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Photo radar could be a big booster of the state’s economy
Saturday, July 17, 2010, 3:52am MST

While the cheering may still be going on amongst the speed-camera foes at the demise of photo radar enforcement on Arizona’s freeways, there’s a little more to the business that still seems to be thriving.
Earlier this year, Redflex Traffic Systems hired Applied Economics of Scottsdale to determine the economic impact of Redflex and its competitor, American Traffic Solutions, on the state.
According to the study, the total economic impact of the photo radar industry was $352 million a year.
Granted, the study had Redflex info and was kind of guessing on ATS info. But between the two companies, they employ about 865 people and have a combined payroll of about $45 million a year.
After that is where the economic impact study fun begins. The study states that, through equipment purchases and development, an additional 1,400 jobs and $63.1 million in payroll are supported by the businesses.
And then you add in employee spending, taxes generated ... the list goes on and on.
To put it into perspective, the last Super Bowl held in the Valley generated about $450 million in economic impact. And odds are, with cities still looking at photo radar in the Valley and around the country, the companies are going to continue putting money into the state, whatever that amount may be.

Here is the full study:
1.0 Introduction

Applied Economics was retained by Redflex Traffic Systems to perform an economic benefit analysis of the operations of the photo enforcement industry, including Redflex and American Traffic Solutions, on the State of Arizona. Redflex Traffic Systems is the longest consistentlyoperating company in the growing U.S. photo enforcement industry, with more than 20 years of experience in partnering with cities to reduce dangerous driving behaviors like red light running and speeding. American Traffic Solutions (ATS) is also a leading provider of technology for photo traffic safety and electronic toll enforcement programs worldwide.

Redflex currently has 310 employees at its headquarters in Phoenix, with company-wide employment of 455. American Traffic Solutions has about 555 employees at its Scottsdale headquarters, with company-wide employment of 770. Figures included in this report are based on 2009 expenditures and employment levels provided by Redflex. Impacts for ATS were estimated based on detailed information from Redflex and the proportional sizes of the two companies.

The photo enforcement industry is an important contributor to the state’s economy. They improve safety and reduce accidents on local roadways through red-light and speed camera enforcement programs. Statistics from cities with enforcement programs show significant reductions in collisions, injuries and costs associated with unlawful driving. Additionally, the photo enforcement industry provides high quality jobs to hundreds of workers and supports the local economy with millions of dollars each year in vendor purchases, creating a very significant economic impact in the region and the state. The fact that locally headquartered companies like Redflex and ATS make a sizeable share of vendor purchases from Arizona companies greatly increases the multiplier effect in terms of the share of economic benefits that stay in Arizona. These local vendors, in turn, are also more likely to make purchases in-state, resulting in a cascade of economic benefits to the state.
2.0 Impact Summary

The economic benefits resulting from the photo enforcement industry include the direct activity created by Redflex and ATS, as well as the impacts created by local supplier purchases and employee spending. Economic impacts measure the effects of economic stimuli, or expenditures, in the local economy. All industries have some kind of economic impact in the rest of the economy. Industries like Redflex and ATS that pay above average wages and have strong supplier relationships with other local industries have higher local economic impacts than firms that do not possess these characteristics. These impacts include direct and indirect jobs, personal income, and economic activity or output, that is generated by the local photo enforcement industry. Indirect impacts are the result of the multiplier effect and capture supported supplier and consumer businesses and their employees throughout Arizona that benefit from these locally-based companies.

The operations of Redflex and ATS detailed in this analysis provide substantial economic benefits to the state. These positive impacts include the following:
Economic Impacts

Overall Operations Impacts. All total, the photo enforcement industry created an annual impact of $352.4 million on the Arizona economy in 2009. The operations of the two primary companies in this industry, Redflex and ATS, directly and indirectly support an estimated 2,300 jobs and $108.1 million in personal income in Arizona.

Jobs and Income. These two companies combined directly employ about 865 people in Arizona with a combined payroll estimated at $45.0 million annually. Through the multiplier effect, an additional 1,400 jobs and $63.1 million in annual payroll are supported annually at other businesses throughout the state. These additional jobs and payroll stem from direct and indirect impacts of supplier demand created by Redflex and ATS, and consumer demand created by their employees.

Local Vendor Spending. Redflex made an estimated $26.2 million in local purchases for various services and supplies in 2009, representing 47 percent of their total vendor purchases in that year. Based on the proportional number of ATS employees in Arizona, it is estimated that ATS made local vendor purchases of about $46.9 million in 2009. All total, based on the specific types of vendor purchases that are made locally, the annual economic impact of vendor purchases on the state is estimated at $123.8 million in 2009. This impact is included in the overall operations impact above.

Employee Spending. Another component of the overall operations impact comes from employee spending. The 865 employees currently working at ATS and Redflex make a significant amount of local purchases. The effect of employee purchases generated a total economic impact of $53.8 million on the state in 2009.
Revenue Impacts

Direct Revenue Impacts. Redflex and ATS generate direct tax revenues to state and local governments in Arizona, in addition to the economic impacts described above. Annual property tax revenues paid by Redflex are estimated at $118,000 per year. In addition, the company generates a significant amount of state, county and city sales taxes, estimated at $371,000 in 2009. Finally, Redflex is subject to corporate income taxes in Arizona of about $9,000 per year. Although similar information is not available for ATS, it assumed that they generate a proportional amount of direct state and local revenues.

Indirect Revenue Impacts. In addition to direct revenues, the photo enforcement industry generates substantial indirect property, sales and personal income tax revenues in Arizona through employee spending and property ownership. Indirect revenues for the two companies combined are estimated at $12.2 million per year to state and local governments.
Redflex Profile
Employees (68 percent in Arizona) 455
Total Payroll $25.08
Total Gross Revenues $92.00
Local Vendor Spending $26.22
Percent of Total Expenditures in Arizona 47%
American Traffic Solutions Profile
Employees (72 percent in Arizona) 770
Estimated Payroll $40.05
Combined Annual Economic Impacts
Total Output $352.45
Total Personal Income $108.07
Total Jobs 2,251
Annual State and Local Revenue Impacts
Property $3.49
Sales & Use $6.61
Personal Income $2.62
Corporate Income $0.01
Total $12.74

Source: Applied Economics, 2010.