Apr 28, 2009
Buy the numbers
by Drew Menard
Of Lynchburg’s revenue, 85.6 percent of all non-dedicated income (income at the city’s discretion) and 70 percent of the General Fund come from local taxes, according to the City of Lynchburg (the City’s) annual operating budget for 2009.
Liberty’s impact on this figure can easily be traced to the bottom line – that is the line which runs along the bottom of Liberty Mountain. Ward’s Road defines Liberty’s western border, at the foot of the mountain. The four-lane road is teeming with economic life as numerous local businesses feed off of the heavy vehicle and foot-traffic. Wards Road is also an economic engine that powers other sectors of the economy, as theses businesses create satellite residential land developments and property taxes.
“When I look at Wards Road and when I look at both the commercial and the residential development, It is undeniably the chief driving force in Lynchburg,” Rex Hammond, president and CEO of the Lynchburg Regional Chamber of Commerce, said.
With 11,300 students only steps away, Wards Road business owners rely heavily on the neighboring school’s business.
Lynchburg’s income from sales tax has steadily increased over the past 10 years (since 1999), according to the 2009 operating budget. Only 2003 saw a decline in sales tax revenue, when it dropped by 7.4 percent, but in 2004 the figure increased by 4.5 percent, and boomed ahead, increasing by over six percent in each of the years leading up to 2009, which has been budgeted at an eight percent loss due to the struggling economy.
However, in the midst of a growing national economic crisis in 2008, Lynchburg soared to 6.9 percent above the previous year. Last year Lynchburg generated just under $15.5 million in sales tax versus 2007’s $14.5 million.
In 2006, Liberty’s population increased by nine percent, as did Lynchburg’s sales tax revenue. The City’s sales spike was the second-highest increase in the 10 year period outlined in the 2009 operating budget.
“The real value of Liberty University to the City … is the students and their parents when they shop, eat and stay in the city. The City collects meals and lodging taxes plus the state collects sales tax from these activities – that directly benefits the City,” said Lynchburg Director of Financial Services and Liberty alumna (1984) Donna Witt.
Local sales tax accounts for 11.1 percent of all non-dedicated revenues, according to the operating budget. Non-dedicated revenue is all of the funds that are used at the City’s discretion.
“We have more restaurants and we have more businesses because of Liberty’s presence in this community,” Hammond said.
Meals tax in Lynchburg is still expected to grow this year, though at a less extreme rate than in years past. The City’s operating budget showed that annual meals tax revenue has doubled in less than 10 years from just under $5.5 million in 1999 to $10.1 million in 2008. The City expects an increase of nearly two percent in 2009.
Liberty hosts a plethora of events which bring in thousands of people to Lynchburg each year. According to Liberty Enrollment Office employee Luke Enns, Liberty will welcome more than 25,000 guests this year. (See related story on page 6). These visitors affect three major areas of City revenue: meals tax, sales tax and lodge tax.
These events have been possible due to Liberty’s aggressive recruitment, which has led to a surge in growth at the school in the past decade, bringing more visitors and parents to Lynchburg in return.
In 1999, the City’s income from lodge tax was $963,921. In 2008, that number was over $1.6 million, a 40 percent increase in just nine years.
To put this hike in perspective, Liberty’s residential student population increased by 53 percent during the same period.
Though Liberty’s direct impact on sales in the City cannot be calculated in dollars and cents, there is no denying the correlation with the university’s growth and that of Lynchburg’s economy.
Liberty has 4,830 commuter students this year, according to a report provided by Susan Misjuns, the director for research/institutional reports. There are an additional 1,700 students living locally who are enrolled in Liberty’s online program, according to Liberty Chancellor Jerry Falwell Jr. These students, in addition to the staff and alumni who reside locally, are a chief contributor to one of the greatest financial revenues the City has – real estate.
Real property tax, or taxes collected from real estate and land development generates 37.7 percent of Lynchburg’s non-dedicated operating budget, based on their projections for 2009, in which the City has anticipated a 3.6 percent increase from last year’s $46.5 million.
Currently Liberty’s property value is just under $109 million, according to Witt, of which $14.5 million is taxable, paying the City over $150,000 in taxes.
“The total assessed value of real property in the City is estimated to be over $4.5 billion as of July 1, 2008,” according to the 2009 operating budget.
In other words, Liberty owns approximately 2.4 percent of all assessed real property value in the City.
“There are times when I wonder if education is a secondary vocation and real estate is a primary vocation, because (Liberty) is involved in so many transactions,” Hammond said.
The City’s revenue from real property increased by 46 percent between 1999 and 2008, according to the City’s 2009 operating budget. During that time, revenue increased each year, with four years bringing in more than a 10 percent increase from the previous year. In 2008 for example, Lynchburg notched a 15.6 percent gain in real property – Liberty’s residential student population increased by 7.5 percent in that same year. Of those students, 43 percent were living off-campus, according to Misjuns.
In each of the other years that the City’s real property revenue was up over 10 percent, Liberty’s population grew by a minimum of 7.5 percent, the highest of which was 14.5 percent in 2002, when the City had a 10.7 percent increase in real property gains. Also, the percentage of commuter students during each of those years was never lower than 37 percent.
“I would be interested to see if it wasn’t for Liberty and other educational institutions how stagnant the growth here in Lynchburg would be,” Tom DeWitt, a local housing realtor and Liberty alumnus (1979), said.
Liberty University and its related entities (Thomas Road Baptist Church and Lynchburg Christian Academy) are the second largest employer in Lynchburg with 3,788 workers, employing 10.5 percent of the City’s workforce.. Only Centra Health Inc. employs more people in the City than Liberty University, according to the City’s 2009 proposed budget. Nine years earlier Liberty was No. 6, employing over four percent of the City’s workforce.
However, Liberty’s direct impact on the job market can hardly be assessed based merely on those figures, as employees who service the school are not included in this total. For example, employees of Sodexo and the Barnes & Noble campus bookstore are excluded.
As the school continues to grow, more and more service jobs, such as those at Sodexo will be made available to members of the community.
“There are a lot of front line administrative positions that are filled by local people (at Liberty),” Hammond said. “We’ve seen substantial growth from Liberty both in terms of enrollment and supporting workers to facilitate those educational needs.”
Not only does Liberty provide jobs to the community, it provides a substantial amount of the workforce as well.
“You can’t go into a restaurant without being serviced by a Liberty student,” Hammond said.
“Nursing … education … business and law – those are degrees that any community can use and certainly those graduates have an opportunity to fill positions that are available in Lynchburg,” Hammond said. “Liberty’s curriculum is very practical for our community’s needs and the needs of our region.”
Even in the midst of an economic crisis, Lynchburg continues to press forward, thanks largely in part to its “diversified economy,” according to Hammond.
“I see Liberty’s and (TRBC)’s presence in Lynchburg as very symbiotic, we benefit each other,” he said. “Without question Liberty has been one of the leading growth components of our community in the past five years.”