The FIR Preparation Process
Bill Selection and Assignment
Once bills are introduced in a legislative session and printed, hard copies are placed in a mailbox at the state capitol building. TRD representatives (Marilyn Hill, Tax Policy Director and Jeanne Flannery, current Tax Information Office Director during the 2002 legislative session) retrieve them, examine essentially all bills introduced and determine which ones should be reviewed by TRD.3 This process is sometimes repeated at the agency level electronically, when a TRD employee performs electronic searches on the legislative web site by key word. After bills have been selected for review, the Tax Research Office (TRO) is notified and bills are assigned to various portions for the agency for review depending on their content. A typical bill is assigned to the Revenue Processing Division, the Audit and Compliance Division, Administrative Services Division, Legal Services Bureau and the Property Tax and Motor Vehicle Divisions when appropriate. Once assigned to divisions, depending on the nature of bills, they are transferred to specific individuals within divisions for review and comment.
After the Tax Research Office is informed that specific bills are to be reviewed, they are assigned to a specific TRO analyst and the associated information is entered on a log maintained by Tax Research Office and Tax Information Office employees. An example of a bill log is shown as Exhibit 1. The logs facilitate tracking measures as they move through the review process.4 The practical implication of this for legislators is that if someone wishes to know where a particular measure is in the process, a call to the Tax Policy Director or analysts in TRO will answer the question.
The review process has traditionally been “blind” by nature wherein employees are provided with copies of bill drafts and essentially no other information. The reasoning underlying this approach is that reviews will be more accurate if reviewers have no preconceptions regarding what a proposal does or does not do.5 Their first task is therefore typically to determine what a bill does, and why. Once they answer these questions, division employees evaluate the proposals and place comments on the network in a “division comments” folder on the TRD network. In unusual cases, they communicate with Tax Research employees via phone, FAX or e-mail. The comments range greatly, but usually center on administrative issues. Systems people, for example, indicate the extent of computer software changes necessary to implement the proposal, while auditors describe difficulties associated with enforcing the measure. These types of considerations typically appear in the “Administrative Impact” and “Technical Issues” section of reports described below.
Tax Research staff then write report drafts. Major work of Tax Research economists consist of:
- Describing the proposed legislation
- Calculating and describing fiscal impacts
- Discussing policy issues associated with each measure
- Incorporating comments from various other groups in the Department pertaining to proposals.
As indicated above, most of the comments from individuals outside the Tax Research Office pertain to technical or administrative issues. The fiscal impact sections and bill descriptions are almost always performed completely by economists.
Once draft reports are complete, they are placed in a specific subdirectory on the TRD network. After Roundhouse staff – typically the Tax Policy Director and TRD Secretary — have edited and prepared the final versions of FIRs, the FIRs are distributed to various individuals and agencies. They appear on the Department web site, and are sent via e-mail to any individual wishing to be placed on the e-mail distribution list.6 Hard copies are delivered to bill sponsors. Legislative staff members at the Roundhouse then attend committee hearings and respond to questions regarding FIRs. In some cases TRD economists testify at committee hearings. This activity is generally minimized, however, due work demands on the economists in producing the large volume of reports submitted to them for review. New FIRs are typically prepared for amended versions of proposals and for substitute bills. Procedures for preparing reviews of amended versions of proposals and substitutes are similar to procedures for preparing other FIRs. Amended versions of bills often incorporate changes recommended in initial FIRs — typically as technical or administrative comments. During the session’s final weeks, TRD often ceases writing reviews of amended legislation simply because action on measures becomes too rapid for the analysts to follow.
3 Bills are selected for review if they impact essentially any portion of the Tax Code or affect TRD administratively in any way. One example the latter is legislation that would, for example change administrative responsibilities of the Department, as was the case with a proposal in last year’s legislative session that would have moved the ONGARD service system from TRD to another agency. Another example was a proposal that changed per diem payments for auditors.
4 They also provide a convenient means of identifying measures introduced during a particular session, whether TRD reviewed them and similar information. Bill logs, FIRs and associated drafts of legislation are available in Microsoft Word and Excel format. Individuals interested in copies of them should contact the Tax Research Office.
5 The procedure can sometimes lead to almost comical results. For an example, see the author’s review and hasty revision of HB-298 in the 2002 session, in which he incorrectly characterized “personal assistive mobility devices” – gyroscopically controlled machines currently being tested by the US Postal Service – as electronic wheelchairs.
6 To view a particular FIR, go to: http://www.state.nm.us/tax/, select “Proposed Legislation” and enter the appropriate bill number. If you wish to be placed on the e-mail distribution list, please contact Patricia Herrera of the Tax Information Office (505) 827-0928 or Pherrera@state.nm.us.