Local Government Fiscal and Economic Impact Model: Cost-Benefit Analysis of New and Expanding Firms Requesting Property Tax Abatements, Draft Copy

Abstract

The Fiscal and Economic Impact Model is an assessment tool which is used to analyze the fiscal and economic consequences of a new development such as a new firm's location or an existing firm's expansion within a community. The Model is based on a cost-benefit analysis (CBA) to examine the fiscal and economic impact that a firm has on a community in terms of measurable tangible costs and benefits. In particular, the purpose of the Model is to estimate the costs and benefits associated with the granting of a property tax abatement to a new or expanding firm. Employing over 240 input variables, the Model differs from a simple financial accounting framework because a much broader range of impacts -- both direct and indirect -­are taken into account.

The Fiscal and Economic Impact Model of the Institute for Public Policy and Business Research at the University of Kansas is an extension and refinement of a cost-benefit model originally developed by Dr. David Darling of Kansas State University's Extension. For a detailed description of the Institute's conceptual and technical improvements and refinements, and for a proposed further development, refer to Appendix 1.