James White

You’ve probably never met them, and they probably don’t know anything about you.

But eight number-crunchers on the eighth floor of a government building in downtown Nashville are part of everyday life, making calculations that ultimately affect everything from home renovation costs and your child’s bus ride to school to the care you receive in an emergency room.

As analysts for the Tennessee General Assembly’s bipartisan Joint Fiscal Review Committee, this gang of eight is entrusted to create what many say is a powerful force over proposed laws: a fiscal note, or the estimated price tag.

“A fiscal note can make or break a bill,” said Hayes Ledford, who as vice president of public affairs for the Chattanooga Area Chamber of Commerce lobbies for changes in Nashville. “That’s always going to be part of the discussion. One of the first things I ask is, ‘What’s the fiscal note?’”

In past years, tax breaks for local business owners were stymied by fiscal impact notes outlining lost revenue, according to Mr. Ledford. This year, he is watching several measures, including a bill that would create a sales tax exemption for solar panels purchased for residential use. But its fiscal note predicts a $214,300 decrease in state revenue and a $68,900 decrease in local revenue.

The fiscal note on a bill to put seat belts on school buses last year also was too much to overcome, said state Rep. Gerald McCormick, R-Chattanooga. The analysts predicted a recurring $67.9 million increase in state expenditures, plus a one-time increase of $386.9 million and a recurring $67.9 million increase for local governments.

Increased trauma funding would have been dead in the water last year without cigarette tax revenue to fill the funding gap identified by the fiscal note, said Doug Fisher, Erlanger hospital’s vice president of governmental and community affairs.

With a $7,800 state expense and a recurring cost of $80,600, a $9.9 million appropriation from a new cigarette tax increase was the only way a new trauma fund could be created, he said.

“I suspect there are things that have a certain level of urgency that maybe don’t come into play (because of fiscal attachments),” Mr. Fisher said.

That puts a lot of power in the hands of analysts charged with creating the fiscal impact, said Randy Nichols, district attorney general for Knox County and chairman of the Tennessee Public Safety Coalition.

“It’s a flawed system,” Mr. Nichols said during a recent editorial board meeting with the Chattanooga Times Free Press.

He recalled an encounter with a committee analyst, who he said admitted to guessing about the financial impact of a bill.

“We don’t think that’s good enough, to guess,” Mr. Nichols said on behalf of the Public Safety Coalition.

Coalition members have been frustrated by high incarceration costs assigned to their legislation that would increase penalties for gun crimes, according to Hamilton County District Attorney General Bill Cox. The $68.9 million fiscal note for HB3148/SB3754 does not take all of the relevant factors into consideration, he said.

If the law were enacted, Mr. Cox said, it would deter criminals from reoffending and actually reduce costs considerably over the long haul. He said Public Safety Coalition members have consulted with an expert at the University of Memphis who has assured them that those calculations could be made.

“If you can accurately determine the amount of savings, you need to consider that, too,” he said.

REVIEW COMMITTEE ORIGINS

Supporters of the fiscal note system, including state Sen. Douglas Henry, D-Nashville, point out that indirect factors such as deterrence can be nebulous.

Attempting to calculate those effects would be “even vaguer than the system is now,” said Sen. Henry, Finance Review Committee vice chairman.

The current system, which extrapolates existing data from state and local agencies, is a vast improvement over the system in place before the committee’s emergence in the 1970s, he said.

“Under the old system, the governor’s office of finance and administration did it,” Sen. Henry said. “So the old fiscal notes were slanted toward the governor’s administration.”

The creation of the fiscal review committee — which was voted into existence in 1968 but not funded or staffed until two years later — marked the first time the legislature “began to assert its independence,” according to David Copeland, a former Republican state House member. The Chattanooga lawmaker helped create the panel and served on it through 1992.

“You want impartiality, and you want accuracy, and you want the legislators to be educated (on fiscal impact),” Mr. Copeland said.

To live up to these founding principles, the committee is reconstructed by party caucuses at the beginning of the two-year Assembly term. The new committee hires a staff of outside experts in financial, legal and government analysis, said James White, who has served as the staff’s executive director for the past five-and-a-half years.

The staff moved offices three-and-a-half years ago from Nashville’s Legislative Plaza and to a location across the street. Mr. White said this increased the physical distance between the lobbyists who are fixtures in the halls of the House and Senate and the analysts.

anatomy of a review

Under state law, a fiscal note must be attached to each bill up for debate within seven days of the bill’s introduction, according to Mr. White. However, he added, his staff of eight is so bogged down — writing about 1,900 fiscal notes this session, plus fiscal memorandums for any amended legislation — it is not always able to meet that deadline.

Instead, the staff promises to make a good-faith effort to complete a fiscal note — which can take anywhere from a few hours to a few weeks to research and complete — as soon as possible, according to Mr. White, who added that a bill never has had to die under his watch for not having a note in time for debate.

Though legislators sometimes conference with committee staffers before filing a bill, usually the task of calculating its impact is assigned to an individual analyst after it is filed. The analyst, who is assigned to a bill based on his or her individual expertise, reaches out to various agencies for cost estimates and also relies on past committee research on the issue, Mr. White said.

For the note on the gun crime legislation, for example, the number of reoffending felons in past years was factored into population growth estimates to obtain a viable projection for future years, he said. Then incarceration expenses were taken, down to the cent, to determine how much extending the sentences of the people involved would cost.

The resulting fiscal note includes a bill summary, assumptions used to make cost estimates and specific calculations of those estimates, he said. Both costs and potential new revenue streams are identified, he said.

A first draft is reviewed by another analyst, then the committee’s assistant director, followed by Mr. White, who said he signs off on each one.

“If a bill is controversial, we talk to each other,” he said.

Lobbyists are allowed to interject their research and personal opinions into the mix, Mr. White said, though analysts are careful about being unfairly influenced by them.

“Autonomy is extremely important, because if we don’t have that, then the integrity of the process is lost,” he said. “We’re like baseball umpires calling balls and strikes. We just have to do it down the middle, as best we can.”

POLITICS IN THE MIX?

The committee staff is well-intentioned, agreed Rep. McCormick, who is a committee member.

However, Rep. McCormick said, politics sometimes comes into play when staff members ask state agencies for estimates.

“It does get political,” he said. “If one agency doesn’t like a particular bill, they will make sure it gets a big fiscal note. It’s a lot easier to kill a bill with a fiscal note than through other means.”

Though every bill in the state House of Representatives goes through fiscal review, only those with fiscal notes of $100,000 or more have to go through that extra step in the Senate, he said.

So, when voting on bills, Rep. McCormick said he tries to remain cognizant that ulterior motives or bias could be at play.

“I don’t assume it’s gospel,” he said. “But I try to keep the fiscal impact in mind. We’ve just got to. Because we’ve got to be financially responsible.”

And to do so, Mr. White said, the Fiscal Review Committee remains as financially conservative as possible.

While legislators can debate various potential savings on the floor, he said, fiscal notes are designed to show them the extent of any potential costs so they do not pass something that ends up costing more than they had bargained for.

Although factors such as crime deterrence ultimately could decrease incarceration costs, “we cannot measure it with enough precision to put (it) in a fiscal note,” he said. “We have to err on the side of the cost being there.”