Jan. 13, 2009

  A Publication of the Economic Development Corporation of Utah
CEO Jeff Edwards

President's Message

Governor's Office of Planning and Budget Presents 2009 Economic Report


Last week the Governor's Office of Planning and Budget (GOPB) presented the 2009 Economic Report to Governor Huntsman at an event sponsored by the Salt Lake Chamber of Commerce and the Wasatch Economic Forum.

The Economic Report to the Governor is a great source of information, data and research about Utah's economy. It provides critical information on employment, wages and income, home prices, demographics and an overall economic outlook. The report confirms indications that Utah's economy has seen only a modest downturn over the past year and is expected to see more slowing in 2009. Despite this news, Utah seems poised to weather the economic storm better than other states by capitalizing on its diverse economy, great workforce and excellent track record of attracting new businesses to the state.

You can see the report in its entirety here. For a summary of the report click here.

As this newsletter is being distributed I will be attending “What's Up Down South?" the Washington County Economic Summit in St. George. Watch for my report about the conference in next week's newsletter. One highlight will be Governor Jon Huntsman's address to open the conference. He also is expected to be in attendance at the 2 p.m. ribbon cutting for St. George City's SunSmart Solar Farm, 3780 South Street, Bloomington. (Click here to read a Spectrum story about the solar farm.)

Today's Economic Review also includes links to many of the ED-related news stories from the past week. As always, if you have comments, suggestions or topics you'd like to see in the Economic Review, please contact us by clicking the “Comments" link at the bottom of this page. Enjoy!

Jeff Edwards

Jeff Edwards
President and CEO


Feature

2009 Legislative Priorities
for Economic Development


When the Utah Legislature opened its session two years ago the state was sitting on $1.6 billion in surplus revenues and the primary question was how to spend the money. During the 2009 legislative session, which opens January 26, the question will be just the opposite -- how best to cut the budget in a shrinking economy.

As with past Legislative sessions, this year's session can expect a variety of bills important to Utah economic development. Jason Perry, director of the Governor's Office of Economic Development (GOED), says his team is keenly interested in several economic development-related initiatives that could have significant impact on Utah's economy.

Motion Picture Incentive Fund

First is Senate Bill 14, sponsored by Senator Lyle Hillyard, R-Logan, which would strengthen the Motion Picture Incentive Fund by granting approved motion picture projects a 20 percent tax rebate on their in-state spend. Production companies would thus receive a percentage of every dollar spent in the state.

Currently, approved motion pictures filmed in Utah may receive a rebate of 15 percent of their in-state spend with a cap of $500,000. Perry says this is one of the lowest incentive percentages among the 50 states and precludes Utah from attracting any big budget films to the state. In preparation for Hillyard's bill, GOED spent months drawing upon economists and experts in the film industry to develop a detailed financial model that demonstrates the exact economic impact a film can have on the state.

"We wanted to be one of the first states to create an economic model that substantiates the multiplier effect of film production in a state and that's what we've done," Perry says. "Our model shows that every $1 spent in the state by a film production company turns 2.5 times or translates into an additional $2.5 for the state."

Hillyard's bill also includes an imputed income requirement, which allows the state to capture some of the income taxes on wages earned by actors filming in the state. Perry says the incentive is designed to do much more than attract big budget films and would actually put Utah in the right path to attract motion picture studios to locate here.

The film industry can have an enormous economic impact on rural Utah, since the state's varied landscape can emulate many other locations -- even other worlds like the Vulcan planet (a production company recently spent two weeks filming part of the new Star Trek movie near the San Rafael Swell in Emery County). Incidentally, this latest Star Trek sequel is the eleventh feature film based on the Star Trek series and is slated for release in May.

Hillyard's bill has already been recommended by the Workforce Services and Community and Economic Development Interim Committee and Perry says he'll be on Capitol Hill to add his support to the measure.

Healthcare Reform

Legislation aimed at healthcare reform is also a priority for GOED. Healthcare costs are escalating so dramatically that they can't be sustained by business and industry. Perry expects there will probably be multiple bills addressing various issues of healthcare reform and says addressing the issue at the state level is important to Utah economic development.

Sales Tax on Food

Another priority for this session is the removal of the remaining sales tax on food. Last year the Legislature cut the sales tax to 1.75 percent. Perry says Governor Jon Huntsman would like to see the remaining tax removed completely.

“Such a step will have an economic benefit for every person living in the state," he adds.

Economic Kick Start Plan

The Governor's economic stimulus package is also a legislative priority. Governor Huntsman calls it his “Economic Kick Start Plan," which is actually a three-pronged approach to economic stimulus. First, the plan would keep Utah's road construction projects on track. In December the state halted $3.9 billion in planned construction due to budget uncertainties. Perry says putting those projects back on track would preserve some 20,000 construction jobs and associated wages of approximately $700 million. Funding could be accomplished via bonding that would be paid for by an increase in vehicle registration fees.

Second, Governor Huntsman would like to stimulate the housing market by creating liquidity, which would allow new mortgages to be issued and help Utahns get into homes. Perry says there are approximately 4,000 unsold homes in inventory around the state and helping to reduce that inventory would stabilize prices and bolster the residential construction industry. Governor Huntsman has set aside $5 million from his own budget and is working with various government agencies and programs to help qualifying individuals make home purchases. The construction industry has lost approximately 13,500 jobs over the past year, so stimulating the housing market would serve to bolster the industry and perhaps recoup some of those lost jobs.

Third, continuing the state's capital building projects. This would protect approximately 3,000 associated jobs. Perry says funds to continue the construction projects will come from private donations and public/private partnerships. The Salt Lake Chamber of Commerce estimates that every $100 million spent on state buildings generates about 4,000 local jobs.

EDCUtah President and CEO Jeff Edwards says the Utah Legislature is generally attuned to supporting economic development efforts. Past legislatures have supported economic development incentive reforms and initiatives such as USTAR (the Utah Science, Technology and Research initiative) and the expansion of the Utah Fund of Funds. Both Perry and Edwards are hopeful that this Legislature will continue to advance the state's economic development position.


CALENDAR


Jan. 14:  Washington County Economic Summit
, 7 a.m. to 2 p.m., Dixie Center, St. George, UT www.whatsupdownsouth.com

Jan. 15: Utah Commercial Real Estate Symposium, Salt Palace Convention Center, Room 255. Register here.

March 24-26:  JEC Composites Show (Paris, France) http://www.jeccomposites.com/jec-show/

 
In The News

Economic Development Headlines from the Past Week

SDL licenses with spinoff company

- Utah State University's Space Dynamics Laboratory is bringing its technology to the marketplace for the first time through a licensing agreement with a new company. SDL signed the contract with Thermal Management Technologies on Dec. 19. TMT is technically a “spin-out" business of the Utah State University Research Foundation; SDL is the largest USURF unit. (Herald Journal)

Silver screen anniversary: Sundance celebrates 25 years of independent filmmaking

- This year marks the 25th anniversary of the Sundance Film Festival, the premier showcase for independent films and world cinema in the United States. Well, maybe it does. (Deseret News)

Board OKs incentives for 2 movie productions

- The Governor's Office of Economic Development Board on Thursday approved spending rebate incentives for a pair of movie productions. The board approved a rebate of up to $500,000 for Snowmen LLC for the film "Snowmen," an independent feature film that is expected to spend $3.4 million while shooting in Utah. Frostbite Features Inc. was approved for a rebate of up to $240,000 for "Frozen." The independent feature film is expected to spend $1.6 million in Utah. (Morning News)

Salt Lake Convention and Visitors Bureau celebrates 25th anniversary

- Salt Lake for many years has been a hot attraction for skiing, vacations and even business conventions. In recent years, the Salt Lake area has seen a rise in tourism from people all over the world, a result of the 2002 Winter Olympics. The Salt Lake Convention and Visitor's Bureau (SLCVB) is one the key organizations involved in bringing people from countries all over the globe to Salt Lake. (Utah Business)

Economic report highlights challenges Utah faces in coming year

- Utah's diversified economy and low unemployment rate will help in the coming year, but will not leave Utah unharmed, according to the annual Economic Report to the Governor presented today in Salt Lake City. Governor Jon Huntsman addressed the gravity of the situation. (KCPW News) (Utah Business)

Utah, 4 other rural states have lowest jobless rates

- Insulated from the harshest effects of the housing bust — and buoyed by an abundance of energy and agriculture — five contiguous rural states have the lowest unemployment rates in the land. (Deseret News) (SL Tribune)

Tourism board approves summer ad budget; $3.2 million to lure out-of-towners

- Consequences of the global financial meltdown aren't all bad: It appears the state will be able to get more advertising bang for its buck than before. (Salt Lake Tribune)

Chamber names 2009 business award winners

- Small Business of the Year is The Mandarin restaurant, located in Bountiful. The Entrepreneurial Success award will go to Sam Weller's Zion Bookstore. The Community Service award will be presented to Junior Achievement of Utah. Manuel's Fine Foods is the Minority Small Business of the Year. (Deseret News)

Downtown heads list of Dunlavy's accomplishments

- Tooele City Mayor Patrick Dunlavy first met representatives of Big 5 Sporting Goods at the International Council of Shopping Centers convention in Las Vegas in 2007. At the time, Dunlavy was told Tooele was not on a short list of Utah cities the company was considering for expansion. (Tooele-Transcript)

Mid-Jordan extension: New TRAX line money in the bank

- A federal funding agreement that assures completion of the Mid-Jordan TRAX line is the surest signal that Utah's burgeoning transit system is maturing, Midvale Mayor JoAnn Seghini said Friday at a signing ceremony.
(Salt Lake Tribune)  (Deseret News)

Extended-stay hotel opens in West Haven

- A Kansas-based hotel chain has opened its second extended-stay hotel in Utah -- in the Ogden suburb of West Haven -- the second of seven it plans for the state. (Salt Lake Tribune)

Utah Hospitals Rank Better than National Average on New Comparison Reports

- Utah's hospitals are generally providing better care than the national average for births, knee replacement, heart attacks and pneumonia, according to the Utah Department of Health's annual comparison reports. (KCPW)

Finalists selected: 3 local entrepreneurs edge closer into business

- Three finalists for the Southern Utah Concept to Company Contest were announced Thursday, as local entrepreneurs presented their technology-based business ideas to a panel of judges. The contest, sponsored by Grow Utah Ventures, Zions Bank, USTAR, SEED Dixie and other local organizations, began months ago as more than 70 prospective entrepreneurs submitted their proposals with hopes of winning the grand prize of $10,000 in funds and an additional $10,000 in support services from economic development groups. (Spectrum)

Utah lands will be opened for oil-shale development

- A 79-year prohibition on oil-shale development in Wyoming and Utah is being lifted by the U.S. Interior Department. (Deseret News)

Provo designates airport development zone

- The city has formally cleared Duncan Aviation to land its repair facility at its airport. The Municipal Council voted Tuesday to create an Aviation Services Community Development Project Area Plan. It covers nearly 44 acres at Provo Municipal Airport.  (Salt Lake Tribune)

'Body Worlds' bows out amid praises

- Sellout crowds for the finale of the "Body Worlds 3" exhibit Sunday were not enough to entice nearby eateries to open. Even so, business people around Salt Lake City's Library Square applauded the impact of The Leonardo museum's popular exhibit in their neighborhood, citing increased visitation and a sense of cultural opportunity during its four-month run. (SL Tribune)

Slow economy good for marketing Utah tourism

- The slow economy has been great for promoting Utah's brand to vacationers. Ad space in the media is cheaper to buy and public relations strategies are succeeding in this "softer market." (Park Record) (SL Tribune)

'Invented In Utah' unveils 2009 event

- "Invented In Utah" announced that nominations are now being accepted for its 2009 event. The organization is dedicating to supporting Utah's inventors and assisting them in bringing their ideas to reality. (Utah Business)


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