Fiscal Impact ModelingThe TexSAFE

ExperienceGaren EvansCommunity Resource DevelopmentMississippi State University

Tex$AFE

Decision-making “What if” scenarios

Community Education Linkages in a local economy

Policy Analysis

Review of Impact Models

Input-Output Analysis Wassily Leontief

Computable General Equilibrium Kraybill et al. 1992

Econometric Adams et al. 1975

Simulation Law and Kelton 1982

Input-Output Analysis

Wassily Leontiefb. 1906

Nobel Prize, 1973…for the development of the input output method and for its application to important economic problems.

x = (I-A)-1 y

Input-Output Analysis

Advantages Inexpensive & ease of use

Disadvantages Theoretical: CRS, fixed inputs,

elasticities Practical: lacks fiscal component,

easily abused.

Integrated Modeling

“The theoretical motivation for integrating econometric models with input-output models stems from the restrictive assumptions of either component when used by itself.”

(Rey 2000)

Strategies: embedding, linking, coupling

Tex$AFE: The Idea

1. Identify Direct Impacts2. Estimate secondary impacts with

input-output analysis.3. Use total I-O impacts with

Tex$AFE.4. Estimate fiscal changes.

TEX

$AFE

New jobs and earnings

Secondary data (254 counties cross-sectional)

IMPLAN Input-output model

Impacts: output value-added earnings jobs

Coefficients

Spreadsheet Secondary data for county

Baseline, project, and impacts

Regression equations

Tex$AFE: What’s Inside

Spreadsheet Model Easy to use and maintain Multiple spreadsheets

Base model data Local data Statistical estimators Modular results

Tex$AFE: Data Demographic

Population Total, school-aged, elderly

Commuting Economic

Jobs, earnings, income, unemployment Fiscal

County revenues, expenditures Rates: city, school district, special district

Tex$AFE: Estimators

NETCMT =f(jobs, unemp)POP=f(jobs, netcmt)CLF=f(pop,hisp)SAC=f(pop,hisp)INCOME=f(pop,earn)

RETAIL=f(income)PROPV=f(income)HOTREV=f(income)MIXB=f(income)

CA_REVX=f(pop)CA_IGED=f(pop)CA_DEXP=f(pop)

Tex$AFE: Calibration

Tex$AFE: Output

DemographicsProperty RevenuesSales RevenuesOther RevenuesExpendituresAccounts

Tex$AFE & Wind Turbines

82.5 megawatts on 3200 acres $180 million

Tex$AFE & Wind Turbines

Pecos Wind Farm Property Taxes:

Buena Vista & Iraan ISDs: $22.8 million (25pv)

County Taxes: $8.2 million without tax abatement $2.4 million with tax abatement Present Value of 10 year tax abatement:

$5,794,276

Tex$AFE & Cheese

$97.5 million1 cheese plant24 dairy farms

Tex$AFE & Cheese

The county property tax base increases by $109.5 million.The net fiscal impact for all jurisdictions in the county is $1.275 million annually (nominal dollars).The net present value of the fiscal impact over 20 years for all jurisdictions is $17.12 million (real dollars).

Tex$AFE & Space Transport

First commercial spaceport in Texas.

Fiscal impacts: Promo/enabling

Economic impacts: Ascender Project

Distribution of Sales Tax Revenues

Where to Start?

Shields, M.. 1998. An Integrated Economic Impact and Simulation Model for Wisconsin Counties. Ph.D. Dissertation. University of Wisconsin. Madison.

Swallow, B., and T. Johnson. 1987. A Fiscal Impact Model for Virginia Counties. Review of Regional Studies 17(1):67-74.

Swenson, D., and D. Otto. 2000. The Iowa Economic/Fiscal Impact Modeling System. Journal of Regional Analysis and Policy 28:64-75.

Community Policy Analysis Networkhttp://rupri.org