Abstract
The paper presents a simple, realistic, and cost-effective methodology for estimating net fiscal impacts that does not require input-output or structural model frameworks. The methodology is most appropriate for projects in rural areas where analytical methods are constrained by limited data. The method is illustrated in the context of additions to power capacity presented in a 1992 resource plan submitted by a power company in Nevada, however, the principles are not specific to the power company or to the state of Nevada.
Highlights
Public regulatory bodies are increasingly requiring public utilities to include analysis of regional economic impacts in the facilities planning process
The impetus to require economic impact analysis in the case of public utilities stems from the fact that power plants are often sited in rural areas, where project-related growth may exert a significant impact on the local economy
Public utility resource planning requires consideration of many potential projects, and, at the same time, utilities are increasingly being required to assess various economic impacts associated with each proposed project states and counties are frequently pressured to evaluate economic development strategies and tax incentive policies designed to attract new industrial construction
Summary
Public regulatory bodies are increasingly requiring public utilities to include analysis of regional economic impacts in the facilities planning process. If sufficient capacity exists to provide additional government services without new capital construction, the marginal impact is the appropriate measure of the power generation facility's impact on local government spending. The net fiscal impact measure focuses on county, state, and school district general fund revenues and expenditures Revenue impacts include both direct taxes and fees paid by the power company for the project under analysis and indirect taxes paid by project-related employees. Revenue from the remaining taxes is earmarlced for programs funded by specific taxes such as building inspections funded by pennit fees Increased revenue from these taxes and fees is not included in the net fiscal impact measure because it is theoretically matched by increased government ·expenditures to provide additional project-related services. The construction phase impact estimates should be viewed as upper bounds on the potential impacts, since the estimation methodology does not attempt to account for the expectation that a smaller proportion of families will move to the area for short-term construction employment than for operations employment
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