Fiscal Notes — A Critical Part of the Legislative Process

Guide-to-Fiscal-Notes-Agencies-1When a bill or resolution is introduced in a legislative session, legislators know the potential financial impact from the attached fiscal note. The fiscal note spells out:

  • Cost
  • Savings
  • Revenue loss
  • Revenue gain

The Legislative Budget Board (LBB) is responsible for these fiscal notes, with affected agencies providing input. Prior to the legislative session, the director of each state agency provides the name of an agency contact to receive the fiscal note requests from the LBB and provide timely responses.

The LBB outlines the steps in the fiscal note process:

  1. The bill is referred to committee
  2. If the bill meets specific criteria, the committee clerk electronically requests a fiscal note from the LBB
  3. The LBB fiscal note coordinator determines whether the bill has fiscal implications.
    1. If the bill has no fiscal implication (NFI), skip to Step 6
    2. If the bill has fiscal implications, the coordinator assigns the fiscal note request to affected agencies and the appropriate LBB analyst.
  4. Agencies provide the LBB with a brief fiscal analysis, detailing the bill’s fiscal impact and method of finance. These estimates exclude secondary impacts and costs caused by inflation.
  5. The LBB analyst reviews the information submitted by affected agencies as well as other sources to provide an accurate estimate that is used to create a draft fiscal note. The LBB estimate may agree with or differ from the information received from the state agencies.
  6. An LBB manager reviews the draft fiscal note.
  7. Once the draft fiscal note is approved:
    1. The LBB coordinator finalizes
    2. The LBB director approves
  8. The fiscal note coordinator sends it electronically to:
    1. The committee clerk that made the request,
    2. The author/sponsors of the bill, and
    3. Source agencies.

Steps 2 through 8 are usually repeated each time the bill is changed in committee or on the floor of either chamber.

Scott Dudley of the LBB told the Administrator, “For the most part, agency responses are good.” However, he said that agencies should develop internal review protocols so everyone in the agency involved in fiscal note preparation is on the same page. These will also ensure that assignments are made to the proper analyst to formulate a timely response.

He said, “It is best when all within the agency are on board with a cost estimate so we don’t receive conflicting information about the fiscal implications.” Dudley added that many agencies track legislation so employees are prepared for a fiscal note request. He said if an affected agency is inadvertently left off an assignment, it should let the LBB know immediately.

For more information on the fiscal note process, see the LBB website.

About the Author

Ann Fowler

Ann is a writer with the Comptroller’s Fiscal Management Division.

Ann Fowler can be contacted at: ann.fowler@cpa.texas.gov.