Budget office idea gaining steam

Jim Schowalter has plenty on his plate in his new gig. As president and CEO for the Minnesota Council of Health Plans, Schowalter is the leader of a multibillion-dollar industry, providing direct employment to 16,000 people and health insurance to millions of Minnesotans.

Even with those new responsibilities, Schowalter couldn’t help but notice the talk of a change at his old job. Not that it’s anything he hasn’t heard before.

The former commissioner of Minnesota Management and Budget (MMB) said discussion of taking the duty of preparing fiscal notes for the Legislature out of that agency had become a nearly annual ritual, almost certain to resurface in some form during each session.

“It’s like the springtime, when the birds return,” said Schowalter, who left MMB in January after four years in office.

This year, the chirping is louder, and coming from higher up in the trees. The key financial committee leaders in both houses of the Legislature are withholding judgment for now, but their caucus leaders are striding forward with companion bills to move the fiscal note process from MMB.

Both bills got a first hearing on Wednesday and, as Senate Majority Leader Tom Bakk explained, the process had initiated with a phone call from House Speaker Kurt Daudt earlier this session. Daudt was “frustrated,” Bakk said, by a late-arriving fiscal note that had forced Republicans to redirect a bill, a reference to the House GOP caucus’ controversial education reform bill.

But Bakk went on to say that the notion had been around a “long, long time,” and was “a good discussion to have.”

Presenting his bill on Wednesday afternoon, the Senate leader observed that the bill had appeared in a House committee earlier that day. It did, but a delete-all amendment offered there leaves the bills in markedly different forms. Bakk’s proposal, which preserved the original language of the proposal, would establish a “Legislative Budget Office” under the authority of the Legislative Coordinating Commission.

In the House, the bill’s new form has the Office of the Legislative Auditor (OLA) conducting the fiscal analysis for bill proposals.

Bakk told senators that he envisioned the change as a clean sweep of some 17 full-time employee positions from MMB to the legislative branch, though he added the Legislature might have to “do a little work” to make sure the switch was as simple as it seemed.

Among possible complications, Bakk said he was not aware of the staffers’ current compensation, and how it might compare to legislative salaries, and when questioned did not know if their contracts had come under a collective bargaining unit.

Both Bakk and House Majority Leader Joyce Peppin, who presented the House file on Daudt’s behalf, spoke of ancillary benefits that would come from the new offices, though their respective pitches reflected the differences in the two proposals. Bakk imagined the legislative budgeting team producing research reports for the Senate during the interim between legislative sessions, as House researchers do for the lower chamber; Peppin said OLA staff could use the period between sessions to return to the work of auditing state programs and departments.

The arguments from Bakk and Peppin did have one major piece in common: Under either method, the bill would bring fiscal notes into the legislative branch from the executive, which both said was in keeping with the “separation of powers.” Bakk highlighted a survey from the National Conference of State Legislatures (NCSL), which found that, of 40 states that responded, 34 had a budgeting office that answered to the Legislature.

“Why we have another third party, over at MMB, that actually does this work on behalf of the administration is a mystery to me,” Bakk said. “And I think that’s why most states don’t do it this way.”

Schowalter, for his part, said he thinks the different system employed here is a good thing, and said MMB has traditionally been recognized for transparency and professionalism on both economic forecasting and fiscal note estimates.

“I think Minnesota’s been a leader for quality and integrity,” Schowalter said. “They’re looking for a change that looks more like the [federal] Congressional Budget Office. I don’t think having the CBO made Congress any more effective.”

Sen. Sandra Pappas, DFL-St. Paul, said she thinks a new office, dedicated entirely to generating fiscal analysis, could quicken the process of getting notes into lawmakers’ hands. As the debate has begun, Pappas has awaited a final fiscal note for a bill she plans to recommend for passage in the coming days.

“MMB itself often has a lot on its plate,” Pappas said, “and I’ve had trouble getting things from them in the past in a timely manner.”

Schowalter said the timing of fiscal notes is a matter of staffing bandwidth, and probably would not change unless legislators also added more employees to that team. The number of requests for notes “jumps dramatically around this time of year,” Schowalter explained, while the number of employees handling the practice remains the same. Aside from adding more analysts, Schowalter suggested “some form of triage, or prioritization” could cut down the delivery time on notes that are deemed more important than others.

Pappas said the Senate DFL caucus had not discussed the issue, but guessed that “everybody” would have at least one story of a note that took longer, or found different results, than the bill’s author had expected. Even still, Sen. Richard Cohen, DFL-St. Paul, chair of the Senate Finance Committee, said he is “fairly well satisfied” with the current system, and only “so-so” on the movement to craft a new one.

Cohen actually authored a bill with similar effect around a dozen years ago, he recalled, though he eventually pulled back from the proposal after determining that MMB’s figures are “fairly nonpartisan and… accurate.” Cohen did say he found the idea of involving the OLA as “a bit more intriguing,” though he had not discussed the proposal with Auditor Jim Nobles.

Rep. Jim Knoblach, R-St. Cloud, chair of the House Ways and Means Committee, said earlier this session that he did not yet have a position on the measures proposed. His DFL counterpart, Rep. Lyndon Carlson, DFL-Crystal, said Thursday that he had “some reservations,” including the possibility of duplicating work done by both OLA and MMB, which he suspects might still have to play a role in the new method.

Carlson has chaired the House finance committee during three terms, two of them under a Republican administration. His only complaint during that time was timeliness during “crunch-time,” particularly on notes relating to health and human services, though he conceded those calculations tended to become “very complex.”

Cohen said he hoped the move to change legislative budget analysis would not complicate the Legislature’s simultaneous effort to pass a budget this session.

“If we’re going to question fiscal note to fiscal note, based on a bill that may or may not pass, it’s going to be a very long session,” Cohen said.

Gov. Mark Dayton seemed less than receptive to the notion, volunteering his opposition in the press conference announcing his supplemental budget. Bakk, in testimony, told legislators he hoped that was a function of Dayton’s not knowing the details behind the proposals.

The successful Wednesday votes move both bills into their chamber’s respective state government finance committees, where neither is scheduled for a hearing. There, legislators would get a look at what cost, if any, might be associated with the various changes associated with either proposal. As of Friday morning, neither version had a fiscal note.