Economic impacts of the Pueblo Smoke-Free Air Act

On July 1, 2003, the city of Pueblo CO enacted a smokefree ordinance (Pueblo Smoke-Free Air Act [PSFAA]) that prohibited smoking in public places and workplaces, including taverns and restaurants. Opponents to this ordinance argued that it would have a negative impact on tavern and restaurant sales.

The purpose of this study was to determine whether the PSFAA had a negative economic impact on tavern and restaurant sales tax revenues.

With data gathered in 2007, this study implemented an interrupted time-series model in 2008, using 42 months of pre- and post-intervention sales tax revenue data for Pueblo to determine whether implementation of this ordinance had an effect on tavern and restaurant sales tax revenues. Ratios of tavern and restaurant openings to closings were also computed for the pre- and post-intervention periods.

Pre-post sales tax revenue data showed slight losses in sales tax revenue for taverns, and gains for restaurants, which more than offset the tavern losses. After adjusting for the consumer price index, the city of Pueblo experienced a 20.3% gain in combined tavern and restaurant sales tax revenues from the pre-ordinance period to the post-ordinance period. The ratio of tavern openings to closings improved from 1:1 pre-period to 3.3:1 post-period and the restaurant ratio remained unchanged at approximately 1.78:1 from pre- to post-period.

There is no evidence that the PSFAA had a negative economic impact on consumer price index-adjusted tavern and restaurant sales tax revenues. From a fiscal policy perspective, this ordinance may have contributed to a net increase in sales tax revenues for the city of Pueblo. The business openings/closings data suggest that the confidence Pueblo's business sector had in the local hospitality industry was not negatively influenced by the PSFAA.