OF FINANCES AND FORECASTS
Expert’s studies range from Toyota plant to Final Four to charter changes
Steven Nivin was in the background of two of the biggest local news stories of 2018 — the NCAA Men’s Final Four and the clash over the fire union’s three City Charter amendments — feeding numbers into his forecasting models.
The 52-year-old economist, who teaches at St. Mary’s University, authored the economic impact studies for the Final Four and the charter election. He pegged the benefits of hosting the national college basketball championship at $135 million. And he concluded that if voters approved the amendments — they ultimately passed two of the three — the cost to the city could reach as high as $4.2 billion over the next 20 years.
Nivin produced both studies under contract with the city.
One of the biggest economic development deals he examined for the city was Toyota’s Tundra plant in 2003. Among the expected benefits: 5,300 spinoff jobs, which would pump $4 billion into the local economy. City, county and state officials gave the automaker more than $133 million in incentives.
Nivin’s work influenced how the Toyota plant, the NCAA championship and the charter amendments were discussed in public and covered by the news media. But talking about that part of the forecaster’s job — shaping perceptions, the part both politicians and critics are most attuned to — makes him uneasy. Nivin, who earned his doctorate at the University of Texas at Dallas, is a low talker, and his voice gets even lower when the subject is how his analyses might affect public opinion.
A former analyst for USAA and the city’s economic development department, the Richardson native is more comfortable in his other role — a close observer of the San Antonio economy. His view of the year ahead? Expect slow job growth, with the likelihood of a recession.
The San Antonio Express-News caught up with Nivin last week at his book-crammed office at St. Mary’s. Here is an edited transcript of the interview:
Q: Who’s the audience for your economic impact studies — politicians who have to consider incentives or other expenditures to make a big project happen or the public?
A: It’s really both. With any of these projects, you’re looking at incentives. So is the net benefit to the city of San Antonio in terms of a fiscal impact — is that positive? And policymakers, as well as the citizens, want to know that. So does the incentive package that we formulate — does it lead to those positive benefits? It’s always a core question with those projects but especially with Toyota since it was such a large project with a large incentive package.
As far as the Toyota plant, if I’m recalling right, they’ve made more investment than what they had originally indicated. There’s a larger number of suppliers at the (on-site supplier) park than what had originally been indicated. So I think the overall impact has been much larger than we’d projected. It created basically a new industry in San Antonio, too. From a really nerdy perspective, you go back and you look at the inputoutput models you used to do a lot of (pre-Toyota) impact studies, and you couldn’t put up automotive manufacturing in San Antonio. It wasn’t in the model because it wasn’t an industry here. And now it is.
Q: So, when you’re working on a forecast for a big project, and you know it’s gonna get a lot of public attention, how does that affect your work?
A: I did the impact analysis on charter amendments, which is about as high-profile as you can get around here. This might sound hokey, but the fact that it’s high-profile and is gonna get a lot of public scrutiny — of course, that’s
on your mind. And I’m sure that most people that do this kind of work could say something similar. You’re always trying to get the numbers right and do the best you can. Maybe the high-level public scrutiny causes you to do some additional sensitivity testing or something like that. But I can honestly say I didn’t change anything or do anything differently. I get this all the time: “Well, they’re paying you, so you’re gonna tell them what they want you to hear.” I don’t play that game.
Q: In any of your work for the city or another entity, did you ever feel that the way elected officials were using your work was overly political? Did you ever say to yourself, “Oh, I would not have used (the data) in that way” or, “They took that number out of context”? Or did you feel pressure to deliver a particular result?
A: That would be something that would stick in my head, and I honestly can’t think of a situation of where that’s been the case. Maybe it happened, and I just don’t remember.
And if you do that kind of stuff (shape results to fit public officials’ agendas), it’s going to be found out. Somebody’s going to get in there, dig around and figure out, “Hey, this isn’t right. This doesn’t make any sense.” So I’m not even sure there’s a short-term gain to it. But medium- to longterm, to me, that’s a path to failure and getting out of this business because if you get to the point where you’re just making things up — so that they can fit what your client wants — eventually people are going to find that out. There would be some people who would still want to hire you; I wouldn’t want to work for those kind of people.
The other things is — this is my community, too. I live here. So whether it’s high-profile, low-profile, or no profile, it’s always the goal to give policymakers the best information possible. It’s hard to make a good decision with bad information.
Q: I’m guessing you took some criticism for your impact analysis of the city charter amendments, some eye-rolling.
A: Yeah.
Q: How did you respond to that?
A: I just lay it out. “This is what I did. These are the assumptions I made — and reasonable people can disagree about the assumptions that are made — but this is why I made ’em, and here’s the justification for it.” Sometimes they’ll change their minds. Sometimes they don’t. But it’s really just being open and transparent about what you did and how you did the calculations.
Q: The charter revisions must have have been complicated. How would you explain it to a layperson? How did the proposed amendments translate into what ultimately was a dollar figure?
A: There’s a lot of number crunching in that that goes into it, but I think the concept is relatively straightforward. People might disagree with this, but there’s a pretty large body of literature in economics looking at the effects of public policy uncertainty on economic growth. And while there are different components to charter amendment analysis, really the main effect of the charter amendments was the policy uncertainty that it would create, especially the one that fortunately did not pass (Proposition A, which would have made it easier to put ordinances, including spending decisions, to a referendum). It would have really opened up the door wide for a variety of referenda — basically anything related to the budget, zoning issues and all that. The evidence is pretty strong that, in that type of environment of uncertainty, economic growth slows.
Q: Your forecasting work also involves predicting what’s ahead for the regional economy. So, what’s your employment forecast for 2019?
A: For this year, I actually just changed it a little bit down for employment growth to 0.75 percent to 1.25 percent for San Antonio.
Q: Why did you cut your forecast?
A: It’s interesting as you look at the trends for growth in San Antonio. This isn’t just in San Antonio — it’s for the most part happening around statewide in the other major metros. … We got up to around 4 percent (job growth) in recent years, which is pretty high for San Antonio, and so I think part of that (slower job creation) is just sort of a regression to the mean. Historically, San Antonio’s growth rate in employment has been around 2.25 percent. So we’ve been under that the past couple years. In 2018, we ended up at 1 percent. I think in 2017 we were at 2 percent or something like that.
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I think one of the big constraints is just the tightness in the labor market. Unemployment has been low for a while — this is a national thing. And San Antonio’s been especially affected by some of the (federal) immigration policies in a couple ways. I’ve heard anecdotally and read that construction companies are having a hard time finding workers. Now, there are a lot of factors that go into that, but I think the immigration policies might have something to do. Also — I don’t have data on this — but the spending by the Mexican nationals in San Antonio has a pretty good impact, and I have to wonder if their spending activity has declined. And maybe some of the uncertainty around NAFTA has probably affected us a good bit. There are these policy issues as well as just the structural constraint of the tight labor force — it’s hard for me to see where an acceleration of (job) growth at this point comes from.
I’m also one of these economists who thinks that there’s a pretty decent chance that the U.S. economy is going to go into a recession around 2020.