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Report: Cost estimates for legislation often skewed

CHARLESTON, W.Va. -- West Virginia lawmakers are passing bills with inaccurate and biased estimates of how much the proposals will cost, and little is being done about it, according to a report released Tuesday.

Legislators often attach price tags, called "fiscal notes," to their bills. But agency officials who prepare the fiscal notes sometimes inflate expected costs to kill legislation they don't like -- or downplay costs if they want bills to pass, according to the report.

"As revenues continue to fall, it is increasingly important that legislators understand how proposed legislation will affect the budget," said Sean O'Leary, who prepared the report for the West Virginia Center on Budget and Policy. "The state's current process for producing fiscal notes, however has led to biased, inaccurate and inconsistent information that legislators largely distrust."

The report cites numerous examples of fiscal notes that have included basic math errors, state agency bias and conflicting information. Some notes also had missing explanations and failed to disclose how legislation would affect cities and counties.

Earlier this year, for instance, lawmakers passed a bill that requires county sheriff's departments to issue bulletproof vests to deputies. A table at the bottom of the fiscal note listed "$0" financial impact to the state. However, a written summary on the same document declared that counties would have to pay $143,750 for the protective vests.

"Local costs or savings are often ignored by fiscal notes," O'Leary said.

State agencies also "game" fiscal notes to undermine bills, according to the report.

Several years ago, the Department of Education estimated it would cost $1.5 billion -- nearly as much as the state spends on K-12 education each year -- to provide daily physical education classes in schools statewide. Department officials inflated the analysis by including the costs of building new gymnasiums and athletic facilities, according to the report.

During the past legislative session, the Tax and Revenue Department prepared 22 fiscal notes, the most of any state agency, followed by the Consolidated Public Retirement Board with 10, and the Secretary of State's Office with six. Seventy-two bills had fiscal notes.

Lawmakers frequently amend bills as they move through legislative committees. But the bills' fiscal notes are seldom updated, even though the revisions often change the legislation's financial impact, according to the report.

In 2011 and 2012, the Legislative Auditor's Office reviewed fiscal notes, finding that 32 or 143 bills passed had cost estimates that were off by more than 10 percent.

"With many fiscal notes providing grossly inaccurate estimates and many others providing no data at all, they are falling short of their goal of educating legislators and the public about how a bill will affect the state budget, individual agencies, local governments and taxpayers," according to the Center on Budget and Policy's report.

The Charleston-based nonprofit think tank also surveyed state lawmakers. More than 80 percent said fiscal notes clearly explained financial impacts less than half of the time.

The survey solicited written comments from lawmakers. One legislator likened fiscal notes to notes sent home by a teacher.

"You don't agree, but your opinion will have little effect on the punishment sure to follow," the lawmaker wrote.

Another legislator suggested that legislative leaders might benefit from a course on the proper pronunciation of "fiscal." The lawmaker wrote the state should "provide a training class to committee chairs, explaining they are 'fiscal' notes, not 'physical' notes."

The report recommends setting up an independent legislative office that would provide an unbiased review of fiscal notes. The notes also should explain how state agencies calculated the financial impact of a bill, according to the report.

"When the Legislature suspects a fiscal not is unfairly biased for or against a bill, it only serves to create distrust, making the legislative process more difficult and contentious," O'Leary said.

Reach Eric Eyre at ericeyre@wvgazette.com or 304-348-4869.


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