States Seek the Next Big Boom: Retirees

Cindy LaRue wants to position Arizona as a leader in what could be the biggest growth industry of the 21st century: senior citizens.

In 1996, the first wave of baby boomers turned 50. Approximately 78 million will follow. And with baby boomers considered to be more lifestyle conscious and more likely to relocate than their parents, they have become a financial boon to Sun Belt states.

Mrs. LaRue's job is to woo healthy and wealthy seniors to her state, and from the tiny 15th-floor office at the Arizona Department of Commerce in Phoenix, she tracks leads, analyzes trends, and frets over increasing competition and misperceptions about Arizona.

"There's still the image of Arizona as the Wild West in some people's minds," LaRue says. "We sometimes get people asking if we have electricity and phone service in all of our cities. It's part of our charm, but it's also part of the perception we have to overcome."

Historically, Arizona has been second only to Florida in retirement destinations. But eight years ago, California supplanted Arizona as No. 2, and other Sun Belt states have been gaining ground rapidly. Indeed, seven states have designated seniors as an industry, and competition is growing. Last week, Arizona stepped up the pressure by doubling to $400,000 the money it spends on recruitment. Yet many citizens here are asking if the push is such a good idea.

While seniors bring $307 million each year to the Arizona economy, no one knows what the strains on services such as health care might be. In addition, a funding battle between a school district and retirement community here has illustrated problems between newcomers and longtime residents. They are issues that are dividing communities across Arizona and hint at flash points that could arise elsewhere as baby boomers near retirement.

Who's recruiting?

Arizona established its Office of Senior Living in 1996, when state lawmakers identified seniors as one of the 10 industries most important to Arizona's prosperity in the next century. Since 1989, Alabama, Pennsylvania, Mississippi, Montana, Utah, and Arkansas have also set up recruiting offices to lure seniors.

The competition is fueled primarily by demographics. According to one forecast, the 70 million people age 50 and older account for half the discretionary spending in the United States.

Advocates of senior recruitment say bringing in more seniors is good for a whole host of reasons: Seniors drive less than people under age 55, so they contribute less to air pollution; they don't increase traffic congestion because they travel primarily during off-peak hours; and they have no school-age children to burden crowded school systems. They are quiet, they give time and money to community organizations, and their crime rate is virtually zero.

But perhaps most important, seniors bring money and jobs.

So far, only 46 couples have moved to Arizona as a result of the state's marketing efforts, LaRue says, but they have brought an estimated $1.3 million in annual income, including Social Security benefits and $15 million in assets. They also created an estimated 184 jobs, including service-sector jobs and higher-paying jobs in the health-care professions.

Yet the practice of recruiting seniors is not without its critics.

Participants at a recent forum to discuss state issues raised concerns about the potential long-term strain on social services. Seasonal winter residents already stretch resources at small, rural hospitals, and at times, these hospitals are forced to close all but emergency admissions in response to seasonal demand.

Wary fingers also point to a potential financial crisis in Florida, the state with the highest percentage of seniors. Florida spent $1.3 billion in 1997 on Medicaid - the insurance program that pays health-care costs for poor or indigent seniors. That bill could soar as high as $8.9 billion - roughly half the state's current general revenue budget - by 2010 if current conditions continue.

While LaRue says Arizona's policy of targeting seniors with significant resources should prevent such a crisis here, some people worry that accommodating the influx of new residents will be at the expense of the ones who are already there.

School-funding flap

There are other concerns, too. In Sun City West, a middle-class suburb northwest of Phoenix where the streets are filled with golf carts instead of children, retirees recently fought with members of the local school board over local taxation. Some residents of Sun City West complained that they were unfairly subsidizing the Dysart School District - paying three times more than neighbors who aren't in the school district. So a well-organized group called Citizens for Tax Equity launched a bitter fight to de-annex their neighborhood from the poor, largely Hispanic surrounding community.

The move failed, but members of the group later captured four of the five seats on the Dysart school board. Legislation that provides state funding for school construction passed recently and may have made the point moot, but much bitterness remains.

"Everything in Arizona is set up for the resort, for the golf-course set that's going to come in from other states and drop some money," says the Rev. Mitchell Eickmann, the only remaining member of the Dysart school board who is not a resident of Sun City West. "I think the state is not really thinking long term and it is certainly not taking into account the interests of its long-term residents."

Still, proponents say the shift to a community of older citizens is inevitable, and it is best to be prepared. "It's certain Arizona's senior population will double," says LaRue. "The more proactive we are in planning for that, the more we ensure that it is an opportunity rather than a threat."