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ARC Study Underscores Economic Benefits of Physical Infrastructure

October 2007


CHARLESTON, WEST VIRGINIA, October 25, 2007—Building physical infrastructure creates jobs, enhances tax revenue, and leverages public investment. That is the message of a study unveiled today by Governor Joe Manchin III and ARC Federal Co-Chair Anne B. Pope at the Appalachian Regional Commission (ARC) conference Back to Basics: Investing in and Improving Appalachia's Infrastructure, held at the Charleston Civic Center.

Conducted for ARC by the Economic Development Research Group and BizMiner/Brandow Company, the study, Program Evaluation of the Appalachian Regional Commission's Infrastructure and Public Works Projects, measured the economic development performance of 104 projects funded by ARC during the period 1999–2005. The study found that the projects had a significant impact on the Appalachian Region's economy, creating more than 17,600 new jobs and generating $639 million in new annual wages, and helping retain 9,580 threatened jobs and $325 million in existing annual wages.

The jobs created led to a net expansion of $1.3 billion in annual personal income in the Region. For each public dollar invested, the projects returned $9.30 in annual recurring personal income. In addition, the projects generated $1.7 billion in non-project leveraged private investment (LPI)—an LPI-to-investment ratio of 75 to 1. The projects' impact on annual tax revenue included an estimated $13.3 million in annual state income taxes, $16.6 million in annual state and local sales taxes, and $14.2 million in annual local property taxes.

"Physical infrastructure is the basic building block of economic growth," said Manchin. "As the governor of West Virginia and the ARC states' co-chair, I will continue to emphasize the implementation of projects that bring clean drinking water and wastewater services, as well as modern telecommunications, to West Virginia and the rest of Appalachia. These basic and necessary services will improve the quality of life and spur economic development for the entire Region."

"We think these are impressive numbers," said Pope, in commenting on the study. "They show that ARC's policy of investing over half of its project funds in physical infrastructure is not only improving the lives of people in West Virginia and throughout Appalachia, it is also reaping important dividends in job creation, public investment leveraging, and tax revenue."

The report also showed gaps in the Region's ability to grow new businesses at the same rate as the nation as a whole. Pope said ARC is responding to this challenge by expanding telecommunications investments and increasing investments in entrepreneurial assistance in the Region's economically distressed, at-risk, and transitional areas.

The study concluded that the projects studied had enhanced economic diversification in the Region and that there was a "highly favorable perception of the ARC program" among local development professionals and project stakeholders.