Local Economic Impacts Associated with Pure Taxable Capacity Changes

Abstract

An attempt is made to broaden the purview of fiscal impact analysis to include impacts on the local private sector that may stem from local public sector changes. More specifically, attention is focused on the limiting case, in which new private sector development yields positive changes in fiscal capacity, but does not increase public service demands or interact with the local private sector. This phenomenon is termed a ''pure'' change in fiscal capacity, or, stated differently, pure tax revenue importation. Interest in this issue stems from an analysis of the local impacts of constructing and operating nuclear power stations. Nuclear power stations, like other electrical generating facilities, are characterized by large capital-labor ratios, implying that the impact of siting would be to increase local taxable capacity, via the property tax base, to a greater extent than local private sector activity, via new hirings. Moreover, a small labor force implies a modest change in the demand for local public services, and facilities of this nature by themselves demand few, if any, public services. A nuclear power station, however, may be distinguished from other electrical generating facilities through siting regulations that require locating in a low population density area, a fact whichmore » ensures the influence on the community will be substantial. The question of how and to what degree feedback effects from local public to local private sector may take place is described.« less