FY 18-19 County Trade Pull Factors
We all have a gut instinct of where money flows in the regions we live. In Southeast NC much of the wealth in rural counties is generated by agriculture and timber production and flows to the counties with access to four-lane interstates, cities, and counties with beaches.
But how can we quantify what we instinctively know? A simple measure of the movement of wealth between counties, across regions and across North Carolina is a measure called County Trade Pull Factors (CTPF). It is a simple calculation of how much sales tax revenue is collected in a county, divided by that county’s population, which is then divided by the total sales tax revenue collected in NC divided by the state’s population.
CTPF = (County Sales Tax Rev. / County Pop.) ÷ (State Sales Tax Rev. / State Pop.)
It is also a direct reflection of the health or concentration of a county’s retail sector.
If a county’s CTPF is > 1.0, it is pulling revenue into the county from adjacent counties.
If a county’s CTPF is 1.0, it is neither gaining revenue from adjacent counties, nor is it losing revenue to adjacent counties.
If a county’s CTPF is < 1.0, it is losing revenue to the counties nearby.
Once the CTPF is calculated we can assess the county’s effective spending power based on its CTPF. This is measurement is the Trade Area Capture (TAC) and is a calculation of the county’s population times its CTPF.
Pender County, in southeast NC, has a CTPF is 0.62. This means that 38% of the wealth generated by agriculture, tourism and other businesses in the county gets spent outside the county. Another way to think about TAC is that Pender County has nearly 60,000 permanent residents, but because of Pender’s proximity to New Hanover County (Wilmington) many of Pender’s residents travel, shop and find entertainment outside of the county. This creates a situation where its effective sales tax-generating capacity is that of a county with a population of 37,200.
Finally, a county’s market share in-state sales tax generation is calculated by dividing the county’s TAC by the state’s total population. This is shown as a percent market share (MS).
The tables with every county’s population, sales tax revenues, CTPF, TAC, and MS can be reviewed by clicking on the links at the bottom of this article. The regions created for these reports are based on the five districts used by N.C. Cooperative Extension: Northeast, Southeast, South Central, North Central, and West. These are large geographic regions and in broad terms show how wealth migrates across the state.
Smaller regional economics are in play with counties where people are cut off by geography, where interstate access does not limit movement, or in counties that border Tennessee, Virginia, Georgia, and South Carolina.
For example: Mecklenburg County, the county with the largest TAC in NC, has a reach well beyond the region it is placed in for these reports giving it a MS that creates more than 16% of the state’s sales tax revenues.
And Dare County, with a CTPF of 3.06 and a population near 36,000, has a TAC of nearly 112,000. While its pull is large, its MS only creates 1.2% of the state’s sales tax revenue.
The bottom line for this assessment is that CTPF’s, TAC’s and MS’s help us quantify the flow of wealth between counties in North Carolina. Much of that wealth comes from the agriculture timber industries in eastern NC while tourism/travel are the major revenue industries in central and western NC.
Anyone who has questions can call Mark Seitz, Pender County Extension Director by phone at (910) 604-4287 or by email at Mark_Seitz@ncsu.edu.