Boycott over immigration law sees mixed results - East Valley Tribune: Business

Boycott over immigration law sees mixed results

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Posted: Thursday, November 18, 2010 10:39 am | Updated: 10:27 pm, Fri Nov 19, 2010.

A self-proclaimed "progressive" think tank that favors letting illegal immigrants remain in the United States claims a boycott of conferences because Arizona's new immigration law will cost the state $141 million in spending and $9.4 million in lost taxes during the next two or three years.

But the chief economist whose firm actually did the study for the Center for American Progress says the conclusions that group reached from his numbers are totally flawed.

Jim Rounds, senior economist for Elliott Pollack & Co., said it is more likely that the downturn in conventions is due to the Legislature raiding the funding for the Arizona Office of Tourism than it is from any boycott due to SB 1070. He also said that the report makes the overall impact look a lot larger than it is.

Finally, Rounds said no effort was made to look at any savings to the state from the exodus of at least some of the illegal immigrants.

Angela Kelley, vice president of the Center for American Progress, conceded the last point but said that wasn't the purpose of the report. She said it was commissioned and released as a "cautionary tale" for any other state which would follow Arizona's lead in trying to enact its own immigration statutes.

"Arizona-like laws are toxic to fragile state economies," she said. "There are currently 25 states that are flirting with Arizona-like measures," Kelley continued, many of which are places that tend to attract conferences and conventions. "It's our hope that citizens of those states will be on high alert when politicians begin to talk about moving an Arizona-like measure."

The Arizona Hotel and Lodging Association earlier this year said reports from its members showed $15 million worth of cancelled conferences in the four months after Gov. Jan Brewer signed the law. The study says the real figure over what was actually cancelled and the conferences that won't come over three years could be triple that.

Extrapolating out what those conventioneers would have spent beyond the rooms themselves, including food, entertainment and shopping, the report figures $141 million in lost revenues.

The tax consequences of all that computed out to $9.4 million for the state and cities.

But Rounds, in a separate interview with Capitol Media Services, said that needs to be put into perspective.

He said the entire state budget exceeds $8 billion, making those lost revenues a small fraction. And he said the same is true of the lost revenues: that $141 million is less than one-tenth of 1 percent of the total state gross domestic product.

Rounds said the real story, though, is that the Center for American Prosperity made assumptions about why those dollars were lost that are not based in any solid facts.

"We only did the math," he said. "We disagree with the interpretation."

In the two prior budget years, state lawmakers took away a combined $10.2 million of funding for the Arizona Office of Tourism. And this year the agency, which normally gets about $15 million, got nothing from the state.

"You can't possibly control for everything," Kelley responded when asked later about Rounds' criticisms. She defended the conclusions her staff made with the numbers his firm produced.

"But it's a little bit naive to say that the law doesn't have an impact or is something that is equivalent to diminished money for the tourism office when you got the intense reaction that no one can deny happened the minute Brewer signed the bills and that resonates and is reverberating even today."

How deep that reaction remains, though, could be up for debate. Tourism industry officials say while convention business appears to be down, casual visitors continue to come to the state.

Rounds also said that whatever tourism losses the state has suffered already because of SB 1070 can't be extrapolated out into similar losses going forward.

"It's only a transitory event," he said, pointing to Kelley's statement that other states may adopt similar laws.

"We're carrying the water for the whole nation on this," Rounds said. "As soon as (legislative) session start and there's 25 other states' help carrying that bucket of water, we're not going to be the target."

Rounds also said while his firm was commissioned solely to look at tourism, the report does not present a full picture due to the failure to consider the costs to Arizona from illegal immigration.

The Pew Hispanic Center, for example, has estimated that close to 15 percent of students in Arizona schools are here due to illegal immigration, whether they are undocumented themselves or the U.S.-born children of illegal immigrants. That translates out to more than $500 million in state aid.

Rounds acknowledged that illegal immigrants do contribute to the economy with their own taxes and spending. But he said that, generally speaking, the amount of money being earned by a family of four headed by an illegal immigrant, compared with the services received, means they are not net contributors.

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