Montgomery County Council Receives Report That Could Lead to Better Cost Estimates Prior to Decision Making

ROCKVILLE, Md., July 14, 2010—The Montgomery County Council received a report on July 14 from the County’s Office of Legislative Oversight (OLO) that recommends a better system to evaluate the costs of proposed projects and legislation before decision-makers decide to proceed with them.

OLO reviewed more than 200 fiscal impact statements considered by the Council between January 2005 and May 2010 and discovered a great degree of variability among the statements. OLO speculates the variability in content is likely due to two factors: complexity of bill and a lack of standard. The report said, “Some contained only a single sentence estimating revenues or costs.”

Since 1985 fiscal impact statements have been required to accompany legislation. The report goes on to say, “The Executive Branch has no formal standards governing the format or the content of fiscal impact statements prepared for legislation.” The result is that it has been difficult for decision-makers to measure the adequacy of the information in trying to weigh a project’s worthiness compared to an accurate cost.

The level of complexity of fiscal impact statements that the Council has received in past years with proposed legislation differs from bill to bill. The report says the fiscal consequences can range from no impact to a significant impact.

The OLO report makes four major recommendations and includes 11 specific suggestions that fiscal impact statements should include “at a minimum.”

OLO’s recommendations about the content of fiscal impact statements concern what types of information should be included such as the methodology used to calculate revenue cost estimates and the variables that could affect these estimates in the future. OLO also recommends estimating the revenues and costs for the next six fiscal years for an admissible long-term projection (instead of one year estimates included in some reports). Another change recommended would require fiscal impact statements to indicate how the addition of new staff responsibilities would affect other duties of employees.

Along with the requirement to prepare fiscal impact statements and minimum standards on their content, OLO recommends establishing target dates of when the Executive branch should present the fiscal impact statement. The report also recommends directing Council staff to identify the fiscal impact statement as a discussion item in packets for pending bills and regulations.