Economic Analysis Flashcards
Fiscal Impact Analysis Notes
AKA cost-revenue analysis.
Estimates costs and revenues of a proposed development on a local government.
Estimated costs to provide municipal services compared against sales, property, and income tax generated by a new development. Difference between the revenues and expenditures = fiscal impact AKA net fiscal impact.
Revenues > expenditures = development has a positive fiscal impact.
Expenditures > revenues = negative fiscal impact.
Expenditures = revenues = neutral fiscal impact.
Can also be used to analyze the cumulative impact of land use decisions. Ex. used to analyze a proposed annexation or rezoning.
Use with caution - some development may appear net negative fiscal impact; however, it’s non-numeric/unmeasurable social, economic, and environmental benefits are valuable.
Fiscal Impact - Average Per Capita Method Notes
Simplest but least reliable.
Divides total local budget by the existing population in a city to determine the average per capita cost for the jurisdiction. Result is multiplied by the expected new population associated with the new development.
Assumes cost of service to new development is same as cost to service existing community - not always true.
Average Per Capita Method
Fiscal Impact - Adjusted Per Capita Method Notes
Uses average per capita figure and adjusts based on expectations about the new development.
Relies on subjective judgement.
Adjusted Per Capita Method
Fiscal Impact - Disaggregated Per Capita Method notes
Costs and revenues estimated based on major land uses.
Ex. Cost of servicing a shopping center vs. an apartment complex.
Disaggregated Per Capita Method
Fiscal Impact Analysis notes - Dynamic Method
Statistical analysis applied to time-series data from a jurisdiction.
Ex. determines how much sales tax (per capita) generated by a grocery store and applies to a new development. Requires more data and time.
Fiscal impact is challengeing - sometimes expenses (new roads) are financed over multiple years, multiple develpments share capital facilities.
New facilities per capita cost is determined by calucating average cost per capita (of user) or capacity of the facility divided by the aniticipated number of residents/users.
The movement of private investment recyling additional private investment in an economy following government-backed economic development.
Describes how certain types of jobs will drive demand for even more jobs.
Multiplier Effect
Multiplier Effect Notes
Multipliers measure the interdependence/linkage between industry sectors within a region.
Provide estimate of “ripple effect” due to local change in economic activity. Ex. direct suppliers for a new industry and grocery/hairdressers.
Government should provide incentives to businesses to locate/expand and create a positive business environment while providing quality city services.
Geographic areas in which companies can qualify for a variety of subsidies.
Encourage businesses to stay, locate, or expand in depressed areas (help revitalize).
Include corporate income tax credits and property tax abatements.
Offered by local, state, and federal governments since the 1980s.
