Fiscal Impact Reports Introduction
Overview of Fiscal Impact Reports
Presentation by Allen Maury, PhD, Senior Economist1
N.M. Taxation and Revenue Department
Revenue Stabilization and Tax Policy Committee of New Mexico Legislature
Raton, New Mexico August 7, 2002
During the 2002 legislative session, three analysts at the Taxation and Revenue Department (TRD) wrote approximately 300 fiscal impact reports (FIRs) over a three-week period. Since each analyst generated about 100 reports while working about 20 days, they averaged roughly five reports per day per analyst. This performance was typical for a short (i.e., one-month) legislative session. During long sessions, the analysts write about 500 reports over an approximate six-week period.
Taxation and Revenue Department employees have produced fiscal impact reports – sometimes called “bill reviews”– for approximately 30 years. TRD employees began writing reviews of proposed legislation in the early 1970s when Franklin Jones was Commissioner of the Bureau of Revenue – later to become TRD – and Fred O’Cheskey was Deputy Commissioner. During the early days of FIR preparation, analyses were often done on a very informal basis the night before a committee hearing, with no written report issued, according to Mr. O’Cheskey. The Commissioner and Deputy Commissioner (now Secretary and Deputy Secretary) often performed the analysis. Jim O’Neill, TRD Tax Policy Director for many years, recently said the bill review process was well established within TRD by the time he began working for the Department in 1978, and that it operated internally then pretty much the same way then as it does now.2
Recent years have witnessed some degree of confusion and dissatisfaction with TRD fiscal impact reports among individuals seeking changes in tax laws. This presentation is accordingly intended to 1) provide an overview of how the FIR process works at TRD, 2) assist people in interpreting FIRs, and 3) eliminate some misconceptions that various citizens may possess regarding the bill review process. A companion presentation by Tom Clifford, Chief Economist at the Taxation and Revenue Department, focuses on dynamic revenue estimating and is designed to achieve similar objectives.
1The author has written bill reviews for the Taxation and Revenue Department for over 15 years.
2 Mr. O’Neill also recently stated that:
“… The Legislative environment was different then. Many more of the proceedings were done ‘in camera’. Documents like TRD bill reviews and even LFC FIRs were held confidential by committee chairmen. Not even junior Democrats got to see them. Committee chairmen (e.g., Eddie Lopez at HTRC) got to look extraordinarily brilliant by asking penetrating questions drawn from the bill reviews. The sponsor usually was blindsided and had no effective answer. It was a fun way to kill bills. (Of course the Chairman could support a turkey by simply not asking those questions.)
Republican Colin McMillan changed all that. When he took over as Chairman of HTRC … he did not use TRD bill reviews to club Democratic sponsors. Instead he ordered staff to make copies for all Committee members–effectively making the bill reviews public. That is when TRD started to distribute them routinely to the sponsors and anyone else who wanted them.”
Mr. O’Cheskey points out, however, that during the days when reviews were sequestered by committee chairpersons, shrewd sponsors would sometimes circumvent the process by talking directly to the Tax Department.