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Largest cities act as magnets for growth and development

Bigger begets bigger, that’s how State Economist Dr. Phil Pepper put it. While many small rural communities are losing population and hard pressed to maintain necessary infrastructure and services, the state’s top largest cities continue to be magnets for growth and development.

“Population centers typically have experienced the greatest growth in jobs and income,” Pepper said. “There is a larger and, generally, better educated workforce. The public schools are often rated higher in the populated areas, which adds to the attractiveness and population growth of the area. Trade, services, government and health activities are usually concentrated in these population centers. Bigger begets bigger.”

Jackson is by far the largest city in the state with a population of 184,256 in the 2000 Census. Next are Gulfport at 71,127, Biloxi at 50,644, Hattiesburg at 44,779, Greenville at 41,663 and Meridian just below that at 39,968. Rounding out the top 10 are Tupelo at 34,211, fast-growing Southaven at 28,977, Vicksburg at 26,407 and Pascagoula at 26,200.

If the state had no cities of any size, some of the state’s existing economic activities would be occurring in Birmingham, Memphis, Mobile, New Orleans and other large cities in other states and people would take their business there.

“Given population and income in a state, economic activity will occur,” Pepper said. “If Jackson did not exist, the activity would simply be spread over other areas. The market works. There is no way we can measure the true economic impact of our largest cities. I think it would be unfair to the rural areas to attribute all the economic activity in the cities to the cities.”

More choices, lower prices

The larger cities pull economic activity from the rural area. People from rural areas travel to and spend money in the larger cities. Pepper said rural economies, in many cases, lose because of the urban areas and what they offer. Consumers from the rural areas probably gain overall by taking their business to the larger cities because of a wider array of choices and lower prices that often can be found in the larger cities.

Higher gas prices that make it more economical to travel less distance for shopping combined with “buy local” campaigns could shift some business back to the rural areas.

“Higher gas prices may also impact the commuting patterns we’ve seen in the past,” Pepper said. “Many rural residents drive to cities for employment. The cost of transportation may cause people who commute to the cities from the rural areas to rethink the value of their jobs. In effect, the higher gas prices are reducing the disposable income they derive from their job — the equivalent of a pay reduction.”

The largest cities also pack a wallop when it comes to generating sales tax revenues. There are 307 municipalities in the state, and the top 10 generate roughly a third of the sales tax revenues in the state, ranging from 33% in fiscal 2005 to 31% in fiscal 2007.

The state’s largest metropolitan areas basically serve as a nucleus that fuel all kinds of development, says Ross Tucker, director of the Greater Jackson Alliance.

“I think the impact of Jackson is well known,” Tucker said. “It is pretty much a given. I grew up in a rural Mississippi town and everyone is protective of their own territory, so to speak. But to watch and understand how certain regions depend on one area in particular, you have to take care of your own and also take care of the whole. The capital of Mississippi is never going to change. The state capital is Jackson. As Jackson goes, so goes the state of Mississippi.”

The largest employer in State of Mississippi is the public sector, federal, state and local governments. In Jackson, healthcare is the second largest employer base with people from throughout the state accessing care in the Jackson area.

While there have been concerns about population declines in the City of Jackson, that appears to have leveled off. And Tucker said there is a renaissance occurring in the downtown area with a significant amount of redevelopment in and around of the central part of the city and the Fondren District.

“We have continued development along the I-55 area as well as downtown,” Tucker said. “In the southern and western parts of county there are new improvements and infrastructure on the drawing board that will spur along additional development. Infrastructure is the way of gaining access for economic development. Where you build a road, you get development.”

Jackson isn’t immune from the nationwide slowdown in the economy. Tucker said while they are having some of the same issues as the rest of the country, it has not been as severe as experienced in many other areas.

“We’re weathering the storm,” Tucker said. “The economy is more steady here and doesn’t fluctuate as much.”

Cities in general derive a significant portion of their operating budget from sales tax revenues. So a downturn in the economy can cause concern. But George E. Lewis, executive director of the Mississippi Municipal League, said in most cases revenues have not been down significantly.

“But we are worried about the prospects of that happening,” Lewis said. “We have not seen a huge hit at this time, but the economy in general makes us concerned about future revenues. I think cities will be taking a closer look at all expenses, especially fuel expenses, in the months ahead. For some people it is not a matter of wanting to, but having to. I think we are all just going to be forced to make some decisions that otherwise, in a vibrant economy, we would not make. This fuel thing is affecting everyone. I think for the everyday person, going to your grocery store is the big thing. You have to eat.”

Changing habits?

Proportionally a bigger volume of sales taxes is generated in the largest cities. These metropolitan commercial centers attract business from throughout the state.

“They are so big is it not just commerce from within municipalities, but surrounding cities, towns and counties,” Lewis said. “There is a concern that increases in gas prices will change the habits of where people shop. But I hope that we don’t see that happen, that commerce is still brisk within all of our cities and towns in Mississippi. It will be interesting to see how all of this works out.”

Lewis said cities will be monitoring closely their economic status as the business climate absorbs increases in fuel costs. Higher fuel cost impact the cost of all types of goods and service. Lewis said tough, strong management skills will be needed to lead through these economic times.

John H. Brown, public relations coordinator, City of Hattiesburg, said there is strength in diversity. In addition to a strong medical community and serving as home to the University of Southern Mississippi, Hattiesburg is a major retail center, there is significant impact from activities at Camp Shelby, and the area is promoting high-tech manufacturing ventures such as those in polymer science.

Hattiesburg also hosted a large number of evacuees after Hurricane Katrina, and gained significant population as a result of relocations after the storm. While many Coast retails centers were recovering after the storm, Hattiesburg received a great deal of sales activity from people purchasing items to replace things lost in the storm.

That was reflected in sales tax numbers with Hattiesburg going up from $97 million in sale tax collections in fiscal 2005 to $128 million in fiscal 2006 before leveling out at $124 million in fiscal 2007. Brown said he expects fiscal 2008 revenues to reflect continued growth.

“We are down slightly in sales tax, but as far as development, it has been balanced,” Brown said. “Construction and investment in our area are still going up despite national trends. Housing developments are still continuing. In the upcoming months Sam’s Club will open in our industrial park. The growth of the area is continuing.”

Biloxi, the state’s third-largest city, is actually below Hattiesburg, Tupelo, Meridian and Southaven in sales tax collections for 2007. But Biloxi is a major powerhouse when it comes to generating gaming revenues that benefit the entire state.

Since gaming began 1992, $10.5 billion in gross gaming revenues have been generated in Biloxi. The amount of revenues paid to the state has been $846.4 million.

“That is just in the relatively few short years of casino gaming in Biloxi,” said Vincent Creel, spokesman for the City of Biloxi. “We have made a significant impact to the State of Mississippi, and that is why when we talk about roads and infrastructure and state assistance, we feel it is merited.”

Gaming revenues dipped in the past month. In Biloxi, it was the lowest figure in 20 months, going back to before the Beau Rivage reopened. Creel said he believes that is a direct result of the price of gas and general worries over the economy.

“As good as our airport is doing locally, we are still primarily a drive-in market,” he said. “About 85% of our clientele is drive in. One of the first things they are going to cut back on is leisure spending.”

Contact MBJ contributing writer Becky Gillette at 4becky@cox.net.

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