Local fiscal impact of a water resources development project

The net fiscal impact of the construction of Keystone Lake in north central Oklahoma is estimated based on changes in the land use patterns in the vicinity of the lake. Only county government expenditures for which revenues are specifically earmarked are considered. In this manner it is possible to compare the net change in expenditures for specific public services caused by Keystone with the change in the revenues earmarked for these purposes. The empirical findings indicate that the development patterns caused by Keystone Lake caused a serious imbalance between the revenue generating capacity of local government and the demand for public services. As a consequence of the fiscal rigidities in Oklahoma, the quality of public services must be reduced to maintain a revenue-expenditure balance in the counties impacted by Keystone.