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Economic Impacts and Contributions Study: Mixed Drinks Tax Receipts

Technical Report · June 2017

DOI: 10.13140/RG.2.2.24148.71045

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Javier Oyakawa
University of Texas at San Antonio
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 ADDENDUM FOR

Fiesta 2016
Economic Impacts and Contributions Study:
Mixed Drinks Tax Receipts

Prepared for:

Fiesta San Antonio Commission

June 2017
Acknowledgements
This research was carried out by the University of Texas at San Antonio Institute for Economic
Development’s Center for Community of Business Research. Any findings, conclusions and or opinions are
those of the authors and not necessarily those reflected by The University of Texas at San Antonio. The
research was supported by the Fiesta San Antonio Commission.

Lead Investigator: Javier Oyakawa

Business Analyst: Kalub Stutts

This addendum identifies revenues for local governments from mixed drinks tax receipts as part of the
economic impacts and contributions that “locals” and “non-locals” had in the area during Fiesta 2016.
These revenues were already included in the impacts results, in the amounts corresponding to the value
added impacts. They are specific revenues from mixed drinks sales during Fiesta.

The study revealed that Fiesta 2016 contributed with over $340.0 million in sales to the local economy,
supported almost 3,460 full-time-equivalent (FTE) local jobs, and provided close to $206.0 million in
value added to the area. These gains included sales tax collections of $3.6 million for local governments.
The economic contributions quantified spending by “local” and “non-local” visitors, and budgets from
Fiesta event organizers.

Based on information from The Bar Mart Liquor Receipts Reports, 1 sales of mixed drinks generated tax
revenues to local governments close to $195,760, this amount includes direct, indirect, and induced
impacts from expenditures in mixed drinks at local businesses located in or close to the downtown San
Antonio area.

When including businesses located in seven ZIP codes in or around downtown,

the results showed that in April mixed drinks sales increased on average by
$2,922,000. Applying a 6.7 percent mixed drinks sales tax to this amount results
in $195,760 tax collections due to Fiesta 2016 due to “local” and “non-local”
visitors.

The following map shows the ZIP codes included in this analysis: 78202, 78203, 78204, 78205, 78207,
78212, and 78215:

1
Available at: http://barmart.net/reportwelcomepage.html. This source gets the data from the Texas
Comptrollers, but the site offers a larger data history than the Texas Comptroller’s site.
 Figure 1.

ZIP codes 78202, 78203, 78204, 78205, 78207, 78212, and 78215

Source: Elaboration CCBR

Taking into consideration only non-local visitors spending, the economic impacts translated into $188.0
million in sales for the local economy, support for over 1,840 FTE jobs, and close to $112.0 million in
value added for the area. These impacts also included $2.0 million in sales taxes for local governments.
From the ratio of economic impacts to economic contributions, that is 2.0/3.6, you get the proportion of
local governments’ revenues from the impacts by “non-local” visitors. They accounted for close to 56
percent of the revenues. This percentage amounts to close to $108,756 in local governments
receipts from “non-locals” expenditures in mixed drinks when applied to the $195,760 tax
collection shown previously (for seven ZIP codes).
Data and Methods

Using mixed drinks tax receipts data from The Bar Mart Liquor Receipts Reports, from January 2013 up
to January 2017, for businesses close to or in the downtown area we get the information on the
following page in current dollars.

While it would be ideal to get the data from the Texas Comptroller, Bar Mart’s Liquor Receipts Report
was used because it has monthly data back to January 2013. The Texas Comptroller site only had
monthly data for the last two years and was missing several months of that data for those two years. To
properly calculate seasonal factors you need several years of data to help reduce the effect of other
random factors that may affect any one month in a year. 2

One important assumption made in the study comprises allocating the spike of mixed drinks sales in
April to the Fiesta event. There is no other significant event in the downtown area during that month, to
our knowledge.

In the first method, by using the monthly sales averages, you can observe during the months of March,
April (when Fiesta occurs), May, October, and December sales of mixed drinks are above the average of
100 percent. This increase included sales from businesses in the following ZIP codes: 78202, 78203,
78204, 78205, 78207, 78212, and 78215. But these results also apply to the closest two ZIP codes for the
downtown area.

2
It should be noted that the Bar Mart’s data was based on the initial release of the monthly data from the Texas
Comptroller’s site and due to updates after the initial release the Bar Mart’s data is slightly off. To ensure that the
data was still useable we checked the residual difference at the quarterly level and most differences were below
$100,000 which isn’t too large considering the sums of money we are looking at and the errors were in both
directions so it doesn’t appear that the error will give our analysis any bias.
 Date Number of All Zip Code Sales 78204 and 78205
Months
01/2013 1 $9,734,942 $7,648,035
02/2013 2 $11,849,217 $9,553,055
03/2013 3 $15,938,940 $12,808,088
04/2013 4 $13,136,830 $10,369,273
05/2013 5 $12,247,418 $9,666,048
06/2013 6 $12,018,334 $9,457,474
07/2013 7 $10,626,731 $8,169,793
08/2013 8 $10,669,767 $8,085,374
09/2013 9 $10,126,006 $7,921,245
10/2013 10 $11,768,549 $9,426,055
11/2013 11 $11,120,299 $8,804,888
12/2013 12 $12,351,431 $9,779,082
01/2014 13 $9,990,947 $7,760,538
02/2014 14 $11,946,710 $9,282,296
03/2014 15 $15,456,138 $12,152,994
04/2014 16 $13,697,764 $10,513,375
05/2014 17 $13,279,136 $10,117,280
06/2014 18 $11,975,350 $9,262,980
07/2014 19 $12,182,795 $9,219,345
08/2014 20 $11,612,682 $8,593,648
09/2014 21 $10,847,350 $8,411,900
10/2014 22 $13,253,038 $10,490,674
11/2014 23 $11,071,104 $8,412,333
12/2014 24 $12,961,555 $10,149,858
01/2015 25 $11,384,460 $8,760,922
02/2015 26 $12,740,591 $9,986,921
03/2015 27 $15,777,492 $12,566,712
04/2015 28 $14,108,580 $10,854,298
05/2015 29 $12,649,064 $9,497,684
06/2015 30 $11,768,794 $8,770,944
07/2015 31 $11,838,022 $8,773,938
08/2015 32 $11,161,734 $8,143,714
09/2015 33 $11,816,384 $8,658,929
10/2015 34 $14,692,480 $10,891,891
11/2015 35 $11,765,053 $8,523,187
12/2015 36 $14,159,702 $10,272,839
01/2016 37 $13,930,334 $10,251,168
02/2016 38 $14,020,042 $10,312,613
03/2016 39 $15,772,982 $11,449,939
04/2016 40 $16,444,521 $11,963,728
05/2016 41 $14,592,422 $10,356,483
06/2016 42 $13,415,350 $9,536,035
07/2016 43 $15,001,124 $10,479,581
08/2016 44 $12,698,013 $8,767,373
09/2016 45 $13,472,679 $9,187,999
10/2016 46 $15,467,612 $10,692,067
11/2016 47 $13,726,112 $9,473,192
12/2016 48 $16,461,917 $11,561,349
01/2017 49 $14,158,654 $9,879,538

To find the seasonality of the Mixed Beverage sales, the collected data had the overall trend removed.
By taking the difference between the sales for the last and first recorded months and dividing by the
total number of months minus one you obtain the detrended sales. This value is used to subtract the
trend from each data point using this formula. The observation number starts at 0 for t=1.
 𝐷𝑒𝑡𝑟𝑒𝑛𝑑𝑒𝑑 𝑆𝑎𝑙𝑒𝑠𝑡 = 𝑆𝑎𝑙𝑒𝑠𝑡 − (𝑇𝑟𝑒𝑛𝑑 ∗ 𝑂𝑏𝑠𝑡 )

𝑆𝑎𝑙𝑒𝑠𝑡𝑚𝑎𝑥 − 𝑆𝑎𝑙𝑒𝑠𝑡𝑚𝑖𝑛
𝑇𝑟𝑒𝑛𝑑 =
𝑡𝑚𝑎𝑥 − 𝑡𝑚𝑖𝑛

Afterwards you take the average of the detrended sales for each month and compare it to the average
of all periods as a percentage. This shows us the basic seasonal factor of the mixed beverage sales data.
When considering all seven ZIP codes close to downtown, the months that stand out are March with
close to 30 percent more than the average tax receipts for a month, then April in second place with
close to 16 percent followed by May, October, and December each with four to six percent more than
the average tax receipts. On the other end, September has the lowest average monthly mixed drink
sales with 14 percent less than the average followed by November and January with around 11 percent
less each than the average tax receipts.

Table Average Mixed Drinks Sales in Percentages

Month % of Avg Monthly Sales % of Avg Monthly Sales

All Downtown Zip Codes for 78204 & 78205
Jan 89.95% 91.89%
Feb 101.72% 100.53%
Mar 129.79% 120.27%
Apr 115.95% 113.43%
May 104.30% 104.75%
Jun 95.05% 96.43%
Jul 95.29% 95.65%
Aug 86.24% 87.50%
Sep 85.66% 86.96%
Oct 105.63% 107.26%
Nov 87.26% 90.51%
Dec 105.67% 108.05%

The results are similar when considering only two ZIP codes (78204 and 78205), but with the
percentages lower for March and April, and a little higher for October and December.

The study estimated a regression with a time factor and seasonal effects using dummy variables for the
different months of the year and in particular for April when Fiesta occurs.

With a second method, the study started with eleven dummy variables among the twelve possible
months (as it is usual in these models, one month is excluded to avoid statistical problems) by
considering the seasonal effects over the period of analysis, from January 2013 to January 2017. Timet
starts as 1 for Jan 2013.
 𝑆𝑎𝑙𝑒𝑠 = 𝑖𝑛𝑡𝑒𝑟𝑐𝑒𝑝𝑡 + 𝑇𝑖𝑚𝑒 𝑃𝑎𝑟𝑎𝑚𝑒𝑡𝑒𝑟 ∗ 𝑡𝑖𝑚𝑒𝑡 + 𝐹𝑖𝑒𝑠𝑡𝑎 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒 ∗ 𝐷𝑢𝑚𝑚𝑦𝐹𝑖𝑒𝑠𝑡𝑎 +
𝐹𝑒𝑏 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒 ∗ 𝐷𝑢𝑚𝑚𝑦𝐹𝑒𝑏 + 𝐹𝑖𝑒𝑠𝑡𝑎 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒 ∗ 𝐷𝑢𝑚𝑚𝑦𝐹𝑖𝑒𝑠𝑡𝑎 + ⋯ + 𝐷𝑒𝑐 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑒 ∗
𝐷𝑢𝑚𝑚𝑦𝐷𝑒𝑐 + 𝑒𝑟𝑟𝑜𝑟

In analyzing the statistical properties of the sales data, the results showed that the sales data suffered a
serial correlation problem. So, by using the statistical software SAS, a method to get rid of the negative
effects of serial correlation on the ordinary least squares technique, allowed appropriate estimates of
the desired parameters. This process eliminated the less statistically significant dummy variables, the
dropped months were close enough to the base line that they aren’t needed. For each dummy variable,
the parameter shows the amount of sales increase in any month. Each of the two final models had
estimates and dummy variables for eight of the months.

When including businesses located in seven ZIP codes in and around downtown, the results showed that
in April, mixed drinks sales increase on average by $2,922,000. Applying a 6.7 percent mixed drinks sales
tax to this amount results in $195,760 tax collections due to Fiesta, on average, due to “local” and “non-
local” visitors.

All Downtown Zip Codes Parameter Estimates

Variable Estimate t Value P-value
Pr > |t|
Intercept $9,717,475 24.09 <.0001
Time $76,365 5.84 <.0001
Feb $1,390,996 3.78 0.0008
Mar $4,529,463 10.95 <.0001
Apr (fiesta effect) $2,921,803 7.97 <.0001
May $1,737,223 4.66 <.0001
Jun $881,465 2.39 0.0242
Jul $773,859 1.94 0.0629
Oct $1,771,504 5.21 <.0001
Dec $2,102,934 6.36 <.0001

When using only two ZIP codes, the ones closer to the downtown area, 78204 and 78205, sales increase
on average by $2,155,000. Applying the 6.7 percent tax this results in $144,400 in tax collections due to
“local” and “non-local” visitors.
 78204 and 78205 Parameter Estimates
Variable Estimate t Value P-value
Pr > |t|
Intercept $8,111,218 49.64 <.0001
Time $26,629 5.57 <.0001
Feb $1,113,156 3.66 0.0011
Mar $3,665,388 11.50 <.0001
Apr (fiesta_effect) $2,155,052 7.77 <.0001
May $1,087,013 3.38 0.0022
Jun $638,476 2.16 0.0396
Aug -$471,415 -1.59 0.1242
Oct $1,319,181 4.76 <.0001
Dec $1,675,475 5.76 <.0001

In these tables the estimates for each parameter are listed as well as the t-value which is a test for the
statistical significance. To the right is the interpretation of that t value, indicating the probability of
getting a t value of that value or higher. The tables show July and August as having the least significant
values. Usually these estimates would be dropped but here they helped the overall models significance.
April, the month of Fiesta, is the second most significant seasonal variable for each subset of the data.

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