Strategies for the Mitigation of Municipal Financial Problems Associated with Energy Development: A Simulation Experiment

Sally C. Lopreato
J. Kenneth Monts
E. Ray Bareiss

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DOI: 10.2190/QAAT-64E8-X5QT-Q6Y8

Abstract

Alternative strategies are evaluated for financing municipal facilities in communities experiencing population influx due to an energy development such as power plant construction. The simulations, based on a system dynamics model of public service facilities, fall into two broad groups according to whether the needed revenues are sought from local or extralocal sources. Of all cases presented, only direct extralocal grants both eliminate public service shortages and keep the property tax rate down. The solution to the boom town financing problem will likely involve some combination of strategies. The system dynamics analysis can help policymakers and planners conceptualize the nature of the situation and understand the range of options.

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