Many European cities have to cope with an increasing fiscal pressure on the municipal budget, and at the same time are faced with demographic ageing and migration gains. In this context, a close interaction between urban planning and budgetary planning seems to be essential, raising demand for appropriate instruments that are able to evaluate the long-term fiscal effects (fiscal profitability) of urban development projects at an early planning stage. One promising tool is fiscal impact analysis, an approach that basically makes up the balance between project-induced local expenditure for public infrastructure and services (investment and current expenditure) on the one hand, and local revenue (fees, local taxes and revenues from shared taxes induced by new inhabitants and employees) on the other hand. Based on recent literature, the paper raises several methodical issues concerning fiscal impact analyses in a metropolitan planning context, and presents new insights from model-driven case studies for Vienna, Austria It is shown that the definition of system boundaries (spatial, functional and institutional boundaries, considering overlapping effects and the complex budgetary structures in larger municipalities, esp. concerning outsourced units) is one of the major methodical challenges and yet a precondition to ensure the comparability of different project results. In addition, a clear understanding of the term ?fiscal efficiency? and therefore the perspective of the assessment is crucial. Trying to overcome a shortage of many fiscal impact analyses, we propose a hierarchical approach to measure the fiscal profitability of urban development projects from a multilevel budgetary perspective: a) Functional view: revenue and expenditure for project-specific infrastructure services only, b) Classical view of fiscal impact analyses, which additional includes tax revenues induced by new residents and employees (including effects from tax sharing system), and c) Extended view taking into account as well more general (not directly project-induced) public expenditures depending on the number and demographic structure of new inhabitants (e.g. for health care). Our results show that the (expected) negative balance in a functional perspective (a) easily can be compensated by local tax revenues if the preconditions enable a sufficient tax base, whereby these preconditions partly can be influenced by urban planning instruments (e.g. strategic and structural planning, land use planning). However, the resulting positive fiscal impacts of new development projects derived from a classical view of fiscal impact analyses (b) turn out to be overestimated if indirect long-term demographic effects as well as not directly project-induced, but resident-related expenditures are considered in an extended view (c). The paper concludes with suggestions for the implementation of fiscal evaluation tools in a reflective, ?learning? planning process and shows the need for further research in specific fields.
