Payment in Lieu of Taxes as Direct Impact

I'm working on an impact analysis where the company building a plant in our area has negotiated a payment in lieu of taxes instead of paying the typical property taxes for our state. How should I account for this in the direct impact?

My understanding of tax payments is that since they go directly to the government, they should be excluded from the multiplier portion of the impact analysis as they do not constitute secondary spending in the local economy. I do add them back in as part of the direct impact once the model has finished calculating indirect and induced impacts.

Is this correct? Or should I be adding another event in the analysis for a direct impact to the government sector?

Thanks for your help!

Official comment

Michael Nealy

January 24, 2023 17:10
Edited

Hello!

Excluding the PILOT from the construction Event Value, and then adding this value back in (after running the analysis), is a valid approach. However, if you have more detailed information about how and when the government will utilize these funds, you can model them in IMPLAN as separate Events. There are a few options depending on what the money is used for, including an Institutional Spending Pattern Event to model general government spending or a series of Commodity Events to model capital investment expenditures.

Best,

Payment in Lieu of Taxes as Direct Impact

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