The Impact of Micron Technology Virginia on the Economies of the ...

September 2006
<strong>Micron</strong> <strong>Technology</strong>, Inc.
Manassas, <strong>Virginia</strong>
<strong>The</strong> <strong>Impact</strong> <strong>of</strong> <strong>Micron</strong> <strong>Technology</strong> <strong>Virginia</strong> on the
Economies <strong>of</strong> the City <strong>of</strong> Manassas, Prince William County
and <strong>The</strong> Commonwealth <strong>of</strong> <strong>Virginia</strong> in 2005
By: Stephen S. Fuller, Ph.D.
Dwight Schar Faculty Chair and University Pr<strong>of</strong>essor
Director, Center for Regional Analysis
George Mason University

Executive Summary
<strong>Micron</strong> <strong>Technology</strong>, Inc. is a major source <strong>of</strong> employment, payroll, and business investment that benefits the economies
<strong>of</strong> the City <strong>of</strong> Manassas, Prince William County, and the Commonwealth <strong>of</strong> <strong>Virginia</strong>. In 2005, <strong>Micron</strong> employed 1,013
workers within the Commonwealth with 524 (or 52 percent) <strong>of</strong> these employees residing within Prince William County and
120 <strong>of</strong> these workers living within the City <strong>of</strong> Manassas. <strong>The</strong>se jobs supported a total payroll outlay <strong>of</strong> $68.8 million with
<strong>Micron</strong>’s Manassas resident workforce accounting for $8.5 million or 12 percent <strong>of</strong> this total. Combined with the 404 Prince
William County residents working at <strong>Micron</strong>, these workers represent more than one-half <strong>of</strong> all <strong>Micron</strong>’s <strong>Virginia</strong> employees
and 54 percent <strong>of</strong> its payroll outlays. <strong>The</strong> average annual wage for all employees <strong>of</strong> <strong>Micron</strong> in the Commonwealth in
2005 was $67,900 with <strong>Micron</strong> employees living in Manassas and Prince William County having a slightly higher average
income <strong>of</strong> $70,900.
<strong>The</strong> operating and capital outlays <strong>of</strong> <strong>Micron</strong> generate important economic benefits in Northern <strong>Virginia</strong> and the Commonwealth
<strong>of</strong> <strong>Virginia</strong>. <strong>The</strong>se economic benefits resulted from both one-time capital outlays incurred during the 2002–2005
period that were required to modernize the plant and equipment at its Manassas facility and from the operating outlays in
2005 that will recur annually.
Capital outlays in Northern <strong>Virginia</strong> during the 2002–2005 period totaled $178.2 million. <strong>The</strong>se capital outlays had a total
accumulated impact on the Northern <strong>Virginia</strong> economy <strong>of</strong> $279 million over this four-year period; they generated $56.5
million in new, personal income to the benefit <strong>of</strong> local residents; and they supported 1,560 full-time equivalent year-round
jobs, or almost 390 new jobs annually over the four-year period. <strong>The</strong>se benefits at the state-level, inclusive <strong>of</strong> those benefits
accruing to the Northern <strong>Virginia</strong> economy, included $376.2 million in added value to the Commonwealth’s economy, $99.3
million in new, personal earnings for state residents, and supported a total <strong>of</strong> 3,760 new, year-round, full-time equivalent
jobs, or 940 new jobs annually.
Table 1: Summary <strong>of</strong> Local Economic <strong>Impact</strong>s from <strong>Micron</strong>:
2005 Payroll and Operating Outlays and Capital Investment (in millions <strong>of</strong> dollars)
Jurisdiction Direct Total Personal Jobs
and Type Outlays Output (1) Earnings (2) Supported (3)
City <strong>of</strong> Manassas
Payroll $8.5 $10.7 $1.3 6
Operations $49.2 $63.2 $11.7 400
Prince William
Payroll* $37.1 $56.6 $11.8 494
Operations $78.2 $121.3 $22.4 767
Northern <strong>Virginia</strong>**
Operations $134.7 $217.6 $59.4 2232
Capital Outlays $178.2 $279.0 $56.5 1560
<strong>Virginia</strong>**
Payroll $68.8 $137.6 $41.1 1802
Operations $135.7 $285.6 $76.9 2824
Capital Outlays $179.0 $376.2 $99.3 3760
Sources: <strong>Micron</strong> <strong>Technology</strong>, Inc., GMU Center for Regional Analysis Notes: (1) the total value <strong>of</strong> goods and services generated directly and indirectly as a result <strong>of</strong> the initial <strong>Micron</strong> outlay within
the jurisdiction; (2) the additional earnings generated within the respective jurisdiction from the new economic activities supported by the initial <strong>Micron</strong> outlays; (3) the additional new jobs supported
nationwide by the spending and re-spending <strong>of</strong> the direct <strong>Micron</strong> outlays. *County payroll total includes resident workers in Manassas. **Totals for Northern <strong>Virginia</strong> and <strong>Virginia</strong> include City <strong>of</strong>
Manassas and Prince William County totals. <strong>The</strong>se economic impacts from payroll and procurement outlays recur annually; economic impacts from capital outlays reflect spending over the 2002-2005
period.

In Northern <strong>Virginia</strong>, the 2005 annual operating outlays by <strong>Micron</strong>, exclusive <strong>of</strong> regular payroll, totaled $134.7 million,
involving contracts with 331 local vendors. Vendors located in the City <strong>of</strong> Manassas captured $49.2 million <strong>of</strong> these annual
outlays. In the City <strong>of</strong> Manassas, these outlays included $4 million for contract and service labor, $5.9 million for purchases
<strong>of</strong> supplies, $2.8 million for pr<strong>of</strong>essional services, and $5.1 million for taxes. This spending added an estimated $63.2
million in total outlays to the City’s economy in 2005, generated $11.7 million in new personal earnings to the benefit <strong>of</strong>
City residents, and supported 400 new jobs. At the state level, <strong>Micron</strong>’s operating outlays (excluding direct payroll) totaled
$135.7 million and added $285.6 million to the state’s economy in 2005, generated $76.9 million in new, personal earnings
to the benefit <strong>of</strong> state residents, and supported 2,824 jobs. <strong>The</strong> economic benefits <strong>of</strong> <strong>Micron</strong>’s operating outlays, and its annual
payroll disbursements will recur annually.
This analysis demonstrates the magnitude <strong>of</strong> economic impact that flows from the operating and capital outlays <strong>of</strong> <strong>Micron</strong>
to the benefit <strong>of</strong> the City <strong>of</strong> Manassas and Prince William County as well as the expanded impacts <strong>of</strong> this spending as it
circulates through the Northern <strong>Virginia</strong> and Commonwealth <strong>of</strong> <strong>Virginia</strong>. While the effects <strong>of</strong> direct employment and annual
spending outlays are important, it is their multiplier effects that provide a full measure <strong>of</strong> this importance in stimulating additional
job and income growth, and its full contribution to each respective economy as measured by the aggregate addition
to their gross local and state products; that is, the increase in the total value <strong>of</strong> goods and services produced within each
respective economy resulting from the direct payroll, operations, and capital outlays <strong>of</strong> <strong>Micron</strong>.
<strong>The</strong> capital investment required to modernize <strong>Micron</strong>’s plant and equipment during 2002-2005 added a total <strong>of</strong> $376.2 million
to the State’s economy and $279 million to the economy <strong>of</strong> Northern <strong>Virginia</strong>.
Annual operations added $121.3 million and $63.2 million, respectively, to the economies <strong>of</strong> Prince William County and the
City <strong>of</strong> Manassas in 2005. <strong>The</strong>se annual operating outlays, exclusive <strong>of</strong> payroll, also make a significant contribution to the
economies <strong>of</strong> Northern <strong>Virginia</strong> ($217.6 million) and the Commonwealth ($285.6 million). <strong>The</strong>se favorable impacts recur
annually to each respective jurisdiction’s economy.
For the City <strong>of</strong> Manassas, the combined spending <strong>of</strong> payroll, capital (annualized), and operations by <strong>Micron</strong>’s resident workers
and local vendors accounted for a total <strong>of</strong> $57.7 million in direct income and generated a total contribution to the City’s
economy, estimated at $73.9 million. This annual spending in 2005 represented 3.5 percent <strong>of</strong> the total City’s estimated $2.1
billion total Gross City Product. Additionally, <strong>Micron</strong>’s local job base <strong>of</strong> 1,013 workers accounted directly for 4.1 percent <strong>of</strong>
the City’s 24,685 jobs. For one company to account for so large a contribution to the local economy is noteworthy.
In addition to the contributions to the City’s, County’s and State’s economies, personal earnings, and job base, <strong>Micron</strong> generates
a significantly positive fiscal benefit to the City <strong>of</strong> Manassas as well as to the Commonwealth. Based on the fiscal impact
analysis, it is estimated that <strong>Micron</strong>’s presence in the City <strong>of</strong> Manassas resulted in a net fiscal benefit <strong>of</strong> $4.8 million in
FY 2005 or $4,787 per <strong>Micron</strong> employee. This fiscal benefit reflects the estimated contribution <strong>of</strong> revenues from all sources
totaling $5.657 million (real estate and property taxes totaling $5.01 million were the largest single source), and the local
public expenditure demand by <strong>Micron</strong> and its employees on the City estimated at $808,141. In the absence <strong>of</strong> this net fiscal
contribution to the City’s treasury in 2005, the City would have had a budget deficit <strong>of</strong> $3.665 million rather than the surplus
<strong>of</strong> $1.184 million it enjoyed. At the state level, corporate income tax, payroll withholding, and unemployment taxes totaled
$5.96 million in FY 2005. <strong>The</strong>se fiscal benefits at the local and state levels finance public expenditures for government
services to residents that the residential tax base cannot support, thereby enhancing the quality <strong>of</strong> life for all <strong>Virginia</strong>ns.

<strong>The</strong> <strong>Impact</strong> <strong>of</strong> <strong>Micron</strong> <strong>Technology</strong> <strong>Virginia</strong> on the
Economies <strong>of</strong> the City <strong>of</strong> Manassas, Prince William County,
and the Commonwealth <strong>of</strong> <strong>Virginia</strong> in 2005
<strong>The</strong> total economic impacts <strong>of</strong> spending by <strong>Micron</strong> on the City <strong>of</strong> Manassas, Prince William County, and elsewhere across
the Commonwealth <strong>of</strong> <strong>Virginia</strong> will reflect the combination <strong>of</strong> direct outlays (capital or operating) and their subsequent
monetary effects as these funds are circulated through the economy; that is, the respending <strong>of</strong> these direct outlays will generate
additional economic activity that otherwise would not have occurred. <strong>The</strong> total value <strong>of</strong> these combined direct and
indirect values can be estimated by the application <strong>of</strong> appropriate multipliers that have been calculated for Prince William
County and the Commonwealth <strong>of</strong> <strong>Virginia</strong> by the Bureau <strong>of</strong> Economic Analysis <strong>of</strong> the U.S. Department <strong>of</strong> Commerce,
employing its Regional Input-Output Model (RIMS II).
<strong>The</strong> results <strong>of</strong> these calculations are estimates <strong>of</strong> output value (total contribution to the economy, personal earnings) new
earnings realized by residents <strong>of</strong> the jurisdiction, and the jobs supported by these outlays (full-time year-round jobs). <strong>The</strong>
key variables governing the magnitude and significance <strong>of</strong> these economic impacts are their dollar value, the category <strong>of</strong>
service or product purchased, the direct employment and payroll associated with the direct spending, and the geographic
unit <strong>of</strong> analysis and the complexity <strong>of</strong> its economy. <strong>The</strong>se determine the extent to which the economy can provide the inputs
and retain the outputs <strong>of</strong> the economic activities being analyzed. In this analysis, the City <strong>of</strong> Manassas, Prince William
County, and the Commonwealth <strong>of</strong> <strong>Virginia</strong> represent well-developed, diverse, and expansive economies that are able to
achieve significant indirect benefits from the direct outlays <strong>of</strong> the core industries.
<strong>The</strong> following analysis will examine the economic impacts <strong>of</strong> a four-year capital-spending program undertaken by <strong>Micron</strong>
to modernize the plant and equipment at its Manassas facility. <strong>The</strong>se capital outlays for construction and equipment totaled
$178.2 million in Northern <strong>Virginia</strong> and $179 million in total statewide: vendors located within the Commonwealth and
particularly in Northern <strong>Virginia</strong> received contracts to provide these services and equipment.
Annual outlays associated with the operation <strong>of</strong> the Manassas plant are analyzed for 2005. <strong>The</strong>se operating outlays and
their impacts are annual impacts and recur each year, whereas the capital outlays do not recur annually in the same magnitudes.
That the operating outlays and their economic impacts are recurring annually magnifies their importance over time;
the impacts identified herein reflect only a one-year slice <strong>of</strong> an ongoing stream <strong>of</strong> benefits. Operating outlays are divided
into two categories: payroll and operations. <strong>The</strong>se divisions reflect substantially different economic impact patterns: payroll
is spent differently than outlays for operations and therefore have different effects on the local and state economies—payroll
fuels consumer spending while operating outlays support other vendors, pay for fringe benefits, support daily business
activities, and may result in pr<strong>of</strong>its and new business investment.

Employment <strong>Impact</strong>s <strong>of</strong> <strong>Micron</strong> <strong>Technology</strong> <strong>Virginia</strong>
<strong>The</strong> economic contribution <strong>of</strong> any business is frequently judged by the jobs and payroll it generates. While direct job generation
is important, a firm’s non-payroll spending usually accounts for far greater job generation than its own workforce.
This is true for <strong>Micron</strong>. Still, <strong>Micron</strong> is a major source <strong>of</strong> jobs with a workforce totaling 1,013 statewide, with 524 employees
residing within Prince William County, and 120 <strong>of</strong> these employees living in the City <strong>of</strong> Manassas. Additionally, there
were 320 <strong>Micron</strong> employees residing in neighboring counties. Combined, 83.3 percent <strong>of</strong> all <strong>Micron</strong>’s workers live locally
or in adjacent counties. <strong>The</strong>se are shown in Table 2 along with their mean salaries.
Table 2: <strong>Micron</strong> <strong>Technology</strong> <strong>Virginia</strong>: Employment Pr<strong>of</strong>ile, 2005
Place <strong>of</strong> Number Percent Average Annual
Residence <strong>of</strong> Jobs Of total Income*
City <strong>of</strong> Manassas 120 11.8 $70,895.24
Prince William (1) 524 51.7 $70,895.24
Neighboring Counties (2) 320 31.6 $69,638.96
<strong>Virginia</strong> (3) 1013 100.0 $67,896.56
Source: <strong>Micron</strong> <strong>Technology</strong>, Inc. *includes wages and salary, pr<strong>of</strong>it sharing and bonuses. *includes <strong>Micron</strong>’s workers residing in the City;**this secondary labor market includes Culpepper, Loudoun,
Fairfax, Fauquier, Stafford and Warren Counties. ***includes all <strong>Micron</strong> workers residing in <strong>Virginia</strong>.
<strong>The</strong> total payroll associated with this workforce totaled $68.8 million in 2005 for a mean salary <strong>of</strong> $67,897. <strong>The</strong> economic
impacts associated with these payroll outlays are shown in Table 3. As labor income and consumer spending, these outlays
represent a significant revenue base for state income and sale taxes.
<strong>The</strong> salary multipliers underlying the calculations in Table 3 illustrate the cumulative impacts associated with <strong>Micron</strong>’s
employment base. In Prince William County, for each dollar in payroll (for workers living in the County), the County
economy realized a total benefit <strong>of</strong> $1.52; for <strong>Micron</strong> workers residing in the City <strong>of</strong> Manassas their payroll multiplier was
estimated at 1.26. Prince William County residents captured an additional $316,410 in new personal income (wages and
salaries) for each $1,000,000 <strong>of</strong> <strong>Micron</strong>’s payroll earned by <strong>Micron</strong> workers living in Prince William County. This added
personal earnings benefit for the City <strong>of</strong> Manassas was estimated at $158,200 in additional earnings per $1,000,000 <strong>of</strong> <strong>Micron</strong>
payroll earned by City residents working at <strong>Micron</strong>. This local spending also supported additional employment in the
City and County as well as throughout the state and nation.
Since the State’s economy is more complex and self-contained (less leakage to adjacent jurisdictions), its multipliers are
larger than those for the City <strong>of</strong> Manassas and Prince William County. <strong>The</strong> State’s payroll multiplier for <strong>Micron</strong>’s workforce
is 2.00; that is, for each dollar <strong>of</strong> payroll paid by <strong>Micron</strong> to a state resident worker a total economic benefit <strong>of</strong> $2.00
was generated. This payroll spending in the state generated additional personal earnings at the rate <strong>of</strong> $597,392 per
$1,000,000 in direct <strong>Micron</strong> payroll outlay. This payroll effect is significant. For each $1.00 in direct payroll outlay made
by <strong>Micron</strong> in the Commonwealth <strong>of</strong> <strong>Virginia</strong>, an additional $0.60 <strong>of</strong> wage income was generated to the benefit <strong>of</strong> workers
residing in the state.
Lastly, the indirect employment impact <strong>of</strong> this payroll spending in the State (and nation) was greater than the direct employ-

ment effect. In 2005, <strong>Micron</strong> employed 1,013 workers within the State and its payroll spending supported an additional
1,802 full-time equivalent, year-round jobs. While these indirect jobs were not restricted to the Commonwealth, many were
located within the state. Overall, the magnitude <strong>of</strong> <strong>Micron</strong>’s payroll has an impact far exceeds their direct value at both local
and state levels, as measured by their contribution to total output, personal earnings, and job growth.
Table 3: Economic <strong>Impact</strong> <strong>of</strong> Payroll Spend By <strong>Micron</strong>’s Workforce* (in millions <strong>of</strong> 2005 dollars)
Jurisdiction Payroll Total Personal Jobs
<strong>of</strong> Residence Outlay (1) Output (2) Earnings (3) Supported (4)
City <strong>of</strong> Manassas $8.507 $10.740 $1.346 5.6
Prince William** $37.149 $56.652 $11.754 494.1
<strong>Virginia</strong>*** $68.779 $137.558 $41.088 1802.0
Sources: <strong>Micron</strong> <strong>Technology</strong>, Inc., GMU Center for Regional Analysis Notes: (1) includes wages and salaries, pr<strong>of</strong>it sharing, and bonuses; (2) the total value <strong>of</strong> goods and services generated directly
and indirectly as a result <strong>of</strong> the initial payroll outlay within the jurisdiction; (3) the additional earnings occurring within the respective jurisdiction from the new economic activities supported by the
payroll outlay; (4) the additional new jobs supported nationwide by the spending and re-spending <strong>of</strong> the new payroll dollars. *these economic impacts recur annually. **includes the payroll <strong>of</strong> <strong>Micron</strong>
workers residing in the City. ***includes the payroll <strong>of</strong> <strong>Micron</strong> workers residing in Prince William County.
<strong>The</strong> Economic <strong>Impact</strong>s Of Capital Outlays, 2002–2005
While payroll spending by <strong>Micron</strong> has been shown to have important and recurring benefits to the City <strong>of</strong> Manassas, Prince
William County, and Commonwealth economies, spending for the purchase <strong>of</strong> goods and services from <strong>Virginia</strong>-based vendors
has even greater economic impacts as these outlays include a combination <strong>of</strong> payroll, materials, overhead, and pr<strong>of</strong>it.
As these outlays are passed through the wide range <strong>of</strong> suppliers, they generate employment and income benefits that span
the full breadth <strong>of</strong> the local, regional, and state economies. In addition to supporting a large multiplier effect and adding
new personal earnings and jobs to the economy, these monetary flows have important fiscal implications at both the local
and state levels.
<strong>The</strong> two principal categories <strong>of</strong> spending by <strong>Micron</strong> are capital and operating outlays. Capital spending includes outlays
for the purchase <strong>of</strong> supplies and equipment, including the construction and modernization <strong>of</strong> physical facilities that have a
minimum life expectancy that spans several years. <strong>The</strong>se are frequently financed from borrowing and are amortized over the
respective useful life <strong>of</strong> the capital improvement. Capital outlays tend to be uneven over time.
<strong>Micron</strong> undertook a significant capital improvement program that spanned the 2002–2005 period to modernize its Manassas
plant and equipment, positioning its product lines to reflect new technologies and production efficiencies in the increasingly
competitive global market place. This capital spending totaled $1.5 billion with vendors located within the Commonwealth
capturing $179 million <strong>of</strong> these capital outlays. With the exception <strong>of</strong> $800,000, all <strong>of</strong> this capital spending in the state was
captured by vendors and contractors located within Northern <strong>Virginia</strong>. Of this capital spending occurring within the State,
construction and materials spending accounted for almost all <strong>of</strong> these outlays. Equipment purchases accounted for $1.2 billion
<strong>of</strong> these modernization outlays with these occurring almost entirely outside <strong>of</strong> the State. <strong>The</strong> economic impacts <strong>of</strong> these
capital outlays in Northern <strong>Virginia</strong> and statewide are summarized in Table 4.
<strong>The</strong> capital outlays captured by firms located in Northern <strong>Virginia</strong> totaled $178.2 million. <strong>The</strong>se direct capital outlays had a
multiplier <strong>of</strong> 1.5656 accounting for a total contribution to the region’s gross regional product <strong>of</strong> $279 million for the 2002-
2005 period. At the state level, with its larger multiplier <strong>of</strong> 2.10, these capital outlays added a total <strong>of</strong> $376.2 million to the
state’s economy over this period.

<strong>The</strong>se capital outlays and the work they supported within Northern <strong>Virginia</strong> and statewide generated additional personal
earnings for <strong>Virginia</strong> residents totaling $56.5 million in Northern <strong>Virginia</strong> and $99.3 million at the state level. <strong>The</strong>se new
personal earnings are taxable wage and salary payments received beyond the direct payroll paid to <strong>Micron</strong> employees (as
summarized previously in Table 2).
Since spending was recycled through the economy, this capital spending and respending within the local and state (and
national) economies also supports vendor jobs and jobs having broad-based effects. <strong>Micron</strong>’s capital spending, captured by
vendors and contractors located in Northern <strong>Virginia</strong>, supported 1,560 new jobs over the four-year period. At the state level
this capital spending supported 3,750 jobs. While most <strong>of</strong> these jobs would be located in the state, some <strong>of</strong> these job effects
would accrue to economies in surrounding states and across the nation.
Table 4: <strong>The</strong> Economic <strong>Impact</strong>s for Capital Outlays By <strong>Micron</strong> for
Plant and Equipment Modernization, FY 2002-2005 (in millions <strong>of</strong> current year dollars)
Jurisdiction Capital Total Personal Jobs
<strong>of</strong> Vendor Outlay (1) Output Earnings (3) Supported (4)
Northern <strong>Virginia</strong> $178.2 $279.0 $56.5 1560
<strong>Virginia</strong>* $179.0 $376.2 $99.3 3760
Sources: <strong>Micron</strong> <strong>Technology</strong>, Inc., GMU Center for Regional Analysis Notes: (1) accumulated capital spending reported by location <strong>of</strong> vendor; (2) the total value <strong>of</strong> goods and services generated
directly and indirectly as a result <strong>of</strong> the capital outlays within the jurisdiction; (3) the additional earnings generated within the respective jurisdiction from the new economic activities supported by
the capital outlays; (4) the additional new jobs supported nationwide by the spending and re-spending <strong>of</strong> the new capital outlays.*includes the capital outlays received by firms located in Northern
<strong>Virginia</strong>.
While this analysis <strong>of</strong> capital spending was confined to the fiscal year 2002–2005 period, continuing capital improvements
are programmed to maintain the plant’s efficiency and competitiveness. <strong>The</strong>se capital outlays are estimated to fall in the
$300–400 million range annually. Depending on changes in product strategy, these outlays could be considerably higher.
<strong>The</strong> portion <strong>of</strong> these outlays that would be captured by <strong>Virginia</strong>-based firms is not known at this time. However, based on
the <strong>Virginia</strong> and non-<strong>Virginia</strong> split <strong>of</strong> the capital outlays for the 2002–2005 period (15/85%), local vendors can expect to
benefit by at least $50 million annually from continued capital spending by <strong>Micron</strong> to maintain and upgrade its Manassas
plant.
<strong>The</strong> Economic <strong>Impact</strong>s <strong>of</strong> Operating Outlays
Annual spending by <strong>Micron</strong> to operate its Manassas plant involves both payroll (as discussed previously) and a wide range
<strong>of</strong> supporting overhead expenditures. Of <strong>Micron</strong>’s operating outlays in the City <strong>of</strong> Manassas and Prince William County,
payroll accounted for approximately 37 percent in 2005. Non-payroll spending includes service contracts and contract labor,
pr<strong>of</strong>essional and business services, outlays for regular maintenance and repairs, utilities, taxes, leases, and <strong>of</strong>fice equipment
and supplies. Statewide operating outlays reflect a slightly different mix <strong>of</strong> expenditures with direct payroll accounting
for 33.6 percent <strong>of</strong> total annual spending.
<strong>The</strong> importance <strong>of</strong> operating outlays beyond their magnitude ($49.2 million in the City <strong>of</strong> Manassas, $78.2 million in Prince
William County, and $134.7 million across Northern <strong>Virginia</strong>) is that they recur each year. <strong>The</strong>refore, the economic impacts
they generate, as reported in Table 5, are not one-time benefits such as those that flow from capital outlays, but continue to
support the local and state economies year after year.
<strong>The</strong> $49.2 million in direct operating outlays that <strong>Micron</strong> spent in the City <strong>of</strong> Manassas in 2005 added a total <strong>of</strong> $63.2 million
to the City’s estimated gross city product that year, reflecting a multiplier <strong>of</strong> approximately 1.2845; that is, for each
additional $1 <strong>of</strong> spending by <strong>Micron</strong> for its annual operations, the City’s economy realized a total benefit <strong>of</strong> $1.28. Additionally,
this local spending generated new annual personal earnings for City residents <strong>of</strong> $11.7 million and supported 400 jobs

(in the city, state, and nation) beyond those directly compensated for by <strong>Micron</strong>.
Table 5: <strong>The</strong> Economic <strong>Impact</strong> <strong>of</strong> Annual Operations Outlays by <strong>Micron</strong>** (in millions <strong>of</strong> 2005 dollars)
Jurisdiction Operating Total Personal Jobs
<strong>of</strong> Vendor Outlay (1) Output (2) Earnings (3) Supported (4)
City <strong>of</strong> Manassas $49.2 $63.2 $11.7 400
Prince William** $78.2 $121.3 $22.4 767
Northern <strong>Virginia</strong>* $134.7 $217.6 $59.4 2232
<strong>Virginia</strong>*** $135.7 $285.6 $76.9 2824
Sources: <strong>Micron</strong> <strong>Technology</strong>, Inc., GMU Center for Regional Analysis Notes: (1) reported by location <strong>of</strong> vendor; (2) the total value <strong>of</strong> goods and services generated directly and indirectly as a result
<strong>of</strong> the initial operating outlays within the jurisdiction; (3) the additional earnings generated within the respective jurisdiction from the new economic activities supported by the operating outlays; (4)
the additional new jobs supported nationwide by the spending and re-spending <strong>of</strong> the new operating expenditures. *Manassas and Prince William County totals are included in Northern <strong>Virginia</strong> and
Northern <strong>Virginia</strong> totals are included in <strong>Virginia</strong> impact totals. **<strong>The</strong>se economic impacts recur annually.
Operations spending accruing to businesses located in Prince William County totaled $78.2 million in 2005. This spending
added $121.3 million to the County’s economy, reflecting a multiplier <strong>of</strong> 1.551, generated additional personal earnings to
the benefit <strong>of</strong> County residents totaling $22.4 million, and supported 767 jobs in the County, state, and nation beyond those
on the <strong>Micron</strong> payroll.
<strong>The</strong>se economic benefits accruing to the City <strong>of</strong> Manassas and Prince William County, and those captured elsewhere in
Northern <strong>Virginia</strong>, added a total <strong>of</strong> $217.6 to its gross regional product in 2005, generated $59.4 in new personal earnings
for Northern <strong>Virginia</strong> residents (beyond <strong>Micron</strong>’s Northern <strong>Virginia</strong> workers with a payroll <strong>of</strong> $61.7 million), and supported
2,232 jobs within the region, state, and nation.
At the state level, these multipliers are larger reflecting its more complex and self-contained economy (less monetary leakage
to adjacent jurisdictions). <strong>The</strong> $135.7 million in direct operating outlays spent by <strong>Micron</strong> in the State generated $285.6
million in total economic impact reflecting a multiplier <strong>of</strong> 1.9057; that is, for each additional $1 spent by <strong>Micron</strong> within
the Commonwealth <strong>of</strong> <strong>Virginia</strong>, its gross state product realizes a total benefit <strong>of</strong> $1.91. Additionally, $76.9 million in new
personal earnings were generated in 2005 to the benefit <strong>of</strong> state residents with operating outlays supporting 2,824 jobs (fulltime,
year-round equivalent) beyond the 1,013 workers directly compensated by <strong>Micron</strong>. <strong>The</strong>se additional business sales
and personal earnings have important fiscal implications to the State as well as to the local jurisdictions where their vendors
are located and their workers reside.
<strong>The</strong> Fiscal <strong>Impact</strong> <strong>of</strong> <strong>Micron</strong> on the City <strong>of</strong> Manassas
Calculating the revenue and expenditure flows generated by <strong>Micron</strong> in the City <strong>of</strong> Manassas involved application <strong>of</strong> the
GMU fiscal model that allocates the City’s operating revenues and expenditures to their direct sources. <strong>The</strong> basis for this
analysis was the City’s 2005 Comprehensive Annual Financial Report (CAFR).
<strong>The</strong> fiscal model was modified and updated to reflect the revenue and expenditure allocations by land use type for the City
<strong>of</strong> Manassas (this model had been used recently for another project in the City using data from the 2005 CAFR). Based on
this analysis, it had been determined that the non-property tax revenues associated with non-residential land uses generated
$639.09 on a per-employee basis. Actual revenues paid by <strong>Micron</strong> to the City for real estate and for other forms <strong>of</strong> property
were used to determine the total revenue base associated with <strong>Micron</strong>.
Similarly, this fiscal analysis calculated the non-residential demands on city services as expressed on a per-employee basis;

these equaled $797.77. This expenditure demand included the actual usage as well as the availability or general benefit received
by employees (and their employers) from being located within the City <strong>of</strong> Manassas (e.g., theoretically, expenditures
for General Government equally benefit all residents and employees working within the City). Expenditures also include
debt service; this was allocated between residential and non-residential beneficiaries in proportion to the purpose <strong>of</strong> the
public debt (e.g., capital borrowing for school construction was charged only to residential uses).
Applying this model and its per-employee revenue and expenditure multipliers produced total values needed to calculate the
fiscal impact <strong>of</strong> <strong>Micron</strong> on the City <strong>of</strong> Manassas in FY 2005. <strong>The</strong> results <strong>of</strong> this calculation are presented in Table 6. With
total estimated revenues <strong>of</strong> $5.6 million—<strong>of</strong> which 90 percent are in the form <strong>of</strong> direct payments for real estate and personal
property, and with the dollar value <strong>of</strong> demands on the City’s services totaling an estimated at $808,141—the significance
<strong>of</strong> <strong>Micron</strong>’s fiscal contribution to the City is clear. Revenues exceed expenditure demand by a factor <strong>of</strong> 7; that is, for every
$1 <strong>of</strong> expenditure demand, <strong>Micron</strong> contributed $6.90 in revenues to the City’s treasury for a net benefit totaling $4.85 million.
Table 6: <strong>The</strong> Fiscal <strong>Impact</strong> <strong>of</strong> <strong>Micron</strong> on the City <strong>of</strong> Manassas
Sources
Values
Revenues
Real Estate and Other Property Taxes $5,010,000
Non-Property Tax Revenues* $647,398
Total Revenues $5,567,400
Total Expenditures** $808,141
Net fiscal <strong>Impact</strong> (Revenues/Expenditures) $4,849,259
Net Fiscal Benefit Per <strong>Micron</strong> Employee $4,787
Sources: City <strong>of</strong> Manassas Comprehensive Annual Financial Report and GMU Center for Regional Analysis. *based on per employee non-property tax revenue multiplier for 2005. **based on per
employee expenditure-demand multiplier for 2005.
<strong>The</strong> magnitude <strong>of</strong> this net fiscal benefit can be calibrated by expressing it in terms <strong>of</strong> <strong>Micron</strong>’s employment base. For each
<strong>of</strong> <strong>Micron</strong>’s 1,013 Manassas workers, <strong>Micron</strong>’s net fiscal contribution to the City equals $4,787. <strong>The</strong> significance <strong>of</strong> this
net fiscal contribution can be seen by calculating the budget impact <strong>of</strong> its absence; that is, if it had not existed. Without the
revenue surplus generated by <strong>Micron</strong> in FY 2005, the City’s budget would have had a deficit <strong>of</strong> $3.665 million rather than
registering a surplus <strong>of</strong> $1.184. In effect, this surplus allowed the City to lower its real estate tax rate in 2005 and to provide
public services to its residents that otherwise would have required a higher tax burden. In the absence <strong>of</strong> this fiscal surplus,
the real estate tax rate could have only been reduced from it 2004 rate <strong>of</strong> $1.15 per $100 assessed valuation to $1.086 per
$100 rather than the $1.00 rate actually adopted in 2005 with no year-end surplus. This fiscal benefit has important implications
to the City’s budget and to the added value its residents receive for the taxes they pay.
Summary <strong>of</strong> <strong>Impact</strong>s
<strong>The</strong> economic impacts generated by capital and operating expenditures by <strong>Micron</strong> in the City <strong>of</strong> Manassas, Prince William
County, Northern <strong>Virginia</strong>, and the Commonwealth <strong>of</strong> <strong>Virginia</strong> can be measured in terms <strong>of</strong> direct and total job creation,
added personal earnings that will accrue to local and state residents, and the additional jobs supported by this spending
beyond the direct workforce employed <strong>Micron</strong>. <strong>The</strong>se impacts are generated both by capital outlays that extend for the
duration <strong>of</strong> plants and equipment modernization and occur on an annual basis from direct payroll and operating outlays by
<strong>Micron</strong> for the daily operation <strong>of</strong> its Manassas plant.

<strong>Micron</strong> employed 120 residents <strong>of</strong> the City <strong>of</strong> Manassas in 2005 with a total payroll <strong>of</strong> $8.5 million. Additionally, its operating
expenditures captured by vendors located in the City, added $49.2 million to the City’s economy, generated $11.7
million in new personal earnings to the benefit <strong>of</strong> City residents, and supported 400 jobs beyond those compensated for
directly by <strong>Micron</strong>.
<strong>Micron</strong>’s 1,013 workers had a total annual payroll <strong>of</strong> $68.8 million. This payroll spending added $137.6 million to the
state’s economy, generated $41.1 million in additional personal earnings to the benefit <strong>of</strong> state residents and supported a total
<strong>of</strong> 1,802 jobs nationwide. <strong>Micron</strong>’s operating outlays totaled $135.7 million in 2005 and added a total <strong>of</strong> $285.6 million to
the state’s economy, generated an additional $76.9 million in personal earnings, and supported 2,824 jobs nationwide.
Capital spending captured by state businesses over the 2002–2005 period totaled $179 million. This capital spending added
a total <strong>of</strong> $376.2 million to the state’s economy over this four-year period, generated $99.3 million in new personal earnings
for <strong>Virginia</strong> residents, and supported 3,760 jobs nationwide.
For the City <strong>of</strong> Manassas and State, <strong>Micron</strong>’s presence represents a major net fiscal benefit. At the City level, <strong>Micron</strong> was
responsible for generating revenues estimated at $5.6 million in FY 2005, including $5 million in real estate and other property
taxes. <strong>Micron</strong> received, directly or indirectly, an estimated $808,141 in locally funded services during the year, yielding
a net fiscal benefit <strong>of</strong> $4.85 million, or $4,787 per employee. In the absence <strong>of</strong> <strong>Micron</strong>’s net fiscal benefit, the City’s budget
would have had experienced a $3.665 million deficit and would have had to reduce its level <strong>of</strong> services or raise its real estate
tax rate. At the state level in FY2005, <strong>Micron</strong> paid $5.96 million in corporate taxes, payroll withholding, and unemployment
taxes.
Whether recurring economic benefits generated by operating outlays or one-time benefits flowing from capital expenditures,
these income and employment impacts are significant in their magnitudes. <strong>The</strong>y constitute important economic and fiscal
resources for local and state government far exceeding the direct dollar value <strong>of</strong> <strong>Micron</strong>’s direct outlay. As the operating
expenditures recur (and likely increase) annually, these expanded economic benefits will continue to accrue annually to the
City <strong>of</strong> Manassas, Prince William County, and the Commonwealth.