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fiscal nows, The net fiscal flow is the revenues less the either be positive (deficit) or zero There are many methods used to perform fiscal impact analysis, But it is important to remember that FIA must be designed to the tasks described above. FIA is a its upon the accuracy of interrelationships among its components, assumptions and variables. No fiscal impact model can make policy rather a model can produce information about the consequences of a decision or development, given specific economic and demographic assumptions provided the user. FREQUENTLY USED FISCAL IMPACT METHODOLOGIES T,'end Analysis Trend analysis relies on history to project the future, For example, expenditures for social services may be found to have increased an average of 3 percent annually for the last five years in constant do lial's , Trend analysis would extend the 3 percent growth rate into the future, Advantages: Quick, inexpensive, and easily implemented. Low data analysis requirements. Does not require special training, Disadvantages. Ignores the effect of demographic and economic conditions, does not consider changes. Average Cost (Revenue) The average-cost or average-revenue approach determines the per capita costs or revenue and then multiplies this figure by the incoming population, If per capita operating costs for primary and secondary education are $2,000 per pupil per year and a development would add 100 new pupils, the average cost method would assign a cost of $200,000 for schools, Advantages: Quick, inexpensive and easily implemented, Moderate data analysis requirements. Disadvantages: Ignores the effect of demographic and economic conditions, does not consider major changes. Does not consider marginal costs. Deterministic Analysis Deterministic analysis relies on a policy-derived approach to project the future, For instance, staffing analysis may determine that for each thousand persons a jurisdiction there should be one police officer. This approach applies standard cost factors for the police officer and associated support staft~ vehicles and determine the per thousand residents of services. This to the projected population determines the cost attributable to the project. Advantages: Higher degree of accuracy than average-cost approach, Considers marginal costs, Disadvantages: Requires substantial budget and data analysis, greater amount of time to accomplish, Econometric Techniques Econometric analysis relies on establishing statistically significant links between "dependent" and "independent" variables using regression analysis of historic data, It may be determined through regression analysis that there is a relationship between personal income. and the amount of sales taxes generated, Thus, given personal income, econometric analysis could provide a forecast of sales tax revenue based on the statistical relationship, Advantages: Higher degree of accuracy for some items, Considers economic changes. Disadvantages: Requires knowledge of statistical techniques, Requires projection of dependent variables, 2