State Mandates: Fiscal Note Impact Not ‘Potential Minimal’
CT News Junkie, December 7, 2018
by Michael Freda, First Selectman of North Haven and 2nd Vice President of CCM
With the election over, and the House and Senate ready to open the legislative session in just over two months, the Connecticut Conference of Municipalities (CCM) is ready to start looking what challenges lay ahead for the state of Connecticut, and how that will affect the municipalities
Unfunded mandates are of perennial concern — we released a primer on the topic in the lead-up to the election, and introduced the topic during the final gubernatorial debate. CCM would like to see these mandates fully funded by the state at minimum or repealed altogether, but these measures fight symptoms rather than the cause.
Most people won’t be familiar with Fiscal Notes, but they are required on every bill that reaches the floor of the House or Senate, or is approved by committee. The Connecticut General Statutes under Sec. 2-24a states that “no bill without a fiscal note appended thereto which, if passed, would require the expenditure of state or municipal funds or affect state or municipal revenue in the current fiscal year or any of the next ensuing five fiscal years shall be acted upon by either house of the General Assembly unless said requirement of a fiscal note is dispensed with by a vote of at least two-thirds of such house. Such fiscal note shall clearly identify the cost and revenue impact to the state and municipalities in the current fiscal year and in each of the next ensuing five fiscal years.”
In Sec. 2-71c, the statutes mandate that the OFA create the fiscal note be prepared, and that municipalities have “two working days to provide the OFA with any information that may be necessary for analysis in preparation of such fiscal notes.” The Office of Fiscal Analysis (OFA) gives this definition: “a fiscal note is a brief statement of the fiscal impact that a piece of legislation would have on state and local government. The economic or social impact of the legislation is not included.”
The problem here is that there is no one methodology for assessing the fiscal impact of a bill, nor is there any statute or law giving a standard procedure. When reaching out to the OFA, Director Neil Ayers said in an e-mail that “given the diverse assortment of proposals that come before OFA, there is no one process that dictates the calculation of a fiscal note. Our analysts rely on a wide variety of resources in analyzing a proposal.”
Former Director Alan Calandro noted that this ambiguity could be problematic when giving a presentation on Fiscal Notes to the National Conference of State Legislatures in 2014. He called out an increased scrutiny and balance between accounting jargon and verbosity as politicizing what are supposed to be non-partisan memos on Senate or House bills.
But without an explanation of how a number was derived, and without a standard definition of methodology, it is up to legislators to interpret the naked numbers on the page. The problem is compounded by the fact that the OFA implicitly states that the economic or social impact will not be considered.
Fiscal impact differing back to top
Quite often, municipal leaders would notice that the fiscal impacts of bills differing from what was stated in the OFA’s fiscal note. The Advisory Commission on Intergovernmental Relations (ACIR) — which includes municipal leaders and CCM Deputy Director Ron Thomas — invited Neil Ayers to discuss this disconnect at their September meeting.
ACIR used PA 11-232 as an example where unquantifiable costs completely changed the burden of a bill. PA 11-232 is anti-bullying legislation that sought Safe School Policies, the fiscal impact of which was ambiguous at best. Not only did this bill have eight fiscal notes, most of which were on amendments, one fiscal note (Fiscal Note for Amendment LCO 6069) quoted the impact as “potential minimal.” This would require staff to undergo additional training, but only says how much the training itself would cost.
The fiscal note did not account for the added cost of changes the board of education had to make to professional development, and the costs of adding burdens to people in existing positions. In an era when many jobs are already stretched thin, the OFA would have a hard time accounting for the fiscal impact of these kinds of burdens.
Furthermore, municipalities often understand these impacts well before a bill. CCM Deputy Director Ron Thomas said during the September meeting that CCM does provide information about the fiscal impact of a bill during testimony, but it often doesn’t reach the fiscal note. Ayers responded to that by saying OFA would only include testimony if they could support it when appearing before a committee, rendering Sec. 2-71c ambiguous at best.
Even if the fiscal note suggests that there would be a burden on a municipality in the form of an unfunded mandate that does not mean that it won’t pass before the House or Senate. With the upcoming session, it will be important for the newly elect to remember that unfunded mandates often pass the buck from the state down to the municipalities, and those mandates would only further burden the citizens of all 169 towns and cities in the state of Connecticut, either through loss of services or increased property tax.
Because of the elusive nature of fiscal notes and the process by which those numbers are created, there is no reason not to request more transparency from the OFA and for increased input on the parts of the municipalities that might be affected. The OFA should be given more time to complete fiscal notes, and bills should not be pushed through until their impact is understood and agreed upon, including secondary and tertiary impacts. If this transparency and collaboration is completed, fiscal notes will go from being misunderstood to a municipality’s greatest asset in the state house.