By A. Fletcher Mangum, Ph.D.

Earlier this year, my firm was asked by Walmart to conduct a professional analysis of the economic impact that a new Walmart store would have on Powhatan County.  Our study employed a standard computer simulation model that is also routinely used by state agencies such as the Virginia Department of Planning and Budget, Virginia Economic Development Partnership, and Virginia Employment Commission.  Three principal findings emerged from that study.

First, the proposed Walmart would have a significant positive economic impact on Powhatan.  Specifically, our analysis showed that, overall, the proposed new store would generate approximately $652,000 in annual county revenue, 367 new jobs, and $21.5 million in total economic activity.

Second, compared to other counties in Virginia, Powhatan’s existing retail sector is only about half the size one would expect, based on the county’s population.  That means that Powhatan residents must currently travel outside of the county to make a large proportion of their retail purchases and, importantly, that the county is losing significant sales tax revenues as a result. 
For example, had Powhatan’s retail sector been proportionately equivalent to that of other Virginia counties in 2008, the county would have collected about $2 million more in sales tax revenue.  To put that figure in perspective, it would have more than funded the $1.6 million that the county spent on parks, recreation, and community development that year.

Third, Powhatan is experiencing rapid residential growth and that is putting stress on the county’s budget.  Between 2000 and 2008, where Virginia’s population grew by 9 percent, Powhatan’s grew by 24 percent.  Those sprouting rooftops drove a $21.3 million increase in the county’s annual education budget, and a $17.4 million increase in annual tax revenue from real property.  The gap between those two figures – $3.9 million – is just one measure of the net fiscal strain that increased residential growth is placing on the county, and of the county’s need to expand its commercial tax base to compensate.

Finally, it is also important to realize that Walmart is hardly new to Virginia.  As a result, we don’t need to hypothesize about the economic effects, we can simply measure them.  Accordingly, our study looked at sales tax revenue growth in six Virginia localities that are comparable to Powhatan and in which a new Walmart was constructed between 1991 and 2003.  That analysis showed that, on average, those localities experienced a net 14.3 percent increase in sales tax revenue after the Walmart was constructed.

Even closer to home, many of the same concerns that are being raised regarding the proposed Powhatan Walmart were also raised prior to the construction of the Ashland Walmart.  Yet, looking back, an article that appeared in the Richmond Times Dispatch this past August concluded that,

Six years after the Wal-Mart came to town, Ashland is still Ashland.  There’s still a quaint downtown with railroad tracks running down the middle of the main street ... Mom-and-pop stores and local restaurants still flank the tracks of the historic district, offering locals, college kids and passers-by ample opportunity to soak in the small town charm.

In short, the evidence suggests that the proposed Walmart store would make a positive and timely economic contribution to Powhatan County. 

—Dr. A. Fletcher Mangum is Managing Partner of Mangum Economic Consulting, a Richmond based firm.
My Point of View welcomes submissions that pertain to life and issues in Powhatan County. The views expressed in the column are those of the writer and do not necessarily represent the editorial views of the staff of Powhatan Today.