1,179 bills became law last session – just 5% had a price tag
Fiscal notes serve as price tags on bills in the General Assembly. Lawmakers’ habit of omitting them limits their ability to make well-informed decisions.
The 100th General Assembly, which served during the 2017-2018 legislative session, passed 1,179 bills that the governor signed into law. Only 62, or 5.3 percent, of those bills came attached with fiscal notes.
Too often, Illinois lawmakers vote on bills without knowing the possible costs. That lack of information is all the more detrimental for a state facing an $8 billion backlog of unpaid bills, $133.5 billion in unfunded pension liabilities and a budget deficit of $2.8 billion for fiscal year 2020.
Beyond appropriating funds directly though the budget process, lawmakers pass bills that also impact state revenues, debt and spending. Fiscal notes serve as the closest thing to price tags for bills by providing cost or savings estimates, as well as impact on state revenues. Fiscal notes allow lawmakers to judge the cost-effectiveness of bills – making them critical to a well-functioning and transparent deliberative process.
Unfortunately, the absence of such cost estimates is nothing new in Illinois. Between 2011 and 2012, less than 2.3 percent of bills passed by the 97th General Assembly and signed into law by former Gov. Pat Quinn included fiscal notes. In 2013, only 3.4 percent included fiscal notes. The trend continued from 2015 to 2017, during which less than 3 percent of bills signed into law included fiscal notes.
A 2015 report from the Center on Budget and Policy Priorities, or CBPP, ranked Illinois among the seven worst states when it came to best practices for fiscal notes.
Even among the 5.3 percent of successful bills that included a fiscal note last session, most reported either “no impact” or an “unknown” cost. For those that did include a numerical estimate, the total estimated cost ranged from $27.4 million on the low end to nearly $32 million on the high end, in first-year annual and implementation cost.
In Illinois, the Fiscal Note Act requires cost estimates for bills that affect state or local government revenues and expenditures. However, fiscal notes only come attached to a bill when the bill sponsor requests a cost estimate, or when another lawmaker convinces the majority in his or her chamber to request a fiscal note. Moreover, fiscal notes are prepared by the affected state executive agency – not a nonpartisan entity – and may be susceptible to political pressures when determining the costs of bills.
Many bills for which a fiscal note would seem appropriate escape cost estimates due to the Fiscal Note Act’s ineffective requirements. One example is a progressive tax proposal in early 2018, which never received a fiscal note to determine its impact on state revenues. An Illinois Policy Institute analysis found that it would constitute a $3.6 billion tax hike – largely on the middle class – costing the typical Illinois family an additional $665 in income taxes.
Not only are fiscal notes rare to begin with in Illinois, but the few that make it onto bills are often inadequate, leaving lawmakers to guess the bill’s hidden costs. Most fiscal notes report that the bill will have “no impact” or that its impact is “unknown.”
An example of an inadequate estimate is House Bill 2977, which required public schools to teach cursive handwriting. The attached fiscal note to the law, now Public Act 100-0548, simply stated that the bill would have “no impact” on the State Board of Education, but reports an unknown cost of implementation for local school districts.
Need for reform
One recent reform intended to better inform lawmakers of their decisions was Senate Bill 2066, introduced by state Sen. Dale Righter, R-Mattoon, and signed into law in August 2018. SB 2066, now Public Act 100-0242, requires the Department of Commerce and Economic Opportunity to include a statewide cost of compliance estimate with each publication of its catalog of state mandates. But while that is a necessary step toward better program evaluation, it does not address state lawmakers’ lack of basic financial information.
In 2011, former state Sen. Pamela Althoff, R-McHenry, introduced Senate Bill 31, a bill that would have directed the Commission on Government Forecasting and Accountability, or COGFA, to prepare all fiscal notes. SB 31 would have expanded the requirements for fiscal notes and would have set a three-fifths majority threshold for suspending the fiscal note requirement. Despite gaining bipartisan support, the bill never received a floor vote and died in the Senate.
COGFA is a nonpartisan commission that already prepares a wide range of projections and analyses, most notably on revenues, budgeting and pensions. Agencies produce inadequate notes due to lack of forecasting expertise or succumbing to political pressures – issues that could be fixed if the responsibility shifted to COGFA. Illinois should join the majority of states in directing a nonpartisan entity to prepare fiscal notes.
Lawmakers should reform the state’s fiscal note requirements. Requiring every bill to come with a fiscal note attached, for example, would bring the Prairie State in line with most of its peers. According to the CBPP, 38 states prepare cost estimates for “all or substantially all bills.”
Even seemingly inconsequential bills can have an impact on the fiscal condition of state and local government. Strengthening the requirements for preparing fiscal notes would allow lawmakers to cast well-informed votes while increasing transparency during the lawmaking process.