Conceptual aspects of fiscal interactions between local governments and federally-owned, high-level radioactive waste-isolation facilities

This paper examines a number of ways to transfer revenues between a federally-owned high level radioactive waste isolation facility (hereafter simply, facility) and local governments. Such payments could be used to lessen fiscal disincentives or to provide fiscal incentives for communities to host waste isolation facilities. Two facility characteristics which necessitate these actions are singled out for attention. First, because the facility is federally owned, it is not liable for state and local taxes and may be viewed by communities as a fiscal liability. Several types of payment plans to correct this deficiency are examined. The major conclusion is that while removal of disincentives or creation of incentives is possible, plans based on cost compensation that fail to consider opportunity costs cannot create incentives and are likely to create disincentives. Second, communities other than that in which the facility is sited may experience costs due to the siting and may, therefore, oppose it. These costs (which also accrue to the host community) arise due to the element of risk which the public generally associates with proximity to the transport and storage of radioactive materials. It is concluded that under certain circumstances compensatory payments are possible, but that measuring these costs will pose difficulty.