The Impact of Overly Restrictive Annexation Policy
on Economic Activity in Texas and
Its Metropolitan Regions
Prepared for
The Texas Municipal League
1821 Rutherford, Suite 400
Austin, TX 78754-5128
by
The Perryman Group
510 N. Valley Mills Drive, Ste. 300
Waco, TX 76710-6076
254.751.9595 (office)
254.751.7855 (fax)
www.perrymangroup.com
[email protected]
April 2003
The Impact of Overly Restrictive Annexation Policy
on Economic Activity in Texas and
Its Metropolitan Regions
Table of Contents
Executive Summary
i
I.
Introduction
1
II.
Overview of Annexation Issues
3
Linkages Between Suburbs and the Central City
The Economics of Annexation
Annexation Patterns in Texas
III.
Methodology
7
Model Logic and Structure
Model Simulation and Multi-Regional Structure
The Final Forecast
IV.
V.
The Effects of Annexation Restrictions:
Summary of Key Results
16
Synopsis
21
Appendix
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The Impact of Overly Restrictive Annexation Policy
on Economic Activity in Texas and
Its Metropolitan Regions
Executive Summary
The capacity to annex emerging areas of development into a central city is often critical
to the ongoing sustainability of a metropolitan area. Suburban expansion imposes
greater burdens on the infrastructure and facilities of urban centers, as more residents
and firms demand access to roadways, telecommunication systems, concentrated
governmental and business services, cultural and entertainment venues, and a dynamic
regional pool of workers. In the absence of a mechanism to recoup the resulting
incremental expenses, a negative externality is created which ultimately limits prospects
and capacity for growth of the entire area.
The Perryman Group (TPG) has recently engaged in a comprehensive analysis to
evaluate the economic consequences of proposed annexation restrictions on business
activity in Texas. The results reveal that, as of 2030, the state will suffer losses of
9 -$305.7 billion in annual Gross Area Product;
9 -$168.8 billion in annual Personal Income;
9 -$96.1 billion in annual Retail Sales;
9 -1,234,760 in Employment; and
9 -2,314,047 in Population.
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The Impact of Significant Restrictions on Annexation Capacity on Business
Activity in Texas -- Losses as of 2030
Gross Product
($305.7)
Personal Income
($168.8)
(1,234,760)
Permanent Jobs
(2,314,047)
Population
Retail Sales
($96.1)
($350)
($300)
($250)
($200)
($150)
($100)
($50)
$0
Billions of 2003 Dollars
Source: Texas Econometric Model, The Perryman Group
All dollar values are given in constant (2003) dollars. These losses represent a
reduction of 11.9% of the baseline projection for total output, 10.7% for income, and
7.6% in permanent jobs. The losses span all regions of the state. The greatest
percentage losses generated in output occur in Laredo (33.1%), Longview-Marshall
(32.6%), Odessa-Midland (32.2%), Texarkana (31.8%), and Sherman-Denison (31.8%),
while the most substantial absolute losses are in San Antonio ($52.9 billion), Austin-San
Marcos ($52.0 billion), and Houston-Galveston-Brazoria ($42.1 billion). The largest
relative job losses occur in Laredo (19.3%), Bryan-College Station (19.2%), San Antonio
(18.1%), Corpus Christi (17.2%), and Lubbock (17.0%). Once again, the greatest
aggregate reductions in absolute terms occur in San Antonio (240,910), Austin-San
Marcos (162,197), and Houston-Galveston-Brazoria (130,121).
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The Relative Impact of Significant Restrictions on Annexation on Business
Activity in Texas and Its Metropolitan Regions -- Losses as a Percentage of
Gross Area Product as of 2030
-26.18%
-18.29%
-24.02%
-31.06%
-28.77%
-25.09%
-31.02%
-24.06%
-8.30%
-20.22%
-33.06%
-32.59%
-30.14%
-22.56%
-32.25%
-27.47%
-31.62%
-31.83%
-31.85%
-28.43%
-31.73%
-18.77%
-31.17%
-12.64%
-11.93%
-35%
-30%
-25%
-20%
-15%
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-Harlingen-San Benito
Bryan-College Station
Corpus Christi
-5.08%
Dallas
El Paso
Fort Worth-Arlington
-5.86%
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-Edinburg-Mission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
-10%
-5%
0%
Percent
Source: Texas Econometric Model, The Perryman Group
The Relative Impact of Significant Restrictions on Annexation on Business
Activity in Texas and Its Metropolitan Regions -- Losses as a Percentage of
Employment as of 2030
-13.43%
-9.86%
-13.46%
-16.11%
-16.60%
-19.21%
-17.21%
-12.58%
-11.10%
-19.29%
-16.46%
-17.03%
-13.37%
-16.60%
-15.01%
-18.06%
-15.43%
-16.63%
-15.83%
-16.16%
-9.71%
-16.45%
-8.24%
-7.56%
-25%
-20%
-15%
Source: Texas Econometric Model, The Perryman Group
-10%
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-Harlingen-San Benito
Bryan-College Station
Corpus Christi
-2.84%
Dallas
El Paso
-4.52%
Fort Worth-Arlington
-3.29%
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-Edinburg-Mission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
-5%
0%
Percent
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The inability to generate sufficient resources to meet central city requirements within the
context of a growing overall community fundamentally changes the character of the
Texas economy and severely constrains its ability to achieve its full potential in the years
to come.
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The Impact of Overly Restrictive Annexation Policy
on Economic Activity in Texas and
Its Metropolitan Regions
I.
Introduction
Texas has enjoyed remarkable economic expansion over an extended time
horizon. During the past three decades, the state has experienced increases of
201% in output and 136% in jobs. Following well-established national trends,
much of this activity has been centered in the urbanized segments of the vast
Lone Star terrain. The proportion of population included in the metropolitan
statistical areas (MSAs) of the state has risen from less than 80% to 85%, while
the overall state output concentration has expanded from 85% to 92%. In fact,
almost 96% of the total increase in gross state product over the past 30 years
has been in urban areas, as well as 93% of all employment.
This rising dominance of urban activity has been largely fueled by the pace of
migration to suburban regions. In fact, the amount of land that has been brought
into development nationally has advanced at a rate 2.76 times as great as that of
the population in the past 15 years. In Texas, most of the fastest-growing
counties (such as Collin, Denton, Fort Bend, Montgomery, and Williamson) are
adjacent to large central cities. In virtually every urban region, the majority of
new residential and commercial expansion is occurring beyond the boundaries of
traditional activity.
While this phenomenon clearly reflects evolving land use patterns and has been
highly beneficial to the aggregate performance of the state economy, it has
proved challenging for the central cities in MSAs across Texas. As growth
occurs in surrounding areas, there is greater demand for the infrastructure,
services, and amenities found in the major cities, yet the sources of revenue to
support these needs do not rise accordingly. Over time, this situation, if allowed
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to persist, will foster a deteriorating hub to an MSA which threatens its ongoing
prosperity.
To avoid this undesirable evolution in urban dynamics, it is essential that a
mechanism to ensure adequate resources be established and maintained. Some
states seek to accomplish this task through elaborate regional revenue sharing
processes, which are often complicated, controversial, and difficult to administer.
A more direct and efficient approach long used in Texas is to permit cities to
annex areas of new development into their municipal boundaries. Annexation
expands the tax base, thus providing funds to support an increasing regional
population.
The policy relating to this process within the state has evolved over time in
response to changing circumstances. The primary provisions now in place
emanate from Senate Bill 89 (SB89), which was enacted during the Texas
Legislative Session in 1999. Provisions of this measure were implemented in
stages, with the entire statute only becoming fully operational in January 2003.
This legislation calls for an annexation plan, an opportunity for residents of areas
slated for annexation to publicly comment, detailed proposals by the annexing
city regarding the availability of city services, and other elements to assure fair
and equitable procedures. SB89 is designed to give cities time to plan and areas
to be annexed time to respond and voice concerns. Nonetheless, it preserves
the ability to add the territory and tax base needed to provide for increasing
public requirements.
Although the major aspects of SB89 are only now taking effect, there is a
movement of late to substantially inhibit the capacity of central cites to expand.
In particular, current proposals such as House Bill 568 (HB568) would require
prior approval within an area before it could be added to an incorporated area.
This mandate would have the practical effect of drastically reducing and, in fact,
largely eliminating the ability to obtain incremental revenues through expanded
territory. In the present study, The Perryman Group (TPG) provides a
comprehensive examination of the economic consequences of severely limiting
the annexation process. Initially, a discussion of the pertinent issues is provided.
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This analysis is followed by a description of the methodology and models
employed in the investigation. The principle findings are then summarized, and a
concluding perspective is offered. Detailed results for numerous measures of
business activity are provided in the Appendix.
II.
Overview of Annexation Issues
Linkages Between Suburbs and the Central City
A key factor in any discussion related to annexation is a clear understanding of
the relationship between suburbs and the central city. There are widely disparate
views on the topic. Some suburban residents maintain that (1) they gain no
benefit from proximity to the central city; (2) their local political, social, and
economic structures are independent; and (3) they should not be responsible for
funding activities in adjacent areas. Other observers maintain that the traditional
urban center is vital to the economic wellbeing and quality of life of the
surrounding area.
Advances in telecommunications and other technologies have clearly improved
the flexibility of corporations to move away from downtown areas. Offices, retail
establishments, hospitals, and other facilities are now more able to locate in the
suburbs, raising their level of independence from the urban environments. As
jobs shift outward, suburban residents may feel increasingly disconnected from
the central city.
Nonetheless, important linkages remain. From an economic development
perspective, the central city is typically crucial to the ongoing success of the
surrounding area. If the city is flourishing, prospects for its suburbs are
enhanced. When a central city is faltering, however, the competitive position of
its suburbs in efforts to attract corporate locations or expansions is jeopardized.
Cities serve the needs of businesses and consumers on a regional basis.
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Another crucial linkage is the flow of workers between the central city and the
suburbs. It is often true that suburban housing is too expensive for employees at
the low end of the skill and wage spectrum. Many people necessary for the
suburban economy to function may be unable to afford to live there, but instead
commute from the city. At the same time, the central city may provide far more
opportunities than are available in the suburbs. The ability of people to live in
one setting and work in the other is important to the vitality of both areas, a fact
consistently verified by traffic flows. In addition, this movement of workers
increases infrastructure requirements.
Finally, central cities often provide services and amenities beyond what is
feasible for smaller areas. Major hospitals, universities, cultural arts, sports
facilities, and other amenities important to quality of life are often located in or
near traditional urban centers. Crucial aspects of infrastructure, such as
interstate highways, transit hubs, and telecommunications systems, may be part
of the central city as well. Governmental offices, legal services, and financial
institutions which serve large interests also tend to be concentrated in the central
business district.
For all of these reasons (and others), it is in the best interest of suburban and
central city residents to interact in a synergistic manner. The flexibility to annex
additional land in order to maintain a share of economic growth and the resulting
tax base is an important aspect of the long-term viability of central cities,
particularly given the relatively low level of State assistance to cities for regionally
beneficial infrastructure expenditures.
The Economics of Annexation
As population centers grow, they naturally expand outward, absorbing formerly
vacant land. The issue of the appropriateness of urban expansion into larger
geographic areas has been the topic of intense study and debate for many years,
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yet is has become a fact of life in the majority of communities. These new
developments often represent the most vital elements of the regional economy.
Cities which are unable to annex segments of this newly developed land in order
to capture a share of the expansion in the tax base can face growing poverty and
other problems. As noted, if the central cities begin to display difficulties such as
deteriorating infrastructure, rising crime, decreasing relative income levels, and
other consequences of inadequate resources, the suburbs stand to suffer.
Increased suburban activity generally leads to greater demand for city services
such as police, fire, and parks and recreation. In addition, suburban residents
typically utilize city streets and other infrastructure as they access the services
and amenities of the central cities. Similarly, the interdependent labor markets
and supplier networks create added strain on local services. Without the
capacity to annex these growing areas and increase its tax base, a city will face
potentially insurmountable fiscal challenges.
If annexation is severely restrained or virtually prohibited in an area, there may
be undesirable economic development consequences for the affected city and
region. When companies and developers can avoid city taxes by locating in
essentially a “no annex” zone, they may expand or relocate in a suboptimal
manner, distorting natural land-use patterns. The capacity to annex removes this
undesirable, artificial skewing of the location of new activity.
Another benefit of annexation is that it can enhance the quality of life for
suburban residents. Annexed areas may see better water and sewer options,
improved planning, greater police and fire protection, superior access, and other
positive outcomes. From a regional perspective, city control of key land-use
decisions, environmental conditions, and other parameters can represent a far
more favorable long-term scenario than alternatives.
From the perspective of economic theory, the rationale for annexation is
straightforward and unambiguous; it is based on the well-established concept of
“externalities.” An externality may be viewed as some aspect of a transaction
that is not properly reflected in the marketplace. It can be positive (such as the
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social benefits of education that exceed private returns) or negative (such as
pollution generated by some types of production or the health consequences of
tobacco use). When the price of any product does not reflect its true costs, it will
be overconsumed or underconsumed depending on the nature of the externality.
In the present context, suburban development adds to the stress on central city
infrastructure and services. Without mechanism to allow the resulting costs to be
recouped, they become an externality which inefficiently directs development and
ultimately undermines the performance of the entire region. The annexation
process serves the purpose of permitting resources to flow to central cities, then
properly adjusting for the full range of outlays involved in expansion. Stated
alternatively, annexation is an effective approach to properly “price” new
development in the marketplace.
Annexation Patterns in Texas
Over the past 30 years, most Texas cities have substantially expanded their land
area, thus generating the resources necessary to support surrounding
development. In 1970, the recaptured area of the central cities within the state
totaled about 2,200 square miles; by 2000, this area had risen to almost 3,800
square miles. This 72.1% increase corresponds to central city population growth
of 63.1% and suburban expansion of 154.5%. Thus, there has been a notable
increase in the population segment likely to place demands on infrastructure and
facilities, while a sizable portion of the growth in the central cities is the result of
annexation. (Because certain counties have been added to the MSAs over time,
their total land area has risen by 44.3%.) The rate of annexation diminished
moderately during the past three decades.
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Patterns in Annexation and Metropolitan Growth in Texas -- 1970-2000
Increase in Land Area in
Central Cities
72.1%
Population Growth in
Central Cities
63.1%
Population Growth in
Suburban Areas
154.5%
0%
20%
40%
60%
80%
100%
120%
140%
160%
Percent
Source: The Perryman Group
By contrast, many older US cities have become essentially stagnant in terms of
land area growth. In those instances where there is a strong regional planning
effort and flexibility with regard to annexation, the vitality of the central city has
been preserved. However, other central cities have seen notable decay and the
need for large inflows of resources from state and federal sources. Compared to
other large US cities, Texas cities have acquired the financial wherewithal to
partially support the expanding infrastructure needs imposed by growing regional
populations by annexing surrounding land area. The methodology for analyzing
the importance of this issue for future growth and development is presently
described.
III.
Methodology
In order to examine the consequences of significant restrictions on the ability of
municipalities to annex newly developed areas, The Perryman Group has
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180%
engaged in an extensive empirical analysis. As an initial stage of the project,
detailed data were compiled regarding economic and demographic expansion in
all of the metropolitan statistical areas in Texas as well as their central cities.
These areas comprise about 85% of the population and 92% of the economic
output of the state. Information was assembled on relevant variables over the
period from 1970 to 2000, as well as annexation patterns within the central cities.
In a few instances, two cities which exhibit the characteristics of a central city
(such as Odessa and Midland) are included together in the analysis.
The next phase of the investigation involves a comprehensive multiple regression
analysis using cross sectional data from each of the urban areas over the
relevant time period. Multiple regression is a well-established technique for
identifying systematic relationships using variables. This empirical investigation
reveals that (1) annexation is an important factor in supporting urban growth, and
(2) the ability of a central city to expand is a positive, statistically significant
contributor to surrounding suburban prosperity. All of the equations implemented
in this segment of the investigation were extensively tested for statistical
significance, random residual patterns, stability in a forecasting environment,
overall empirical properties, and other pertinent measures to assure their
appropriateness for use in the quantification of the impacts of annexation. These
findings are consistent with both the prior discussion of land-use patterns on a
national scale and with the presence of externalities associated with suburban
development.
The final phase of the analysis involves integrating these equations with the MSA
submodels of the Texas Econometric Model, which was developed and is
maintained by The Perryman Group. Baseline simulations are established for
each area through 2030. These results implicitly assume that no new
impediments to growth will emerge. The model is then re-evaluated with a
substantial restraint on annexation imposed. Findings are given for several
indicators of business activity (population, employment, personal income, gross
product, etc.) for each of the individual areas. A more complete description of
the modeling process is given below.
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Model Logic and Structure
The economic modeling system used in the present analysis is formulated in an
internally consistent manner and is designed to permit the integration of relevant
global, national, state, and local factors into the projection process. It is the
result of more than 20 years of continuing research in econometrics, economic
theory, statistical methods, and key policy issues and behavioral patterns, as well
as intensive, ongoing study of all aspects of the global, US, Texas, and regional
economies. The system has been continually expanded and updated over the
past two decades and is widely used by thousands of corporations, utilities,
governmental entities, and financial institutions.
The Texas Econometric Model revolves around a core system which projects
output, income, and employment by industry in a simultaneous manner. For
purposes of illustration, it is useful to initially consider the employment functions.
Essentially, employment within the system is a derived demand relationship
obtained from a neo-Classical production function. In other words, the need for
workers in any given sector reflects the demand for the product or service they
generate. The expressions are augmented to include dynamic temporal
adjustments to changes in relative future input costs, output and (implicitly)
productivity, and technological progress over time. Thus, the typical equation
includes output, the relative real cost of labor and capital, dynamic lag structures,
and a technological adjustment parameter. The functional form is generally
logarithmic, thus preserving the theoretical consistency with the neo-Classical
formulation.
The income segment of the model is divided into wage and non-wage
components. The wage equations, like their employment counterparts, are
individually estimated at the two-digit Standard Industrial Classification (SIC)
level of aggregation. Hence, income by place of work is measured for
approximately 70 distinct production categories. The wage equations measure
real compensation, with the form of the variable structure differing between
“basic” and “non-basic.”
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The “basic” industries, comprised primarily of the various components of Mining,
Agriculture, and Manufacturing, are export-oriented, i.e., they bring external
dollars into the area and form the core of the economy. The production of these
sectors typically flows into national and international markets; therefore, the labor
markets are influenced by conditions in areas beyond the borders of the
particular region. Thus, real (inflation-adjusted) wages in the basic industry are
expressed as a function of the corresponding national rates, as well as measures
of local labor market conditions (such as the reciprocal of the unemployment
rate), dynamic adjustment parameters, and ongoing trends.
The “non-basic” sectors are somewhat different in nature, as the strength of their
labor markets is linked to the health of the local export sectors. Consequently,
wages in these industries are related to those in the basic segment of the
economy. The relationship also includes the local labor market measures
contained in the basic wage equations.
Note that compensation rates in the export or “basic” sectors provide a key
element of the interaction of the regional economies with national and
international market phenomena, while the “non-basic” or local industries are
strongly impacted by area production levels. Given the wage and employment
equations, multiplicative identities in each industry provide expressions for total
compensation; these totals may then be combined to determine aggregate wage
and salary income. Simple linkage equations are then estimated for the
calculation of personal income by place of work.
The non-labor aspects of personal income are modeled at the regional level
using straightforward empirical expressions relating to national performance,
dynamic responses, and evolving temporal patterns. In some instances (such as
dividends, rents, and others), national variables (for example, interest rates)
directly enter the forecasting system. These factors have numerous other implicit
linkages into the system resulting from their simultaneous interaction with other
phenomena in national and international markets which are explicitly included in
various expressions.
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The output or gross area product expressions are also developed at the two-digit
SIC level. Regional output for basic industries is linked to national performance
in the relevant industries, local and national production in key related sectors,
relative area and national labor costs in the industry, dynamic adjustment
parameters, and ongoing changes in industrial interrelationships (driven by
technological changes in production processes).
Output in the non-basic sectors is modeled as a function of basic production
levels, output in related local support industries (if applicable), dynamic temporal
adjustments, and ongoing patterns. The inter-industry linkages are obtained
from the input-output (impact assessment) system which is part of the overall
integrated modeling structure maintained by The Perryman Group. Note that the
dominant component of the econometric system involves the simultaneous
estimation and projection of output, income, and employment at a disaggregated
industrial level.
Several other components of the model are critical to the multi-regional
forecasting process. The demographic module includes (1) a linkage equation
between wage and salary (establishment) employment and household
employment, (2) a labor force participation rate function, and (3) a complete agecohort-survival population system with endogenous migration. Given household
employment, labor force participation (which is a function of economic conditions
and evolving patterns of worker preferences), and the working age population
(from the age-cohort-survival model), the unemployment rate and level become
identities.
The population system uses Census information, fertility rates, and life
expectancy tables to determine the “natural” changes in population by age group.
Migration, the most difficult segment of population dynamics to track, is estimated
in relation to relative regional and extra-regional economic conditions over time.
Because evolving economic conditions determine migration in the system,
population changes are allowed to interact simultaneously with overall economic
conditions.
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Retail sales is related to income, interest rates, dynamic adjustments, and
patterns in consumer behavior on a store group basis. Inflation at the state level
relates to national patterns, indicators of relative economic conditions, and
ongoing trends.
A final significant segment of the forecasting system relates to real estate
absorption and activity. The short-term demand for various types of property is
determined by underlying economic and demographic factors, with short-term
adjustments to reflect the current status of the pertinent building cycle. In some
instances, this portion of the forecast requires integration with the Multi-Regional
Industry-Occupation System which is maintained by The Perryman Group.
The Texas Econometric Model contains numerous additional specifications, and
individual expressions are modified to reflect alternative lag structures, empirical
properties of the estimates, simulation requirements, and similar phenomena.
Moreover, the system is continually updated to reflect new data and evolving
empirical relationships. Nonetheless, the above synopsis offers a basic
description of the overall structure and underlying logic of the system.
Model Simulation and Multi-Regional Structure
The initial phase of the simulation process is the execution of a standard nonlinear algorithm for the state system and that of each of the individual subareas
(regions, MSAs, and counties). The external assumptions are derived from
scenarios developed through national and international models and extensive
analysis by The Perryman Group. In this instance, the national models, which
reflect similar underlying logic but are not as complete, were used to drive some
of the projections. These results were compared with those of other major
models for overall reasonableness.
Once the initial simulations are completed, they are merged into a single system
with additive constraints and interregional flows. Using information on minimum
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regional requirements, import needs, export potential, and locations, it becomes
possible to balance the various forecasts into a mathematically consistent set of
results. This process is, in effect, a disciplining exercise with regard to the
individual regional (including metropolitan and rural) systems. By compelling
equilibrium across all regions and sectors, the algorithm ensures that the
patterns in state activity are reasonable in light of smaller area dynamics and,
conversely, that the regional outlooks are within plausible performance levels for
the state as a whole.
The iterative simulation process has the additional property of imposing a global
convergence criterion across the entire multi-regional system, with balance being
achieved simultaneously on both a sectoral and a geographic basis. This
approach is particularly critical in non-linear dynamic systems, as independent
simulations of individual systems often yield unstable, non-convergent outcomes.
It should be noted that the underlying data for the modeling and simulation
process are frequently updated and revised by the various public and private
entities compiling them. Whenever those modifications to the database occur,
they bring corresponding changes to the structural parameter estimates of the
various systems and the solutions to the simulation and forecasting system. The
multi-regional version of the Texas Econometric Model is automatically reestimated and simulated with each such data release, thus providing a constantly
evolving and current assessment of state and local business activity.
The Final Forecast
The process described above is followed to produce the preliminary forecast.
Through the comprehensive multi-regional modeling and simulation process, a
systematic analysis is generated which accounts for both historical patterns in
economic performance and inter-relationships and best available information on
the future course of pertinent external factors. While the best available
techniques and data are employed in this effort, they are not capable of directly
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capturing “street sense,” i.e., the contemporaneous and often non-quantifiable
information that can materially affect economic outcomes. In order to provide a
comprehensive approach to the prediction of business conditions, it is necessary
to compile and assimilate extensive material regarding current patterns both
across the state of Texas and elsewhere.
This critical aspect of the forecasting methodology includes activities such as (1)
daily review of hundreds of financial and business publications and electronic
information sites; (2) review of all major newspapers in the state on a daily basis;
(3) dozens of hours of direct telephone interviews with key business and political
leaders in all parts of the state; (4) face-to-face discussions with representatives
of major industry groups; and (5) frequent site visits to the various regions of the
state. The insights arising from this “fact finding” are analyzed and evaluated for
their effects on the likely course of future activity.
Another vital information resource stems from the firm’s ongoing interaction with
key participants in the international, domestic, and state economic scenes. Such
activities include visiting with corporate groups on a regular basis and being
consistently involved in the policy process at all levels. The firm is also an active
participant in many major corporate relocations, economic development
initiatives, and regulatory proceedings.
Once organized, this information is carefully assessed and, when appropriate,
independently verified. The impact on specific communities and sectors that is
distinct from what is captured by the econometric system is then factored into the
forecast analysis. For example, the opening or closing of a large facility,
particularly in a relatively small area, can cause a sudden change in business
performance that will not be accounted for by either a modeling system based on
historical relationships or expected (primarily national and international) factors.
The final step in the forecasting process is the integration of this material into the
results in a logical and mathematically consistent manner. In some instances,
this task is accomplished through “constant adjustment factors” which augment
relevant equations. In other cases, anticipated changes in industrial structure or
14
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© 2003 by The Perryman Group
regulatory parameters are initially simulated within the context of the Texas MultiRegional Impact Assessment System to estimate their ultimate effects by sector.
Those findings are then factored into the simulation as constant adjustments on a
distributed temporal basis. Once this scenario is formulated, the extended
system is again balanced across regions and sectors through an iterative
simulation algorithm analogous to that described above.
In the present instance, the comprehensive modeling and simulation process is
initially employed to establish baseline conditions in each area for 2030. This
end point was selected in order to permit sufficient time for the effects of the
potential restrictions on annexation to impact development patterns, linkages,
and the overall character of the economy. While the baseline projections will
certainly not be perfect due to many intervening factors, the relative differential
between projected outcomes with and without restricted annexation levels should
constitute valid comparisons (i.e., any absolute variations of ultimate actual
outcomes from those forecasted by the model should affect the baseline and
restricted cases in an approximately proportionate manner). Following the
baseline simulations, the entire process is repeated with central city growth being
substantially curtailed from the patterns previously observed. For illustrative
purposes, the constrained case assumes that annexation will occur at 50% of the
rates that would be anticipated under current guidelines. This hypothetical
environment is likely to understate actual impacts, as requiring approval by area
constituents prior to annexation would likely have the practical effect of
prohibiting virtually all territorial expansions of central cities. The results of this
extensive investigation are presently summarized.
15
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IV.
The Effects of Annexation Restrictions: Summary of
Key Results
The basic review and analysis of the historical database compiled for this study
reveals and confirms a definitive pattern of activity evolving outside the major
cities. These central cities contained more than 60% of the population of their
respective MSAs in 1970 but less than 50% by 2000. Moreover, with the
exception of a few areas that are constrained by adjacent cities and have other
large cities within their MSA, all of the primary cities contain at least 35% of the
area residents. Given the diversity across the various regions of Texas in terms
of economic drivers and composition, this finding suggests a lower bound below
which the growth potential of an area would be significantly impaired.
Similarly, historical simulations of the model described above reveal further
evidence of the importance of central city growth to overall prosperity.
Specifically, this segment of the analysis demonstrates that, if annexation had
been eliminated, the urban centers would now only constitute 37% of current
population in the relevant metropolitan regions. This level is near a minimum
threshold and suggests that expansion in Texas would have been severely
constrained over the past 30 years if annexation had been notably restricted.
The likely impacts of a 50% curtailment in anticipated annexation patterns would
result in annual losses by 2030 of
9 -$ 305.7 billion in annual Gross State Product;
9 -$168.8 billion in annual Personal Income; and
9 -$96.1 billion in annual Retail Sales.
All of these values are expressed in constant (2003) dollars to adjust for the
effects of inflation.
16
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© 2003 by The Perryman Group
The Impact of Significant Restrictions on Annexation Capacity on Business
Activity in Texas -- Losses as of 2030
Gross Product
($305.7)
Personal Income
($168.8)
(1,234,760)
Permanent Jobs
(2,314,047)
Population
Retail Sales
($96.1)
($350)
($300)
($250)
($200)
($150)
($100)
($50)
Billions of 2003 Dollars
Source: Texas Econometric Model, The Perryman Group
These totals represent 11.9% of the projected level of state output in 2030 and
17.1% of the baseline growth during the 2000 to 2030 period. The corresponding
impacts on income are 10.7% and 17.6%, while those for retail sales are 12.2%
and 20.1%.
In addition to these declines in yearly business activity, the constraints on urban
development would be expected to precipitate losses of
9 -1,234,760 Permanent Jobs; and
9 -2,314,047 Residents.
This loss of jobs is 7.6% of the baseline employment level and reduces growth by
19.5% during the time period from 2000 through 2030. The loss in population is
approximately 27.8% of that expected from migration (as opposed to natural
increases) over the relevant time horizon.
17
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© 2003 by The Perryman Group
$0
The regional distribution of these impacts is also interesting to note. In
percentage terms, the most significant losses in output occur in Laredo (33.1%),
Longview-Marshall (32.6%), Odessa-Midland (32.3%), Texarkana (31.8%), and
Sherman-Denison (31.8%). In absolute terms, the greatest adverse effects are
observed in San Antonio ($52.9 billion), Austin-San Marcos ($52.0 billion), and
Houston-Galveston-Brazoria ($42.1 billion).
The Relative Impact of Significant Restrictions on Annexation on Business
Activity in Texas and Its Metropolitan Regions -- Losses as a Percentage of Gross
Area Product as of 2030
-26.18%
-18.29%
-24.02%
-31.06%
-28.77%
-25.09%
-31.02%
-24.06%
-8.30%
-20.22%
-33.06%
-32.59%
-30.14%
-22.56%
-32.25%
-27.47%
-31.62%
-31.83%
-31.85%
-28.43%
-31.73%
-18.77%
-31.17%
-12.64%
-11.93%
-35%
-30%
-25%
-20%
Source: Texas Econometric Model, The Perryman Group
18
-15%
-10%
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-Harlingen-San Benito
Bryan-College Station
Corpus Christi
-5.08%
Dallas
El Paso
Fort Worth-Arlington
-5.86%
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-Edinburg-Mission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
-5%
Percent
perrymangroup.com
© 2003 by The Perryman Group
0%
The Relative Impact of Significant Restrictions on Annexation on Business
Activity in Texas and Its Metropolitan Regions -- Absolute Losses in Gross Area
Product as of 2030
($2.663)
Abilene
($3.384)
Amarillo
($51.953)
Austin-San Marcos
($9.416)
Beaumont-Port Arthur
($4.769) Brownsville-Harlingen-San Benito
($5.372)
Bryan-College Station
($9.829)
Corpus Christi
($36.682)
Dallas
($12.028)
El Paso
($17.191)
Fort Worth-Arlington
($42.110)
Houston
($4.382)
Killeen-Temple
($3.855)
($5.919)
($305.678)
State of Texas
($7.287)
($5.907)
Laredo
Longview-Marshall
Lubbock
McAllen-Edinburg-Mission
($7.941)
Odessa-Midland
($2.252) San Angelo
($52.855)
San Antonio
($2.944) Sherman-Denison
($2.068)
Texarkana
($5.548)
Tyler
($2.177) Victoria
($3.511)
Waco
($3.636)
Wichita Falls
($60)
($50)
($40)
($30)
($20)
($10)
Billions of 2003 Dollars
Source: Texas Econometric Model, The Perryman Group
In terms of the proportion of total employment, the highest percentages are
exhibited by Laredo (19.3%), Bryan-College Station (19.2%), San Antonio
(18.1%), Corpus Christi (17.2%), and Lubbock (17.0%). The most extensive job
declines are exhibited by San Antonio (240,910), Austin-San Marcos (162,197),
and Houston-Galveston-Brazoria (130,121). As a general proposition, the Dallas
area exhibits the lowest relative effects, primarily because of the somewhat
“land-locked” nature of the central city. As the urbanized territory of the
surrounding area expands, however, restrictions on other significant
municipalities bring about similar limitations.
19
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© 2003 by The Perryman Group
$0
The Relative Impact of Significant Restrictions on Annexation on Business
Activity in Texas and Its Metropolitan Regions -- Losses as a Percentage of
Employment as of 2030
-13.43%
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-Harlingen-San Benito
Bryan-College Station
Corpus Christi
-2.84%
Dallas
El Paso
-4.52%
Fort Worth-Arlington
-3.29%
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-Edinburg-Mission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
-9.86%
-13.46%
-16.11%
-16.60%
-19.21%
-17.21%
-12.58%
-11.10%
-19.29%
-16.46%
-17.03%
-13.37%
-16.60%
-15.01%
-18.06%
-15.43%
-16.63%
-15.83%
-16.16%
-9.71%
-16.45%
-8.24%
-7.56%
-25%
-20%
-15%
-10%
-5%
0%
Percent
Source: Texas Econometric Model, The Perryman Group
The Relative Impact of Significant Restrictions on Annexation on Business
Activity in Texas and Its Metropolitan Regions -- Absolute Losses in Employment
as of 2030
(12,770)
(16,161)
(162,197)
Abilene
Amarillo
Austin-San Marcos
(41,909)
(33,262)
Beaumont-Port Arthur
Brownsville-Harlingen-San Benito
Bryan-College Station
(48,385)
(49,160)
Corpus Christi
(100,061)
Dallas
(55,405)
El Paso
(61,357)
Fort Worth-Arlington
(130,121)
(1,234,760)
State of Texas
Houston
(26,019)
Killeen-Temple
(25,167)
Laredo
Longview-Marshall
(25,517)
(35,863)
Lubbock
(40,879)
McAllen-Edinburg-Mission
(28,409)
Odessa-Midland
(12,207) San Angelo
(240,910)
San Antonio
(10,880)
Sherman-Denison
(10,641)
Texarkana
(23,672)
(9,929)
(15,672)
(18,208)
(300,000)
(250,000)
(200,000)
(150,000)
(100,000)
20
(50,000)
perrymangroup.com
Waco
Wichita Falls
Persons
Source: Texas Econometric Model, The Perryman Group
Tyler
Victoria
© 2003 by The Perryman Group
0
Although these conclusions represent extensive levels of economic dislocation
associated with limits on annexation, they only represent a portion of the total
effect on aggregate performance. Smaller trade centers in rural counties
(particularly those relatively close to metropolitan areas) and secondary cities
within large urban regions will face parallel (though generally less pronounced)
difficulties in supporting outlying growth. Moreover, the adverse outcomes will
persist and intensify over time. It is, thus, readily apparent that the long-range
prosperity of Texas is critically tied to maintaining a mechanism to sustain central
city vitality in the face of suburban development.
V.
Synopsis
The results of this study demonstrate the profound consequences of measures
designed to restrict annexation. In fact, the entire character of the Texas
economy will be changed in a way which notably limits its capacity to support
future growth and prosperity. The inability to expand in an unfettered manner
creates a situation of market failure in that the emerging growth areas are not
required to pay the full social costs of their expansion. In effect, they become
“free riders” on the transportation, communications, financial, legal, cultural,
educational, residential, and other activities provided by the central city. The
result is perpetual deterioration on the sustainability of the core of the area, which
in turn accelerates flight to outlying areas. This spiral, if left unchecked,
ultimately erodes the viability of the urban centers, diminishes the quality of key
support networks, and imposes future costs and constraints on the entire region.
At the same time, the image of the area is tarnished, thus reducing prospects for
business locations, expansions, and retentions.
This situation can only be overcome by providing a mechanism by which the
central city can expand its tax base in line with regional needs. The most
efficient mechanism to achieve this result is simply to allow responsible and
appropriate annexation of emerging development. Severe restrictions on this
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© 2003 by The Perryman Group
capacity will have notable detrimental consequences for business activity; TPG
analysis indicates negative effects of $305.7 billion in yearly gross product,
$168.8 billion in annual personal income, and 1,234,760 permanent jobs. More
importantly, Texas will be denied the opportunity to achieve its full potential and
destiny in the evolving global economy of the 21st Century.
Respectfully submitted,
The Perryman Group
M. Ray Perryman, PhD, President
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© 2003 by The Perryman Group
Appendix
The Impact of Significant Restrictions on Annexation Capacity
on Business Activity
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Population in Texas and Its Major Urban Centers as of 2030
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
2000
Baseline
Value
2030
Baseline
Forecast
2030 Forecast with
50% Reduction
in Projected
Annexation
Projected
Annexation
Losses
126,441
218,321
1,263,559
384,977
165,020
316,487
2,449,802
466,976
150,446
291,084
2,066,594
430,971
(14,574)
(25,403)
(383,208)
(36,005)
336,991
152,657
380,689
3,541,099
682,111
1,713,122
4,693,524
314,252
194,868
208,797
242,882
548,270
502,808
538,305
6,197,845
973,826
2,927,638
7,877,341
473,461
363,830
281,624
332,905
462,666
405,382
468,471
6,015,047
875,057
2,791,675
7,618,547
424,694
286,787
249,145
296,460
(85,604)
(97,426)
(69,834)
(182,798)
(98,769)
(135,963)
(258,794)
(48,767)
(77,043)
(32,479)
(36,445)
573,920
236,345
103,970
1,599,378
110,988
89,302
175,418
84,075
214,044
140,326
1,088,649
287,947
128,012
2,569,392
173,265
111,294
262,060
103,940
287,385
169,053
927,282
265,269
118,741
2,143,853
145,153
101,589
228,424
95,185
268,109
156,458
(161,367)
(22,678)
(9,271)
(425,538)
(28,111)
(9,706)
(33,636)
(8,755)
(19,276)
(12,595)
17,782,056
20,946,503
29,597,135
33,432,975
27,283,088
31,118,928
(2,314,047)
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Employment in Texas and Its Major Urban Centers as of 2030
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
2000
Baseline
Value
2030
Baseline
Forecast
2030 Forecast with
50% Reduction
in Projected
Annexation
Projected
Annexation
Losses
62,836
103,147
707,305
169,258
95,088
163,849
1,205,459
260,223
82,319
147,689
1,043,262
218,314
(12,770)
(16,161)
(162,197)
(41,909)
118,883
78,457
176,976
2,089,944
280,931
816,310
2,363,339
150,965
75,028
99,451
123,375
200,387
251,918
285,593
3,525,140
440,469
1,357,640
3,953,812
234,455
130,450
154,983
210,576
167,125
203,534
236,433
3,425,079
385,064
1,296,284
3,823,692
208,436
105,283
129,467
174,713
(33,262)
(48,385)
(49,160)
(100,061)
(55,405)
(61,357)
(130,121)
(26,019)
(25,167)
(25,517)
(35,863)
173,844
108,138
50,576
790,334
47,368
40,896
89,239
39,781
103,710
70,845
305,859
171,155
81,337
1,334,141
70,512
63,993
149,579
61,434
161,317
110,716
264,979
142,747
69,130
1,093,231
59,631
53,352
125,907
51,504
145,645
92,508
(40,879)
(28,409)
(12,207)
(240,910)
(10,880)
(10,641)
(23,672)
(9,929)
(15,672)
(18,208)
8,930,936
9,999,775
14,980,088
16,322,847
13,745,327
15,088,086
(1,234,760)
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Real Gross Product in Texas and Its Major Urban Centers as of 2030
(In Constant 2003 Dollars)
2000
Baseline
Value
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
2030
Baseline
Forecast
2030 Forecast with
50% Reduction
in Projected
Annexation
Projected
Annexation
Losses
$3,503,881,593
$5,962,211,060
$60,571,846,094
$10,203,949,498
$10,171,149,545
$18,503,839,322
$216,286,252,121
$30,310,295,930
$7,507,880,066
$15,119,470,179
$164,333,505,674
$20,894,789,184
($2,663,269,479)
($3,384,369,143)
($51,952,746,447)
($9,415,506,746)
$5,176,568,055
$3,635,341,643
$10,393,182,771
$206,371,069,225
$15,936,977,483
$58,507,231,254
$216,585,658,983
$7,849,158,841
$3,397,277,513
$5,529,772,854
$6,951,754,466
$16,576,941,052
$21,407,546,861
$31,685,633,238
$721,979,870,678
$49,997,564,850
$207,059,552,866
$719,199,709,918
$21,668,596,671
$11,660,304,057
$18,164,163,869
$24,178,641,240
$11,808,398,127
$16,035,340,378
$21,856,545,305
$685,298,002,352
$37,969,918,965
$189,869,048,349
$677,089,655,354
$17,286,404,781
$7,805,325,674
$12,245,006,274
$16,892,076,162
($4,768,542,925)
($5,372,206,482)
($9,829,087,933)
($36,681,868,326)
($12,027,645,885)
($17,190,504,517)
($42,110,054,565)
($4,382,191,890)
($3,854,978,382)
($5,919,157,594)
($7,286,565,077)
$7,732,285,698
$7,458,467,748
$2,680,632,474
$50,763,795,454
$3,040,245,339
$2,078,511,409
$5,746,459,054
$2,198,390,494
$6,003,095,594
$3,866,041,273
$26,187,622,602
$24,624,147,197
$8,197,707,088
$167,148,164,046
$9,247,565,564
$6,494,929,395
$19,513,826,293
$6,862,027,857
$18,700,861,083
$11,665,811,750
$20,280,443,061
$16,682,861,722
$5,945,441,857
$114,292,771,726
$6,303,856,258
$4,426,542,492
$13,966,278,577
$4,684,688,433
$15,190,351,508
$8,030,082,495
($5,907,179,541)
($7,941,285,476)
($2,252,265,230)
($52,855,392,319)
($2,943,709,306)
($2,068,386,902)
($5,547,547,716)
($2,177,339,424)
($3,510,509,576)
($3,635,729,255)
$712,143,805,870 $2,417,492,725,093 $2,111,814,684,955 ($305,678,040,138)
$772,661,193,683 $2,562,477,317,300 $2,256,799,277,162
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Gross Product in Texas and Its Major Urban Centers as of 2030
2000
Baseline
Value
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
$3,439,360,673
$5,959,027,125
$53,497,349,694
$10,267,531,793
2030
Baseline
Forecast
$19,515,240,130
$35,748,189,873
$360,579,626,742
$61,230,992,790
2030 Forecast with
50% Reduction
in Projected
Annexation
$12,999,883,785
($6,515,356,345)
$27,564,813,222
($8,183,376,651)
$256,893,933,928 ($103,685,692,814)
$36,975,352,873
($24,255,639,917)
$4,937,801,105
$31,683,365,756
$20,296,692,749
$3,592,247,045
$43,557,250,698
$30,906,093,781
$10,343,558,096
$63,363,125,481
$38,435,456,581
$192,054,538,571 $1,257,761,297,752 $1,180,798,315,175
$15,230,785,660
$93,813,086,566
$65,604,746,370
$56,164,760,153
$366,217,706,272
$329,769,489,328
$215,837,275,424 $1,360,463,839,540 $1,262,719,917,959
$7,664,388,122
$44,216,571,647
$32,415,371,117
$3,379,820,008
$22,159,375,238
$13,227,027,782
$5,371,815,071
$32,515,827,385
$19,579,766,532
$6,623,358,601
$44,881,815,088
$28,401,072,443
$7,432,165,867
$7,958,193,925
$2,663,187,083
$49,338,223,380
$2,594,761,647
$2,003,339,147
$5,542,961,057
$2,196,452,004
$5,848,281,405
$3,790,934,064
$50,589,743,434
$46,683,992,200
$16,078,782,714
$317,137,939,832
$14,601,649,581
$12,328,551,681
$35,496,438,692
$13,280,198,662
$35,340,923,330
$21,745,855,641
Projected
Annexation
Losses
($11,386,673,007)
($12,651,156,918)
($24,927,668,899)
($76,962,982,577)
($28,208,340,197)
($36,448,216,944)
($97,743,921,581)
($11,801,200,530)
($8,932,347,456)
($12,936,060,853)
($16,480,742,644)
$36,502,724,616
($14,087,018,818)
$28,275,381,565
($18,408,610,634)
$10,497,586,694
($5,581,196,020)
$193,473,936,997 ($123,664,002,835)
$8,865,273,215
($5,736,376,366)
$7,415,081,394
($4,913,470,286)
$23,196,689,556
($12,299,749,136)
$8,004,514,386
($5,275,684,276)
$27,062,420,021
($8,278,503,309)
$13,212,684,029
($8,533,171,611)
$683,732,116,720 $4,400,991,386,724 $3,713,094,226,098 ($687,897,160,626)
$740,997,502,706 $4,666,726,709,198 $3,978,829,548,572
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Real Personal Income (by place of residence) in Texas and Its Major
Urban Centers as of 2030
(In Constant 2003 Dollars)
2000
Baseline
Value
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
2030
Baseline
Forecast
2030 Forecast with
50% Reduction
in Projected
Annexation
Projected
Annexation
Losses
$3,321,352,399
$5,721,419,127
$43,428,570,292
$9,810,898,996
$7,515,114,082
$13,954,518,626
$114,151,107,780
$22,680,136,080
$5,856,490,870
$11,756,546,054
$90,905,450,500
$16,728,822,037
($1,658,623,212)
($2,197,972,573)
($23,245,657,280)
($5,951,314,042)
$5,388,775,187
$3,280,612,410
$9,524,942,395
$133,777,346,928
$13,562,716,580
$53,854,755,018
$166,278,362,542
$7,651,265,468
$3,159,470,559
$5,373,922,904
$6,412,932,631
$13,616,596,252
$15,682,532,490
$23,004,878,261
$358,386,457,009
$32,940,300,745
$141,201,593,487
$434,015,336,902
$16,951,132,254
$8,464,038,722
$13,128,503,721
$16,953,161,409
$10,223,048,810
$12,029,839,681
$16,861,323,837
$342,598,350,052
$26,178,159,477
$131,221,946,906
$411,838,324,566
$14,038,654,196
$6,019,575,598
$9,542,119,800
$12,557,088,410
($3,393,547,442)
($3,652,692,809)
($6,143,554,423)
($15,788,106,957)
($6,762,141,268)
($9,979,646,581)
($22,177,012,336)
($2,912,478,059)
($2,444,463,124)
($3,586,383,921)
($4,396,072,999)
$8,215,805,629
$6,880,844,450
$2,703,028,629
$44,164,244,799
$2,786,017,973
$2,145,170,654
$5,160,006,044
$2,393,077,733
$5,253,140,426
$3,794,705,228
$21,812,942,303
$17,838,134,818
$6,613,488,070
$114,340,216,492
$6,287,774,785
$5,108,892,776
$13,326,379,742
$5,790,573,182
$12,684,173,520
$8,884,053,231
$17,527,565,286
$12,813,599,556
$5,039,561,280
$82,877,014,666
$4,650,205,087
$3,738,880,110
$10,081,579,461
$4,221,233,623
$10,654,189,638
$6,542,331,892
($4,285,377,017)
($5,024,535,263)
($1,573,926,790)
($31,463,201,826)
($1,637,569,698)
($1,370,012,666)
($3,244,800,280)
($1,569,339,559)
($2,029,983,882)
($2,341,721,339)
$554,043,385,001 $1,445,332,036,741 $1,276,501,901,393 ($168,830,135,347)
$623,604,719,566 $1,580,843,740,329 $1,412,013,604,982
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Personal Income (by place of work) in Texas and Its Major
Urban Centers as of 2030
2000
Baseline
Value
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
2030
Baseline
Forecast
2030 Forecast with
50% Reduction
in Projected
Annexation
Projected
Annexation
Losses
$2,264,158,000
$3,765,769,000
$34,708,884,000
$6,379,331,000
$10,411,840,800
$18,666,587,941
$185,415,235,317
$29,971,753,802
$7,134,598,105
$14,607,560,151
$134,923,465,540
$18,836,704,347
($3,277,242,695)
($4,059,027,790)
($50,491,769,776)
($11,135,049,455)
$3,248,676,000
$2,416,746,000
$6,546,968,000
$112,982,416,000
$9,363,833,000
$35,431,682,000
$130,126,847,000
$5,475,334,000
$2,214,308,000
$3,422,547,000
$4,354,533,000
$16,683,419,229
$23,479,694,911
$32,136,455,041
$615,148,595,722
$46,220,506,644
$188,802,387,190
$692,851,416,584
$24,653,366,210
$12,055,952,446
$16,993,130,369
$23,395,685,459
$11,010,842,618
$16,905,683,762
$20,204,853,752
$579,141,047,173
$33,081,446,124
$170,909,262,048
$645,191,029,785
$18,511,192,601
$7,411,173,503
$10,583,776,589
$15,257,587,502
($5,672,576,611)
($6,574,011,148)
($11,931,601,289)
($36,007,548,549)
($13,139,060,520)
($17,893,125,142)
($47,660,386,799)
($6,142,173,609)
($4,644,778,942)
($6,409,353,780)
($8,138,097,957)
$5,005,783,000
$4,652,043,000
$1,699,498,000
$31,607,934,000
$1,693,177,000
$1,394,005,000
$3,463,205,000
$1,402,444,000
$3,549,703,000
$2,524,475,000
$27,010,727,534
$24,510,467,261
$8,450,857,044
$166,312,342,264
$7,766,325,576
$6,747,290,995
$18,177,759,051
$6,896,844,688
$17,419,486,568
$12,011,696,467
$19,891,578,782
$15,162,492,310
$5,666,423,977
$104,576,450,858
$4,886,717,434
$4,220,230,599
$12,190,252,709
$4,303,589,323
$13,554,470,606
$7,543,289,713
($7,119,148,751)
($9,347,974,951)
($2,784,433,068)
($61,735,891,406)
($2,879,608,142)
($2,527,060,397)
($5,987,506,342)
($2,593,255,364)
($3,865,015,962)
($4,468,406,754)
$419,694,299,000 $2,232,189,825,112 $1,895,705,719,911 ($336,484,105,201)
$456,498,810,000 $2,374,211,123,020 $2,037,727,017,819
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Real Personal Income (by place of work) in Texas and Its Major
Urban Centers as of 2030
(In Constant 2003 Dollars)
2000
Baseline
Value
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
2030
Baseline
Forecast
2030 Forecast with
50% Reduction
in Projected
Annexation
Projected
Annexation
Losses
$2,428,885,199
$4,039,744,835
$37,234,104,072
$6,843,454,672
$5,497,216,332
$9,855,536,026
$97,895,048,479
$15,824,407,775
$4,283,431,597
$8,302,587,850
$77,952,825,234
$11,670,292,838
($1,213,784,735)
($1,552,948,176)
($19,942,223,245)
($4,154,114,937)
$3,485,031,103
$2,592,574,630
$7,023,287,982
$121,202,371,002
$10,045,091,984
$38,009,488,724
$139,594,132,838
$5,873,688,016
$2,375,408,397
$3,671,551,963
$4,671,343,939
$8,808,467,823
$12,396,747,590
$16,967,321,044
$324,784,538,321
$24,403,381,583
$99,683,388,020
$365,809,869,395
$13,016,419,477
$6,365,270,077
$8,971,988,297
$12,352,392,501
$6,612,379,914
$9,508,605,554
$12,434,303,600
$310,471,831,270
$19,391,760,974
$92,635,617,895
$347,066,470,629
$10,778,965,769
$4,526,300,915
$6,520,104,131
$9,148,187,256
($2,196,087,910)
($2,888,142,036)
($4,533,017,445)
($14,312,707,050)
($5,011,620,608)
($7,047,770,125)
($18,743,398,766)
($2,237,453,708)
($1,838,969,161)
($2,451,884,165)
($3,204,205,244)
$5,369,975,168
$4,990,499,067
$1,823,143,763
$33,907,546,669
$1,816,362,884
$1,495,424,838
$3,715,168,007
$1,504,477,812
$3,807,959,107
$2,708,141,376
$14,261,052,911
$12,940,972,065
$4,461,861,285
$87,809,153,227
$4,100,444,159
$3,562,416,961
$9,597,445,434
$3,641,377,926
$9,197,094,722
$6,341,903,921
$11,458,316,907
$9,294,488,510
$3,399,572,447
$63,637,808,303
$3,032,082,702
$2,606,723,175
$7,259,734,204
$2,654,112,809
$7,724,603,663
$4,669,555,106
($2,802,736,004)
($3,646,483,555)
($1,062,288,838)
($24,171,344,924)
($1,068,361,457)
($955,693,786)
($2,337,711,230)
($987,265,118)
($1,472,491,058)
($1,672,348,816)
$450,228,858,046 $1,178,545,715,351 $1,047,040,663,254 ($131,505,052,097)
$489,711,054,963 $1,253,529,746,841 $1,122,024,694,744
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Personal Income (by place of residence) in Texas and Its Major
Urban Centers as of 2030
2000
Baseline
Value
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
2030
Baseline
Forecast
2030 Forecast with
50% Reduction
in Projected
Annexation
Projected
Annexation
Losses
$3,096,098,000
$5,333,392,000
$40,483,241,000
$9,145,523,000
$14,233,780,641
$26,430,145,294
$216,204,545,987
$42,956,644,218
$9,754,319,632
$20,683,880,399
$157,337,194,732
$27,000,231,848
($4,479,461,009)
($5,746,264,895)
($58,867,351,255)
($15,956,412,369)
$5,023,308,000
$3,058,121,000
$8,878,960,000
$124,704,556,000
$12,642,892,000
$50,202,321,000
$155,001,350,000
$7,132,356,000
$2,945,195,000
$5,009,463,000
$5,978,007,000
$25,790,113,367
$29,703,039,093
$43,571,712,589
$678,791,320,840
$62,389,607,125
$267,438,722,287
$822,033,974,886
$32,105,793,139
$16,031,063,427
$24,865,656,074
$32,109,636,400
$17,022,551,219
$21,387,655,866
$27,397,142,175
$639,064,371,153
$44,657,099,769
$242,096,967,702
$765,549,315,113
$24,108,369,745
$9,855,738,872
$15,488,533,252
$20,942,150,569
($8,767,562,147)
($8,315,383,228)
($16,174,570,414)
($39,726,949,688)
($17,732,507,356)
($25,341,754,585)
($56,484,659,774)
($7,997,423,394)
($6,175,324,555)
($9,377,122,822)
($11,167,485,831)
$7,658,609,000
$6,414,185,000
$2,519,709,000
$41,169,022,000
$2,597,070,000
$1,999,685,000
$4,810,054,000
$2,230,779,000
$4,896,872,000
$3,537,348,000
$41,314,161,369
$33,785,794,239
$12,526,082,430
$216,562,721,776
$11,909,174,770
$9,676,347,998
$25,240,437,326
$10,967,464,708
$24,024,085,534
$16,826,579,546
$30,426,784,994
$20,902,377,214
$8,399,609,293
$136,186,164,986
$7,494,235,817
$6,052,878,278
$16,927,889,923
$6,844,315,820
$18,694,527,701
$10,568,096,794
($10,887,376,375)
($12,883,417,025)
($4,126,473,137)
($80,376,556,790)
($4,414,938,953)
($3,623,469,720)
($8,312,547,404)
($4,123,148,887)
($5,329,557,833)
($6,258,482,752)
$516,468,116,000 $2,737,488,605,064 $2,304,842,402,865 ($432,646,202,198)
$581,311,795,000 $2,994,150,558,854 $2,561,504,356,655
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Retail Sales in Texas and Its Major Urban Centers as of 2030
2000
Baseline
Value
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
2030
Baseline
Forecast
2030 Forecast with
50% Reduction
in Projected
Annexation
Projected
Annexation
Losses
$1,783,165,000
$3,243,408,000
$30,770,089,000
$4,939,717,000
$8,111,053,365
$15,877,071,985
$172,345,807,216
$22,912,580,991
$5,551,438,761
$12,416,897,628
$124,843,355,185
$14,380,996,154
($2,559,614,604)
($3,460,174,357)
($47,502,452,032)
($8,531,584,838)
$2,885,900,000
$2,307,570,000
$4,494,797,000
$53,874,936,000
$7,043,618,000
$27,070,123,000
$62,935,214,000
$3,193,446,000
$2,637,275,000
$3,099,883,000
$3,758,603,000
$14,926,755,948
$21,844,874,408
$21,645,426,198
$298,911,774,441
$34,292,231,213
$143,196,612,818
$335,076,079,531
$14,205,480,224
$14,392,370,219
$15,364,992,553
$19,380,356,259
$9,821,833,706
$15,716,243,614
$13,600,444,711
$281,286,813,068
$24,524,126,643
$129,583,778,798
$311,933,247,684
$10,657,463,902
$8,821,127,820
$9,544,812,041
$12,657,183,295
($5,104,922,242)
($6,128,630,795)
($8,044,981,487)
($17,624,961,374)
($9,768,104,570)
($13,612,834,020)
($23,142,831,847)
($3,548,016,322)
($5,571,242,399)
($5,820,180,512)
($6,723,172,963)
$5,423,942,000
$3,627,869,000
$1,287,170,000
$20,907,340,000
$1,723,362,000
$1,499,783,000
$3,388,077,000
$1,416,672,000
$2,547,371,000
$1,728,748,000
$28,842,859,673
$19,410,774,384
$6,098,408,284
$108,475,985,152
$7,825,674,929
$7,165,276,652
$17,728,810,298
$6,836,768,804
$12,386,402,750
$8,177,811,561
$21,225,777,635
$11,954,360,682
$4,098,215,180
$68,130,149,242
$4,916,318,994
$4,475,791,465
$11,866,110,046
$4,263,341,247
$9,630,202,606
$5,124,326,677
($7,617,082,039)
($7,456,413,703)
($2,000,193,104)
($40,345,835,910)
($2,909,355,936)
($2,689,485,187)
($5,862,700,252)
($2,573,427,557)
($2,756,200,144)
($3,053,484,884)
$257,588,078,000 $1,375,432,239,858 $1,131,024,356,781 ($244,407,883,077)
$288,535,506,000 $1,492,919,219,013 $1,248,511,335,936
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group
The Impact of Restrictive Annexation Policies on
Real Retail Sales in Texas and Its Major Urban Centers as of 2030
(In Constant 2003 Dollars)
2000
Baseline
Value
Area
Abilene
Amarillo
Austin-San Marcos
Beaumont-Port Arthur
Brownsville-HarlingenSan Benito
Bryan-College Station
Corpus Christi
Dallas
El Paso
Fort Worth-Arlington
Houston
Killeen-Temple
Laredo
Longview-Marshall
Lubbock
McAllen-EdinburgMission
Odessa-Midland
San Angelo
San Antonio
Sherman-Denison
Texarkana
Tyler
Victoria
Waco
Wichita Falls
Urban Total
Texas Total
$1,912,897,896
$3,479,379,833
$33,008,744,854
$5,299,102,583
2030
Baseline
Forecast
$4,282,452,631
$8,382,734,725
$90,994,686,190
$12,097,324,274
$3,095,861,594
$7,880,989,362
$2,475,455,608 $11,533,599,359
$4,821,812,746 $11,428,295,217
$57,794,568,500 $157,818,652,819
$7,556,071,398 $18,105,522,080
$29,039,590,470 $75,604,571,166
$67,514,020,556 $176,912,587,543
$3,425,782,883
$7,500,172,102
$2,829,148,060
$7,598,845,790
$3,325,412,774
$8,112,368,373
$4,032,057,477 $10,232,389,546
$5,818,557,027
$3,891,812,019
$1,380,817,134
$22,428,438,593
$1,848,743,972
$1,608,898,641
$3,634,574,123
$1,519,740,960
$2,732,703,158
$1,854,521,826
2030 Forecast with
50% Reduction
in Projected
Annexation
Projected
Annexation
Losses
$3,332,679,613
($949,773,018)
$7,057,229,944
($1,325,504,782)
$71,893,150,816 ($19,101,535,374)
$8,910,564,394
($3,186,759,879)
$5,889,680,508
$8,839,399,476
$8,374,737,182
$150,743,310,330
$14,376,386,447
$70,227,884,843
$167,769,332,994
$6,205,596,590
$5,380,826,263
$5,874,839,748
$7,604,518,166
($1,991,308,854)
($2,694,199,884)
($3,053,558,036)
($7,075,342,489)
($3,729,135,633)
($5,376,686,324)
($9,143,254,549)
($1,294,575,512)
($2,218,019,528)
($2,237,528,625)
($2,627,871,380)
$15,228,377,221
$10,248,449,628
$3,219,821,573
$57,272,865,453
$4,131,779,275
$3,783,103,929
$9,360,410,652
$3,609,659,219
$6,539,740,360
$4,317,699,448
$12,227,218,301
($3,001,158,920)
$7,311,147,321
($2,937,302,307)
$2,465,232,340
($754,589,233)
$41,463,487,210 ($15,809,378,243)
$3,050,123,454
($1,081,655,822)
$2,764,822,786
($1,018,281,143)
$7,061,726,617
($2,298,684,034)
$2,630,801,201
($978,858,017)
$5,487,140,053
($1,052,600,307)
$3,170,420,249
($1,147,279,199)
$276,328,714,687 $726,197,097,937
$309,527,700,713 $788,227,564,313
$630,112,256,844 ($96,084,841,093)
$692,142,723,221
Source: The Perryman Group
perrymangroup.com
© 2003 by The Perryman Group