2. Fiscal Impact Modeling The TexSAFE Experience Garen Evans Community Resource Development Mississippi State University

4. Tex $ AFE Decision-making “What if” scenarios Community Education Linkages in a local economy Policy Analysis

5. 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

6. 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

7. Input-Output Analysis Advantages Inexpensive & ease of use Disadvantages Theoretical: CRS, fixed inputs, elasticities Practical: lacks fiscal component, easily abused.

8. 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

9. 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.

10. TEX$AFETEX$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

11. Tex $ AFE: What’s Inside Spreadsheet Model Easy to use and maintain Multiple spreadsheets  Base model data  Local data  Statistical estimators  Modular results

12. 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

13. 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)

15. Tex $ AFE: Calibration

18. Tex $ AFE: Output Demographics Property Revenues Sales Revenues Other Revenues Expenditures Accounts

23. Tex $ AFE & Wind Turbines 82.5 megawatts on 3200 acres $180 million

24. 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

25. Tex $ AFE & Cheese $97.5 million 1 cheese plant 24 dairy farms

26. 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).

27. Tex $ AFE & Space Transport First commercial spaceport in Texas. Fiscal impacts: Promo/enabling Economic impacts: Ascender Project

28. Distribution of Sales Tax Revenues

29. 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