Fiscal Impact Modeling
The TexSAFE Experience
Garen Evans
Community Resource Development
Mississippi State University
Tex$AFE
Decision-making

“What if” scenarios
Community Education

Linkages in a local economy
Policy Analysis
Review of Impact Models
Input-Output Analysis
 Wassily Leontief
Computable General Equilibrium
 Kraybill et al. 1992
Econometric
 Adams et al. 1975
Simulation
 Law and Kelton 1982
Input-Output Analysis
Wassily Leontief
b. 1906
Nobel Prize, 1973
…for the development of the input
output method and for its
application to important economic
problems.
x = (I-A)-1 y
Input-Output Analysis
Advantages

Inexpensive & ease of use
Disadvantages


Theoretical: CRS, fixed inputs, elasticities
Practical: lacks fiscal component, easily
abused.
Integrated Modeling
“The theoretical motivation for
integrating econometric models with
input-output models stems from the
restrictive assumptions of either
component when used by itself.”
 (Rey 2000)
Strategies:

embedding, linking, coupling
Tex$AFE: The Idea
1. Identify Direct Impacts
2. Estimate secondary impacts with
input-output analysis.
3. Use total I-O impacts with Tex$AFE.
4. Estimate fiscal changes.
T
E
X
$
A
F
E
Secondary data
(254 counties
cross-sectional)
New jobs and
earnings
IMPLAN
Input-output
model
Regression
equations
Impacts:
output
value-added
earnings
jobs
Coefficients
Spreadsheet
Baseline, project,
and impacts
Secondary
data for
county
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$AFE: Output
Demographics
Property Revenues
Sales Revenues
Other Revenues
Expenditures
Accounts
Tex$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
$97.5 million
1 cheese plant
24 dairy farms
Tex$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 Network
http://rupri.org