Business Services GroupThe Bureau of Business and Economic Research performs applied research projects for business, non-profit agencies, and government entities. The research may be primary where we gather and analyze new data, or secondary research where we search for existing studies and data. All types of entities come to us for information needed to make important decisions.

nav-left cat-right
cat-right

Fiscal Impact Analysis

Fiscal impact analysis involves projecting changes in revenues and/or costs for one or more governmental jurisdictions, usually associated with an anticipated economic impact of some nature, often associated with some proposed or actual development project. The economic impacts create changes in demand for government services which affect costs and also cause changes in local tax bases which in turn affect revenues.

Changes in demand for government services may arise from changes in a number of factors:
  • total population
  • demographic composition of population (e.g. age, employment status, income distribution).
  • housing
  • commercial activity
  • infrastructure

Changes in any of these elements may change the need for local government to provide general or particular services. Costs associated with such changes may be estimated through either using current average costs or through detailed projections based upon expected service demand. Revenue increases of decreases reflect changes in taxable economic activity within the jurisdiction of local governments. Improvement or deterioration in economic activity affects local tax bases which in turn affect local government revenues through taxation at the appropriate tax rate. Because of the complexity of this causal chain, changes in each stage may or may not cause a change in net local government revenues. For example, a change in economic activity may not change the value of the legal tax base if purchases by a business are exempt from sales and use tax. A change in the tax base may not affect revenues as in the case of property tax limitations or guaranteed sales tax distributions. Thus, particular impacts must be estimated using specific economic impact projections and analysis of the local government revenue system for a particular entity.