ABSTRACT
The purpose of fiscal impact analysis is to project the changes in costs and revenues of governmental units which are likely to occur in response to a development project. The governmental units of primary interest are those local jurisdictions which may experience substantial changes in population and/or service demands as a result of the project. Fiscal impact analysis had its origins in the 1950s, and a number of studies were undertaken to statistically predict municipal expenditures. The cost functions or multipliers so derived were employed in studies to determine whether certain types of housing development "pay their own way" in terms of costs and revenues to local governments. Key concepts in the estimation of public sector costs and revenues include the basic economic principles of demand and supply. These concepts were developed primarily with reference to private sector goods and services, however, and their application to public sector services is limited by a number of conceptual and practical obstacles.
