Consumer Price Index

April 21, 2009 9:37 AM

Which price index should I use to accurately calculate annual fee increases for local government services (i.e. Consumer Price Index, etc.)?

I have been asked to come up with a standardized method of calculating annual fee increases for permit fees, etc. in a local government job. It is in the Southeastern US. I immediately went to the Bureau of Labor Statistics website and looked up Consumer Price Index data for annual percentage change for all good and services for both national and regional (southeast). Is there anything more accurate I could do, for you statisticians out there? Thanks.

posted by philmas to Law & Government (6 answers total)

Why not the Employment Cost Index, particularly the state and local government series? Apart from construction projects, most of my city's costs are labor.
posted by milkrate at 9:55 AM on April 21, 2009

I'm not sure if that is right because what we are pricing is a service (i.e. regulation to the lucky few) to developers and homeowners, not the cost of labor. So the question isn't so much about employment as the rate at which the pricing of other comparable services are changing, to index our fees.
posted by philmas at 10:06 AM on April 21, 2009

I would have expected that the basis for this this indexation would already be prescribed in by-laws, etc., but it if were up to me, I would want to calculate annual fee increases based on changes in cost(s) to the municipality itself (or the relevant department or other sub-entity) rather than an average of changes across other entities. As a shortcut, you could check out American City & County's Municipal Cost Index -- about which I know absolutely nothing, FWIW -- for ideas.
posted by onshi at 10:25 AM on April 21, 2009

You may also have some difficulty identifying "comparable services" offered by non-government organizations, but you can look at other similarly situated municipalities. Note, however, that increased prices based on increases in other goods' prices (rather than as a response to increased input costs) is itself an inflationary force.
posted by onshi at 10:29 AM on April 21, 2009

milkrate is right. The Employment Cost Index (ECI) is only looking at compensation (wages and salaries, benefits). If I had to guess, the best approximation would be the CPI "Professional Services" series. You can create your own customized series by following the instructions on this web-based form. I would choose Non-seasonally adjusted data and the current base.
posted by alzi at 1:05 PM on April 21, 2009

Thanks much alzi, this is just what I was looking for.
Phil
posted by philmas at 10:27 AM on April 22, 2009