Partners for Our Children

SESSB 5915 edits strikes language from current statute that names statements of fiscal impact as fiscal notes; it replaces the terminology with both the terms fiscal notes and dynamic fiscal impacts. The bill creates new language that defines a dynamic fiscal impact statement as a written statement that includes a dynamic impact estimate of the legislation or proposed legislation and is contained only in the narrative explanation of the fiscal note and is not reflected in the fiscal impact calculation required by RCW 43.88A.020.These statements must include information on the assumptions that were used in computing the dynamic impact estimate and should, at a minimum, be based on assumptions of the probably behavioral response of the persons directly impacted by the legislation or proposed legislation. The bill stipulates the statements may only be requested by the fiscal committees of the House and Senate. The impact statements may only be requested if the fiscal note reflects a positive or negative revenue impact of more than $10 million per fiscal year. The requests for these statements must be made at least 60 days prior to the beginning of a legislative session.

The bill also defines dynamic impact estimate as “an estimate of the net fiscal impact of a bill, resolution, or proposed legislation that takes into account behavioral changes of persons directly impacted by the legislation or proposed legislation and the effect that those behavioral changes may have on the economy as a whole. Dynamic impact estimates may take into consideration factors such as the effects of the legislation or proposed legislation on persons to save, spend, invest, and expand or reduce their business activities in this state.”

The bill adds language to current statute to indicate that beginning January 1, 2017 and subject to the availability of funds appropriated, fiscal notes dealing with corrections, child welfare, and mental health issues shall include – in addition to the increases or decreases of state government revenue and expenditures – an estimate of the fiscal impact of expenditure reductions or increases on other state or local program expenditures as well as any return on investment as a result of the legislation for any legislation projected to result in an increase or decrease of state expenditures exceeding $5 million.

Finally, the bill adds new language that subject to the availability of funds, the director of the Office of Financial Management and the director of the Washington State Institute for Public Policy (WSIPP) shall convene a work group to explore the establishment of a nonpartisan agency to conduct objective, impartial fiscal analysis on behalf of the legislature. The working group shall consider whether WSIPP should subsume the functions of impartial fiscal analysis on behalf of the legislature. The work group would also be tasked with conducting a study of the accuracy and reliability of fiscal notes by examining a sample of fiscal notes on enacted legislation to compare the projected cost of the legislation with the actual costs incurred in the legislation’s implementation. The work group would be required to present its findings to the governor and appropriate committees of the legislature by December 1, 2016.