MnDOT Agency Fiscal Notes

Basically, puts a “price tag” on proposed legislation

A fiscal note estimates:

◦ Costs and savings and◦ Revenue gains or losses that◦ Result from proposed legislation

A way for Agencies to convey estimates of financial impacts of legislative policy changes on their budgets

A tool to help legislators and fiscal analysts understand how a bill might impact the state budget as a whole, individual agencies, and sometimes local governments

What is a Fiscal Note?

Governed by M.S. § 3.98

Process managed by and completed fiscal notes are approved by MMB and posted to their website.

Details of what notes must include – will discuss later

Limit any comments or opinions to technical or mechanical defects of a bill. Do not express opinions on the merits of the proposal

Fiscal Note Statutory Requirements

Fiscal Note Requests are…

DHS

DNR

DOR MND

OT

In a proposed bill, the agency is:

receiving an appropriation collecting money administering a grant or program administering statues being modified by the

bill One that has the most (or some…) knowledge

about the effects of it

Why is an Agency Assigned a Fiscal Note?

Fiscal notes are:◦ An administration product, reviewed and approved by

Minnesota Management & Budget

◦ For support of legislative decision-making

◦ Of keen interest to stakeholders on every side of the issue and to those who represent other issues competing for limited resources.

Therefore: Credibility, clarity, and consistency are extremely important

Speaking of Politics…

Afraid we would pad costs of things we don’t like; shave costs when we like

We “absorb” the costs of things we like

Delays, or inability to complete a fiscal note by the requested time – can be very short timelines

“Hot button” transportation controversies – transit vs roads, asphalt vs concrete, metro vs non-metro, contractors vs employees

Fiscal Note “Controversies”

Just in the last year.... Bills related to: Rail inspectors added

Work Zone Safety

Money appropriated so people could ride buses for free on election day

Criteria for the I-494 construction rehab project

A large transportation funding package

Examples of Fiscal Notes

9

House or Senate requests fiscal note via Fiscal Note Tracking System (FNTS)

MMB notified of request, reviews bill, and assigns agency or agencies

Agency Fiscal Note Coordinator (FNC) notified of request, reviews request & bill; reviews internal bill reviews; requests assistance - Agency subject matter

experts

Agency staff analyze the bill, complete impacts for their area and sends to FNC

FNC completes & consolidates fiscal note, gets approvals and signs off in FNTS

Fiscal Note Process Flow

10

Executive Budget Officer (EBO) reviews fiscal note.

Executive Budget Officer signs off on the fiscal note in FNTS

Completed fiscal note e-mailed to chief author, committee chair, fiscal analyst & requester

Fiscal Note Process

Disapproves Approves

Bill Description - determine what the bill does

Articulate your assumptions

Budget structure & base

Estimating cost & revenue impacts, and FTEs

Long-Term Fiscal Impacts

Local Government Impacts

Cover Sheet

Preparing a Fiscal Note

Develop objective, operational statements regarding the immediate impacts of the bill (over 4 year period).

Think about the timing – need to break into fiscal years.

Separate primary from secondary impacts and focus on the primary impacts. Don’t stretch it!

Get the data you need to back up your assumptions and provide a basis for your calculations.

Include internal resources as well as external.

Use the fiscal note training aids we will provide.

Articulate Your Assumptions

Equation or formula used to determine the impact of the proposal on expenditures and/or revenues

Displays both program and administrative impacts

Must be based on assumptions in previous section

Should be laid out in easy to follow calculations

Need to include change in FTE’s

Section for long term impacts also

Estimating Impacts

Cost and revenue estimates – break out by impact to different “programs and budget activities” in MnDOT biennial budget structure

Know how your business area’s programs and operations are distributed within the biennial budget structure.

Fiscal notes must show the bill’s estimated change to the base budget forecast.

Budget Structure & Base

Describe any unfunded mandates, impacts of shifting costs from the state to the local level, etc.

Describe which local units of government are affected

Describe impacts that may not be obvious to legislators

These are difficult to quantify—it is okay to talk generally about impacts to local governments without specific dollar amounts

Local Government Impacts

Has implications and creates expectations for the entire agency

We may not know the extent to which costs can be absorbed until the final budget bill is complete—don’t make promises we can’t keep

Can only do if it’s entirely within scope of what’s already being completed

MnDOT very rarely does in fiscal notes – let legislature decide whether to appropriate

Absorbing Costs

It’s not enough to just say – “this doesn’t impact MnDOT….”

Assumptions leading to a “no fiscal impact” response should be documented in the supporting narrative section

The fiscal note must explain why there is no fiscal impact to MnDOT

No Fiscal Impact

Know what the fiscal note says before testifying.

Do not disagree with or contradict a MnDOT fiscal note when testifying

If discussing costs for a program (calendar) year, mention that this equates to a fiscal year cost of X – to tie it back to a fiscal note

Testifying – Fiscal Notes

We are completing fiscal note aids to make life easier for people completing fiscal notes.

Different rates to use, assumptions under certain circumstances, etc

Will send out fiscal note aids at the start of the 2015 session, and with every fiscal note request.

Questions?

Updates to the MnDOT process