causes, decreasing emergency room visits, and reducing incidences of asthma. 

REMI Policy Insight Plus provides year-by-year estimates of the total impacts of the Proposed Regulation, pursuant to the requirements of SB 617 and the California Department of Finance.97,98 CARB uses the REMI single-region, 160-sector model with the model reference case adjusted to reflect the Department of Finance confirming forecasts. These forecasts include California population figures dated May 2019, U.S. real gross domestic product forecast, and civilian employment growth numbers dated April 2019. 

State of California Air Resources Board – Proposed Heavy-Duty Engine and Vehicle Omnibus Regulation and Associated Amendments [Full PDF] 

 

Local Infrastructure Financing Tool (LIFT)

The Washington State Joint Legislative Audit and Review Committee (JLARC) staff used Regional Economic Models, Inc.’s (REMI) Tax Policy Insight Multi-Region model (Tax-PI MR) to model three scenarios that illustrate potential employment impacts of the Local Infrastructure Financing Tool (LIFT) program. This technical appendix provides background detail and supporting information for the JLARC staff analysis that led to the results summarized in section 3. Section 1; REMI overview explains what the REMI Tax-PI MR model is, and how and why it is used. Section 2; Modeling LIFT using REMI details how JLARC staff set up the Tax-PI MR program and modeled scenarios to reflect the range of possible results. Section 3; Detailed assumptions and results show the employment changes resulting from each scenario at the county level.

Local Infrastructure Financing Tool (LIFT) Full PDF