Different analysis of rural development's business and industry loan guarantee program: The impact on tax revenue in Oklahoma communities
Abstract
Rural areas across the U.S. have struggled since the Great Recession, with limited employment growth and significant outmigration. Many public- and private-sector programs are focused on generating economic development in rural areas, but few are formally evaluated. One often-overlooked component required for effective rural development is the generation of local sales tax revenue, which helps fund city amenities and services. This research evaluates how one specific rural development public-sector program — the USDA's B&I Loan Guarantee program — impacts sales tax revenue for recipient Oklahoma communities. Sales tax revenue and census demographic data for all Oklahoma communities that charged a sales tax between 2005 and 2015 is meshed with information on B&I loan recipient communities during that time. Multivariate regression and coarsened exact matching (CEM) techniques are used to assess the impacts on sales tax revenues across all 2-digit Standard Industrial Classification (SIC) retail codes. Propensity score matching is also used for a robustness check of the CEM results. The results from the regression models depict mixed results of the impact that the B&I program has on total retail sales (TRS) and TRS per capita in Oklahoma. During time period one (2005-2010), the regression coefficient for the loan amount variable were positive and statistically significant across all models except one. Time period two (2010-2015) results show little to no significant impact of B&I loans on TRS and TRS per capita. The economic environment during these two periods were dramatically different, with the Great Recession occurring during time one and a major oil boom in time two. The results demonstrate that the B&I program and other similar programs may be more vital during tough economic times when tax revenue is crucial for rural communities.
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- OSU Theses [15752]