Modeling Property Tax Revenue Caps

Hi William, Thank you for your post! The loss to the state by lowering the tax revenue cap is something that can be modeled in IMPLAN if you know what that money would have been spent on by the state. If you know what those revenue dollars would have been spent on, yes you can do an Institutional Spending Pattern and make your appropriate selection from there. The imported spending pattern will sum to $1. You would need to edit the Activity level by navigating to Setup Activity>Edit Activity to enter the portion of the total new budget to be spent; this would be your $132 million, then run the scenario to create impact results. If you do use the The State & Local Government Non-Education spending pattern, we advise advise removing the State & Local Government Non-Education payroll Sector and handling it separately, with the reminder that for this Sector Value Added = Output = Industry Sales. As a reminder, reported Direct Effects need to be summed into the Indirect Effects and then the Direct overlaid from the State & Local Government Non-Education Sector (with Output adjusted). Thanks!

A couple of follow up questions: 1.) Since property taxes are primarily generated for schools, I should choose the "State/Local Govt Education" spending pattern? 2.)I need to change the activity level from 1 to $132,000,000? Should this be entered as a negative number since this is money that is no longer being collected? 3.)Regarding the last comment about removing payroll and summing the different types of impacts, does this still apply if I use the education spending pattern? Thanks for the clarification! William

Hi William, 1. You are correct, you would select the State/Local Govt Education spending pattern. This is operational only. If you think that it might effect construction capital expenditures; then that would need to go to a different spending pattern. Activity Options> Import> From Another Model. Direct the file structure back to the IMPLAN User Data folder and then select Utilities and the SpendingPatternsNoPayroll_for_Programs_by_SLGovt, you will find a spending pattern there for construction of schools. 2. Exactly, you would enter a negative $132,000,000 figure into Activity level to get the impact of the potential loss to the economy, assuming that the cap caused that type of loss of revenue and it wasn't replace by some other means. 3. It does still apply to remove the payroll. The Sector is Direct while the remaining Sectors describe the first-round local purchases made by State & Local Government Education.

Thank you for your help. I am still unclear on the last point about handling payroll separately. To start, I delete both payroll sectors for state & local govt (sectors 3531 and 3533). I then add a new activity to account for payroll. Would I choose Labor Income Change and select sector 5001? Since I don't necessarily know the level of payroll, what number would I use as an input? Once I have the inputs in order, can I run both activities in one scenario, or is there a more involved process for aggregating the outputs? Sorry for the long list of questions, but this is an atypical project for us and I want to be sure I am doing the analysis correctly. Thanks! William

Hi William, There is no problem with asking many questions, we want to help you! If you need Direct Employment estimated, you would be better off doing an Industry Change Activity for 3531 and 3533, as this will estimate the Direct Employment. If you use the Industry Change methodology you would want to run two Scenarios and add them together in Excel, otherwise you would have gained no benefit by separating them. Reported Output here is not useful, but the reported Value Added is correct. If you would like to run the Labor Income Change it would be run in a single Scenario. In both cases to create 'standard' impact results. You'll want to add the Direct Effects into the Indirect Effects and then add your Direct to the table and re-sum the totals. To get the payroll value, I would take note of the coefficients for 3531 and 3533 to multiple this against your value of $132,000,000. However this method when using the Labor Income Change Activity Type, will result in a slight overestimation of payroll expenditures associated to the State & Local Government Activity. This is because the Labor Income is a significant part but slightly less than Value Added for government Sectors. However this methodology is fine for the Industry Change Activity Type. Thanks!