Why Legislators rarely know cost of laws they pass
If you add up the financial impact reports accompanying 650 new laws passed by the Illinois General Assembly last year, it looks like legislators saved taxpayers more than $38.5 million.
But looks can be deceiving.
That's because those reports, known as "fiscal notes" in legislative circles, were attached to only nine of those new laws. Eight of them cost taxpayers something, while one claims major savings.
That means more than 98 percent of the new laws were passed without any basic information about the toll they'd take on the state's finances.
That's according to a report by the Illinois Policy Institute, a watchdog group on government spending practices. The group is pushing legislators to toughen its laws and require fiscal notes on more bills.
McHenry Republican state Sen. Pamela Althoff's proposal to do just that never made it out of committee in 2011, despite having support from a bipartisan mix of 19 other state senators.
"Obviously, it's extraordinarily important because of the current fiscal state of Illinois," Althoff said. "It's dire legislators know the cost of any legislation they propose or support."
Taxpayers also are left in the dark about what the new laws mean for the bottom line.
"If you were to push your cart down the grocery store aisle, you'd look at the price tag," said Kristina Rasmussen, executive vice president at the Illinois Policy Institute. "This is like the legislation turning bills into laws without ever looking at the price tag."
For example, no bills affecting Medicaid or education spending — two of the state's biggest costs — came with fiscal notes attached. But a new law limiting the use of Social Security numbers on state licenses will require an extra $234,000 for the overseeing department, according to the one-sentence fiscal note attached to the bill.
The Illinois legislature, like most others nationwide, has a fiscal note policy. Senate President John Cullerton, a Chicago Democrat, believes it's working, even though just 1.4 percent of laws passed last year were accompanied by the financial accounting.
"There are mechanisms in place for people to file these notes," Cullerton spokesman Ron Holmes said. "It's up to both sides when they are going to file those on the appropriate bills."
In some cases, the fiscal notes are completed but never attached to the legislation.
"My conversations with many (General Assembly) members indicated frustration that they are being asked to pass judgment on something that they have very little information on its fiscal impact," said Laurence Msall, president of The Civic Federation, a nonpartisan government research group based in Chicago. "But they should demand it."
Rasmussen argues there are several areas for improvement with the legislature's fiscal notes policy. In its current form, legislators can easily waive fiscal notes from being created or added to proposed laws. And the few that do become part of the legislation are usually from the agency the legislation will affect, which leaves many to question the objectivity of the reports.
Rasmussen said agencies affected by proposed legislation sometimes use a fiscal note as a "tool to kill a bill." If fiscal notes aren't required on every bill, they're "pointless," she said.
"We found one fiscal note that was one word long, 'minimal,'" she said. "What does that tell you?"
But changes will likely come with a price.
"I think it would be worth the investment to have an independent staffing that was not limited to one party or caucus," Msall said.
Rasmussen's group is suggesting the state's Commission on Government Forecasting and Accountability take on the responsibility of plotting the cost of new laws. The legislative agency is led by a bipartisan panel with a staff of about 15 people. Dan Long, executive director of the commission, said it could take dozens more staffers and hundreds of thousands of dollars more for his outfit to be able to do the work.
"There are more than 4,000 bills introduced each year. Are you going to do it on all 4,000?" Long asked.
Rasmussen's group cites Minnesota as an example of a state with a good fiscal note policy. Each bill there with a financial impact must have a fiscal note that shows how much it will cost or save over the first four years, how the costs or savings were determined and which department's budget is affected. But those fiscal notes are still created by the agencies that are affected and the state's management and budget office only checks the work.
"Rarely do we see errors in fiscal notes," said Michelle Weber, the Minnesota office's executive budget director. "But the fiscal note process in Minnesota is not without controversy. Our legislature considers our fiscal notes advisory."
Some in Illinois believe it's too much work to do the calculations if the numbers can still be disputed by legislators.
Althoff is attempting to change the state's fiscal note policy again this year but in a more focused way. Her proposal would require more detailed fiscal notes on laws regarding Medicaid, the largest expenditure of the state budget.
"We're trying to find a practical solution to meet the conceptual idea without creating an additional financial burden," she said.
Rasmussen agreed that tighter focus now might eventually lead to broader coverage later.
"For now to focus on big ticket items to show how it can be done may prove useful," she said. "We've got practically nothing now to speak of, so we've got room for improvement."
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