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4. FISCAL IMPACT METHODOLOGY AND KEY ASSUMPTIONS This chapter describes the fiscal impact analysis methodology and highlights key assumptions utilized in the analysis. Methodological Overview EPS developed a fiscal impact model designed to test how new growth affects General Fund costs and revenues at buildout. While State and Federal funding sources are considered indirectly, the analysis is focused primarily on the City's General Fund expenditure and revenue items that (1) represent a substantive component of the overall budget and (2) are likely to be affected by the General Plan policies and growth trends. Thus, General Fund costs and revenues that are relatively small or are operated on a cost-recovery basis are excluded from the analysis. This analysis is based on the mid-term FY2012-13 budget and assumed as the existing service level "baseline"for the purpose of projecting General Fund revenues and costs. However, it is recognized that budget cuts during the Great Recession, in many cases, reduced City service levels below historic and/or optimal service levels. While economic conditions have gradually started to improve after the end of the recession, long-term structural outcomes are uncertain. As a starting point, this report documents actual service standards based on the existing level of service either provided by applicable City departments (e.g., number of fire fighters, park acres, road miles, etc.) or reflected in the most recent budget. In some cases, a current service is below the preferred standard; given the current fiscal situation, it is recognized that the City's current service provision may not be optimal. To the extent that service standards improve above those estimated in this analysis, the City's General Fund expenditures will increase. This analysis utilizes several forecasting approaches to evaluate the General Fund costs and revenues associated with new growth. The primary methodology and factors for each General Fund item are summarized in Table 7 and highlighted below. • Service population. The service population for any given budget item is defined as the universe of individuals that generate impacts and is based on a review of the various population groups—including residents and employees—relative to each of the City's service providers. For each department, the relative impacts of employment and population are compared and used to estimate a total service population. For instance, for general government, an employee is estimated to have a service demand profile equal to about half the service demanded by a typical resident. Other types of City services, such as parks and library, are provided to the extent that they are accessed by the population. For these departments, an employee is only likely to access services during non-work hours and therefore has a significantly lower impact than the residential population. • Case study. A case study approach was used to calculate fiscal impacts for budget items that may not vary directly with service population or for which detailed data is available to make a more precise estimate. For example, the case study approach is used to estimate property and sales tax revenues. Economic&Planning Systems, Inc. 19 P:\121000\121062Pleasanton\Report1121062Report_FINAL.doc