Magazine article Government Finance Review

Fiscal Impact Tools Change Local Planning

Magazine article Government Finance Review

Fiscal Impact Tools Change Local Planning

Article excerpt

Fiscal impact tools are emerging across the nation and changing the dialog around local and regional planning. Jurisdictions now have a number of tools they can use to compare costs with revenue and analyze fiscal impacts, evolving to meet the increased demand of resource constrained municipalities. This article will take readers on a tour from California to Florida, introducing six emerging fiscal impact tools and providing a cursory review of how these tools are changing local and regional planning discussions.


At the turn of the 21st century, California's state capital, like many other communities, was faced with some difficult decisions. Between 2000 and 2050, the Sacramento region was projected to add more than 1.7 million people and 1 million jobs. Without new approaches to planning for the future, the community's quality of life had the potential to decrease substantially. Already plagued by air quality concerns, the northern San Joaquin Valley faced worsening congestion--a projected increase of more than 50 percent by 2025--and increasing air pollution if growth and investment strategies continued on their current path. In the face of these challenges, the Sacramento Area Council of Governments Board of Directors embarked on a regional "blueprint" project to create a 50-year plan for growth in the region. The project was taken on to provide a better understanding of the linkages between transportation, land use, and air quality, and to set a new vision for the future of the region.

The Sacramento area was faced with a choice: continue to grow on its current trajectory of low density development and accept the associated impacts (the "baseline scenario"), or prioritize compact, mixed-use development and provide more transit choices as an "alternative scenario" that might accommodate growth without sacrificing quality of life. But what would be the regional implications of pursuing a new growth strategy? To truly understand the costs and benefits of this new approach, SACOG needed to look beyond capital investments to address the ongoing operations, maintenance, and service costs associated with land use decisions.

Their analysis showed that the alternative scenario would result in substantial savings in the cost of providing services such as water, sewer, roads, flood control, drainage, parks, and dry utilities; the region could save $13.8 billion over 50 years if it chose what will be called the "preferred alternative" over the "base case." More than half of this savings comes from purchasing far less land to mitigate the consumption of agricultural and habitat lands. The remaining savings are the result of less infrastructure being needed to serve the same number of residents and employees. (1)


The blueprint scenario analysis laid the foundation for the Integrated Model for Planning and Cost Scenarios tool the region now uses to compare costs with revenue to analyze fiscal impacts. The fiscal impact analysis identifies any gaps in funding, which can then be addressed through additional revenue sources or a change in infrastructure-generating land use patterns.

Local governments across the nation are experiencing chronically under-funded budgets, leading to a new awareness that what they build and the ability for those investments to pay returns will have a serious impact on their capacity to sustain their communities. With this new awareness there is a growing need to evaluate whether new developments will push a community ahead or dig them into deeper debt. Emerging fiscal impact analysis tools enable local governments to make this assessment, helping prepare them for a new level of leadership and accountability as they plan for strong, sustainable communities.

Intergovernmental agencies across the United States, including the Ohio-Kentucky-Indiana Regional Council of Governments and the Tallahassee, Florida, Capital Region Transportation Planning Agency, are also developing their own regional fiscal impact models to comparatively evaluate development proposals on the basis of municipal costs and revenue return. …

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