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Where Do Fiscal Notes Come From?

What’s the best way to find out whether the latest great idea your senator or representative has come up with is going to end up leaving you, the taxpayer, holding the financial bag?

Nothing, of course, is ever for certain when it comes to calculating the hidden costs or projected saving of programs and newfangled ways of conducting state business.

But by reading a proposal’s “Fiscal Note” — the estimated price tag attached to each of the thousands of bills filed in the Legislature every session — citizens can at least get a sense of the numbers lawmakers are themselves working with as they deliberate what they think ought to be on state government’s to-do list.

For example, a proposal to require businesses check the immigration status of new employees would cost the state $292,100 a year while a law that would require drivers to keep dogs out of the front passenger seat would bring in $1,100, according to the fiscal notes developed by a team of legislative staffers.

But while many lawmakers regard fiscal notes as reliable estimates of government costs, they are anything but error-proof, and, perhaps unsurprisingly, even sometimes colored by politics. The staff who develop the estimates rely on a series of judgment calls and information from a variety of sources, including state agencies which have been known to exaggerate the effects of bills they may dislike, some lawmakers say.

“If (departments) don’t want to do something, they give us an inflated fiscal note,” said Rep. Tony Shipley, R-Kingsport, who sits on the Fiscal Review Committee overseeing the office that develops the price tags. “Conversely, I suspect, if it’s something they wanted to do, they would deflate the fiscal note.”

“The fiscal notes are only as good as the information that’s given to the fiscal committee,” said House Democratic Caucus Leader Craig Fitzhugh who echoed that some departments tend to tweak their estimates depending on their view of a bill.

The question of the cost estimates’ accuracy came up last week during a debate over whether to require background checks of the people appointed to state boards by the House speaker and lieutenant governor. The Fiscal Review Committee staff said the cost of SB256 was “not significant,” which means it was estimated to cost less than $50. Tennessee Bureau of Investigation staff could just add the duties to their normal workload of performing background checks, the fiscal note said.

“I was just curious how this doesn’t cost anything,” said Sen. Jim Kyle, D-Memphis. “If they can absorb the cost into their day-to-day activities, we wouldn’t need a law for them to do this. The speaker can just call down there and say, ‘I’d like for you to check this out.’”

Even Sen. Mike Bell, a spokesman for the bill, said he can only rely on the estimate he’s given.

“I would say over my first five years, I’ve seen several fiscal notes, and I’ve wondered exactly how they’ve reached that point,” Bell, R-Riceville, said.

The man who oversees the churning out of the 3,000 fiscal notes per session said his staff tries to get as close to the truth as possible. Jim White’s signature goes on each of the documents, certifying the information is accurate to the best of his knowledge.

As staff executive director to the Fiscal Review Committee of eight years, White oversees a team of nine aides, including lawyers, economists and long-time government types who know their way around various state agencies. Each staffer specializes in a certain area of government and spends days or weeks calculating the total financial impact of a bill, even when the legislation never sees the light of day.

“We’re like the umpires in baseball. We call balls and strikes without fear or favor,” White said. “We need to stay distant from the political fray so that we don’t let all the political things that are going on affect what we do.”

But it’s impossible to be completely removed, and political spectators from both sides of the aisle, lobbyists and special interest groups take issue with the projections and often call White pressuring him to change the final numbers, he said. If he’s convinced his numbers were wrong, he does, White said.

“I don’t want to portray a picture that we’re simply stenographers. We’re not,” said White who said part of his office’s job is to double check the departments’ estimates to verify their accuracy.

“We recognize that everyone who has an interest in a fiscal note has an agenda,” he said. “There’s nothing wrong with that at all. And of course, that’s (how) the process works under our form of government. That’s the way it should work. But we have to filter that, if you will. We have to look at what we’re being told.”

White is elected each year by the lawmakers on the committee, which this session is chaired by Republican Sen. Bill Ketron with Democrat Charles Curtis as vice chairman.

Pinpointing costs can be hard when proposals would break new ground for which the consequences are difficult to predict.

Case in point: Gov. Bill Haslam’s proposal to lift the cap on charter schools and open enrollment to all students instead of just students who perform poorly on state tests or come from schools the state deems as failing.

White and his office say the bill would cost state government nothing, but local governments would lose $4.3 million in the 2013-14 school year. That cost would increase each year as education dollars follow students from traditional schools to charters and would ultimately cost local governments $24 million annually by 2023, according to the fiscal note. But those numbers were difficult to estimate, White admitted, because the state has never expanded the education system’s structure in this way.

Sometimes his office misses the mark.

In 2009, it estimated the state would earn about $41,600 a year from ticketing people for texting on their cellphones while driving, assuming law enforcement would issue about 10 tickets a day.

Ultimately, just 49 tickets were issued the first year the bill kicked in, bringing in $2,100.

“We’re not all-knowing by any means, and we do make mistakes. But when we make mistakes, we fix them,” White said. A recent Comptroller’s audit of the committee found nothing out of the ordinary, indicating that the staff’s estimates were “reasonable.”

The process of writing fiscal notes is one of the best examples of the well-worn political cliche that the legislative process is like making sausage.

Once a bill is filed, White assigns it to a staff member who then peppers state agencies and local governments with questions: How much will this cost and for how long? Why will it cost this much? How many people would it affect?

The staffer evaluates the information and compares it to similar legislation and fiscal notes from past years. What financial impact did those bills have? Did our old price tag line up with what the state actually dished out?

Then comes independent research. You name it, from federal government databases and the census to local government reports and research from outside groups like the National Conference of State Legislatures and the American Legislative Exchange Council, the office taps into numerous sources to figure out the final price tag.

The draft goes through three stages of editing before White gives it his stamp of approval.

While not perfect, the process still wins the confidence of top lawmakers.

Overall, legislators consider fiscal notes the most accurate estimate of how much lawmakers’ proposals will cost, said Sen. Randy McNally, an Oak Ridge Republican who sits on the Fiscal Review committee.

“It’s very reliable, and that’s what you want,” he said.

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Chief Justice Makes Rounds with Legislators

Tennessee Supreme Court Chief Justice Cornelia Clark said this week she has met with leadership of the Tennessee General Assembly to discuss matters of the courts, but Clark said she is reluctant to share details of those conversations.

Clark has spoken publicly recently about her opposition in general to legislative efforts to make judges run in competitive elections, and to do away with the Tennessee Plan, which has judges face retention elections with a yes-or-no vote. Critics of the Tennessee Plan say they are not true elections. But supporters of the plan, including Clark, say the current system helps keep partisan politics out of the process.

The Tennessee Constitution calls for appellate judges to be elected, and the Tennessee Plan has been found to pass constitutional muster. Clark has likened the election of judges to allowing sports teams to support a slate of referees who will call their games.

Much of Clark’s communications have been about administrative issues of the courts as opposed to matters like electing judges, however.

One member of the Legislature has been critical of Clark publicly weighing in on the election issue. Sen. Mike Bell, R-Riceville, has said that just as legislators should not inject themselves into cases before the court, members of the court should not lobby legislators.

Bell was scheduled for a one-on-one meeting with Clark, and Bell said this week Clark did visit him. But Bell said Clark said she understood how he felt about her position on the Tennessee Plan and they agreed not to bring up legislative issues. They focused instead, he said, on administrative matters.

Bell had told TNReport that he objected to Clark lobbying on legislation, and Clark acknowledged this week that she learned of Bell’s opinion through TNReport. Bell described their meeting as “a very cordial conversation” that lasted 20-30 minutes.

“We stayed away from any proposed legislation,” Bell said. “We talked about some things I had questions about. I brought up just about everything that was brought up in the conversation.”

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Lawmaker Questions Appropriateness of Justices Lobbying Legislators

Sen. Mike Bell, R-Riceville, said Monday he believes it would be improper for members of the Tennessee Supreme Court to lobby the Legislature against efforts to move the state toward the election of Supreme Court judges.

Nevertheless, Bell has a meeting scheduled with Chief Justice Cornelia Clark on the issue later this week.

Clark told a group of journalists last week that efforts in the legislature to pull back from the state’s retention election system are misguided, and she said she has been involved in discussions with lawmakers voicing her objection to the legislation.

Bell has three bills dealing with judicial elections. He wants to see the state revert to where it was before the Tennessee Plan, which currently seats judges, was implemented.

Bell winces when he brings up potential impropriety. But he said in an interview Monday that he felt the need to say what he believed.

“I think it at least borders on improper,” he said. “If they’re up here lobbying to protect the system, I think it’s improper for them to be doing so. This is a legislative matter, not a judicial matter. This is something I believe should be decided by the Legislature. We’re the ones that created it in 1971. If we choose to continue it, change it or do away with it, it should be up to us.

“Just as it would be improper for me to go and tell them how to rule on a specific case, I think it’s improper for them to be involved in this. That’s probably going to to get me some enemies, but that’s what I believe.”

Clark, speaking to a Tennessee Press Association meeting last week, said, “We, and I personally, have had a number of conversations with legislators, and we’ll continue to do that.

“We are engaging in a good dialogue, and there are some good-faith differences of opinion about what the right answer is.”

Bell has three bills, one of which he was still putting the finishing touches on Monday, regarding judicial elections. That last measure — the one he prefers — is one that would essentially wipe the slate clean of the Tennessee Plan and the let the debate begin anew. But he says his motivation is the clear and simple language in the state Constitution that calls for elections of judges.

In Tennessee, a special commission submits names to the governor, who makes the appointments to the bench. After a judge is on the bench, each judge is subject to what is known as a retention election, where citizens vote up or down on whether to retain the judge.

Bell, and many others, believe the retention election process is inconsistent with clear language in the Constitution.

“The judges of the Supreme Court shall be elected by the qualified voters of the State,” the Tennessee Constitution reads.

Bell has another bill that, short of eliminating the retentions plan, calls for the nonpartisan election of Supreme Court judges from five districts across the state that would be drawn by the Legislature. It would also prohibit the candidate from knowing who contributed to a campaign and the amounts of the contributions.

A third bill sponsored by Bell would require that a judge receive 75 percent of the votes in a retention election, as opposed to the current majority requirement. Since the plan was put in place, only one Supreme Court judge, Penny White, has been removed in a retention election.

Bell, who says he is fundamentally a constitutionalist, is in his first year as a member of the Senate, after serving two terms in the House.

“I got interested in this issue when I was first elected to the House, when I found out what the Constitution actually says,” Bell said. “Article 6, Section 3 says judges shall be elected by qualified voters of the state. I think that wording is very simple and understood by anybody.”

He said if that phrase were put before the people of Tennessee, he believes 95 percent of them would interpret it to mean elections like the state has for other offices.

Bell calls the current system “kind of a charade.”

“It’s almost set up to where we’re intentionally keeping voters from knowing anything about the people running,” he said. “They may all be great people. They may deserve to be retained or re-elected, but under the process, we can’t know anything about them.”

The issue centers on concerns that electing judges at the appellate level can unduly politicize the judicial system. A fear exists that judge’s campaigns would begin to mirror typical political campaigns, where conventional political functions like television commercials could influence elections in ways that are not in the interest of justice.

Bell emphasizes that he is not arguing whether such campaigning would occur if open elections were held. He says the state is simply in no position to ignore what the Constitution clearly intends.

But even Bell concedes there could be political ramifications in part of the legislation he has introduced. His bill for establishing five distinct districts could be subject to gerrymandering, he acknowledged. And he said while one of his bills calls for the candidate being unable to know the origins or amounts of campaign contributions, the people should have access to that information. Bell said he has tried to go by models in the trial courts to craft his legislation.

As for requiring approval by 75 percent of voters in order to be retained on the bench, Bell said it should be higher than a simple majority.

“They need a higher standard, a higher bar to cross to be re-elected,” Bell said. “Many states that have similar plans require 66 percent of the vote. I figured I would start at 75.”