Accounting for Oysters: The Importance of Fiscal Notes in Policymaking

As Maryland has learned, it’s crucial to know the costs of proposed legislation.

Here’s a classic dilemma for agencies: When the cost of a new project is underestimated, agency managers may have to drop aspects of the program, reassess targets, slow down timetables or even ask the legislature for more money. So how do managers avoid this quandary? Fiscal notes. That is, the legislature should factor into every debate about a bill the estimated cost of the program.

Clipping fiscal notes to bills is easier said than done. Management of that process is dicey. Some states are laggards. They do not have their legislative analysts calculate estimates for all bills. North Carolina, for example, only comes up with a cost approximation when a legislator asks for it.

Nor do many states manage their fiscal note process to gain the most pertinent information available. Three years ago, the Center on Budget and Policy Priorities found that a good number of states failed to estimate costs beyond the next year or two, did not revise estimates when legislation was amended and only produced the estimates for a narrow set of bills. Elizabeth McNichol, senior fellow with the State Fiscal Project at CBPP, tells us that very little has changed for the better since then.

More