When inside baseball impacts real people

This is a post about inside Olympia baseball. It’s about process and fine print. But it’s also about the interplay between legislators and state agencies. It’s not about life and death or major initiatives, it’s about an irritating pebble in the shoe of state government.

The 2010 Legislature will be gaveled to order in sixteen days. From the moment the session begins on January 11, 2010 a dance of nerves between the Legislature, executive staff and state agencies will unfold behind the scenes.

The weapon? The drafting of “fiscal notes,” a method, process and document by which a legislator drafts a bill and an agency responds with a cost estimate of how much the proposed legislation will cost to execute.

The dance begins from the minute the idea hits a legislator in the head. If it’s a serious idea, and the policy staff of the executive branch is given sufficient time to analyze the proposal, frequently there is a thoughtful process that unfolds and an objective analysis can occur. Often the process does work. Legislators win, state agencies win, and the idea moves forward on merit. Or not.

It gets tricky, complex and down right silly quickly, however.

During the legislative session, there is rarely sufficient time for policy staff to conduct a comprehensive analysis of the estimated cost of a proposal. The result? Staff makes a best guess estimate. The answer in this situation is almost always that the proposal will cost a substantial amount of money. Why? Because there is literally no incentive for a staff person at an agency to under estimate the cost. They are, in fact, penalized for such action and thus it appears to happen rarely at best. It’s not the fault of staff, of course, but they are hit with a figurative penalty by management for adding work without resources. They are in a tough bind.

Here’s the kicker: The fiscal note has at least two massive, obnoxious, even fatal flaws: First, it only discusses the incremental cost of the policy proposal–never the opportunity cost or other methods of achieving the objective. Second, it is nearly always presented in the form of additional full time employees to perform the task. Simply, the fiscal note measures nearly EVERYTHING in the form of how many new state employees are required to implement the policy idea. So as a legislator there is literally no way to determine whether the idea is more important than another program in the agency. None.

The agency staff, therefore, performs a dance of nerves. Return a “high” fiscal note to a legislator–especially a powerful chair or other leader–and you might get a call from the Governor’s legislative liason team prodding you to reassess the numbers. Return a fiscal note suggesting the policy proposal is low or no cost, and you sure better be correct or your agency director will have a chat with you.

The accusations start to fly and tempers flare when it appears to legislators that the agency is simply opposed to the policy proposal and thus a ridiculously high fiscal note shows up back in your office. Candidly, most of those stories rarely seem to be true. What is definately true, in my view, is that when agencies are given 12, 24 or 36 turn around times in order to get an answer back, the number will be a wild ass guess and very, very high.

When and agency really likes an idea and it fits with their priorities? Guaranteed that you’ll see a modest fiscal note or even the joyous statement, “we can accomplish this within existing resources.”

Can you blame them?

And the dance continues. Legislators are fearful of being too demanding of analysis, time and effort on a bill when the agency can easily unleash it’s behind the scenes magic to kill the idea.

Last year I drafted a bill to create the Higher Education Technology Transformation Task Force, a panel of two and four year institution technology-minded folks to design a comprehensive technology strategy for higher education. The first draft of the fiscal note by the Higher Education Coordinating Board came back with an astounding $500,000 price tag despite the facts of the proposal. The message was simple: The agency hated the idea and they were going to fight it tooth and nail. While I still regret my lack of graciousness in my own response to the agency’s thoughtful legislative liason Chris Thompson, I don’t regret my hard push to question every assumption and demand that the agency come back with a more realistic cost for the actual task at hand. And to their credit they did. But it was not pleasant for anyone. I was able to secure $250,000 in the state budget for the project, a figure that I still believe was far more generous than actually needed.

It seems gentle enough for an inside baseball problem, but when the fiscal note for a program idea says it will cost 2,5 or even 10 times what it should cost in reality, real people can get hurt. Fiscal notes are dead dog serious business. Sort of ‘she who rocks the cradle’ type of serious. Unfortunately, few in the media work in government before joining the Fourth Estate so they don’t discover until after the fact how much power resides in the development of fiscal notes.

Unfortunately, unpleasant fiscal note stories seem to happen every year, year after year, with every legislator and every agency. There is little accountability on either side. One senior legislator told me, “you can learn how to get a fiscal note to say what you need it to say, so don’t mess with it.” Another said, “it’s a damn mess and I wish someone would fix it.”

In my view, it’s time to reform how the Legislature, Office of Financial Management and state agencies create, model and develop fiscal notes. I haven’t been around long enough to know why the system seems to be so broken nor how to fix it efficiently and effectively, but I know that it is directly hurting our ability as legislators to make good public policy decisions. I’m not a tactical operational guy, but I know some of the best folks around Olympia who are, and there is clearly a win-win to be had.

Let’s create an internal working group of staff and legislators to solve this problem.

Fiscal notes are a very important and legitimate tool to help elected representatives make decisions. Today’s model fails to adequately serve either side. We can do so much better.

Your partner in service,

Reuven.