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Front Page » May 25, 2006 » Business Focus » Business is the basis of a community
Published 3,070 days ago

Business is the basis of a community


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By RICHARD SHAW
Sun Advocate publisher

The new Carbon County ambulance garage is going up quickly as workers toil to lay block. This building is funded by both a grant and a loan from the CIB and its construction has provided local jobs in the area.

There are many different kinds of institutions in a town that add to the populations well being. When people are asked which of those are the most important, a dozen different answers can emerge.

Some would site schools, others would say public safety and still others might say churches.

Few usually say businesses.

When the common citizens think of business they think about buying; buying groceries, buying clothes, buying cars, buying, buying buying,

Buying is good for business, particularly for local business.

But there is much more to business than just buying from them. What a business spends is important to the average person too. That's because spending comes in the form of goods and services in the local community. And the spending that is the most important is what a business puts out in payroll.

Some businesses are labor intensive, while others are not. But for most, payroll, payroll taxes and benefit payments are the largest part of their expenditures.

Over the years business has changed, because competition has changed. For instance the way a company mines coal today is very different from the way it was mined in the 1930's. In terms of production it is much more efficient, or in other words the amount of coal produced by a mine, based on inflation, is less expensive to produce than it was 70 years or for that matter 30 years ago. The reason? Reduced labor costs. The machines that grind the coal out of the ground have virtually replaced most of the miners who used to do it with drills and shovels.

New systems, from computers to transportation has changed every business in the county. That means fewer jobs for people with low skills and more jobs for people with higher skills.

Next to payroll, probably the biggest impact business has on a community is the amount of taxes it indirectly and directly pays.

Again look at the mineral extraction industries. These companies not only pay property taxes, but also royalties to the federal government for much of what they take out of the ground. They also, of course, pay payroll taxes and many other fees and charges as well.

The money that is paid in taxes or royalties eventually is spread over the entire country, with a small percentage coming back to the county from which the minerals were taken. In Utah this is often done in the form of grants from the Permanent Community Impact Fund or it is put into special service districts.

In the case of Carbon County, the Recreation and Transportation Special Service District is the designated entity for some of this money.

In the last few years that year to year funding has increased dramatically, with it now running into the millions of dollars.

In 1989 the fund took in $468,000. In 2005 the fund was granted $6,817,000. By all accounts the RTSSD takes in the most money of any other local government agency in the county.

What many people forget however, is that all that money is generated by private business, although indirectly. Government produces very little of its own income by anything it does. It may collect fees, taxes, tariffs or whatever, but it does not produce.

Carbon Counties tax base is small compared to many other counties, when considering sales tax, property tax and other fees. By mid-2005 the county had already generated gross taxable sales of over $191 million dollars. But with a population that varies between 19-20,000 people, that is still respectable.

Major sources of Carbon County government revenue
Property taxes$4,006,000
Mineral lease from RTSSD$3,500,000
Class B Road allocation$977,591
Quarter % County sales tax$800,000
Sales tax unincorporated county$750,000
Total sales tax$1,550,000
*Federal PILT$607,827
Motor vehicle fees$625,000
*PILT (payment in lieu of taxes based on amount of land federal government owns in county).

Money from different government agencies in the county come from various sources. Schools get much of their money from property taxes and some from the state. The county collects from property tax and sales tax, along with the cities.

Much of this money is generated by private citizens, through purchases, ownership and other activities. A good deal also comes directly from business.

With that in mind, direct wages paid by private industry contributes a large chunk of change to the public sector.

In 2004 the top four wage payers in the county were private companies in the areas of mining, transportation and utilities, manufacturing and construction.

The average highest wage earners were those that worked in the mining industry, earning an average of $5,949 per month. Transportation and utility companies paid workers an average of $4,388, while manufacturing was very far behind at $2,784, and construction at $2,738.

Retail and wholesale trade workers averaged $1,977.

Government workers came in with an average of $2,224.

Of course many private jobs are also dependent on government decisions. For instance, construction on the new Carbon County ambulance garage and maintenance shops on Airport Road are accounting for some good income for a number of workers in the county. Without the grants and low cost loans to build these buildings, those jobs would not exist.

But despite that, Carbon county's well being seems to be improving overall, with the Department of Employment Security reporting early this spring that many jobs are going begging for applicants.

A recent poll conducted by the county's department of economic development showed that most private employers see their businesses improving over the next year by a 2-1 margin.

However, as always, local businesses are facing ever increasing outside competition, some of which pays little or no compensation to local government entities for doing business in the county. The two biggest hits some businesses are taking include out of area buying (called leakage by economists) and internet purchases.

"Going over the mountain" is a substantial pass time for many in the area. They buy everything from groceries to cars, and everything in between. This has been of concern to local businesses for many years.

Estimates on loss are done by looking at sales tax averages for a population and then those averages are applied to a local area. In Carbon county's case, in some categories there is a real drain on the area. But in other areas, the county shows a gain, often substantial. Those gains are usually connected to tourist industry spending, such as for fuel and convenience store purchases.

Secondly, more and more people purchase what they need over the internet. This is particularly true of those under 30 years of age, although a growing number of those in middle age and seniors are also discovering the shopping possibilities.

Internet sellers pay no sales tax (unless they are based with in the state) and few pay any other kinds of taxes unless their business location is within the county. No substantial estimates are available for how much money is going out of the county for items bought this way, but national statistics show that the growth in internet sales is going up in the double digits annually.

This not only means challenges for local business, but also for local government as well, which lives by economic ups and downs.


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