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Fiscal Impact Statements
1. What's a fiscal impact statement?
Section 2-4-302 (1), MCA, provides (in part) that if an agency "proposes to adopt, increase, or decrease a monetary amount that a person shall pay or will receive, such as a fee, cost or benefit, the notice [of proposed action] must include an estimate, if known, of: (a) the cumulative amount for all persons of the proposed increase, decrease, or new amount; and (b) the number of the persons affected." The quoted provisions are commonly known as a "fiscal impact statement", and must be included in rule-making notices as a matter of course if some sort of fee or cost is being proposed (or even reduced or eliminated).
2. How do I go about figuring out what numbers I should be using in the fiscal impact statement?
There are a number of sources. If it is for an existing program, program staff may have historical figures regarding how many applications are filed a year, the number of permits granted, copies made, etc. I suggest that we state the basis for our estimates, such as the number of persons in the affected category during the last calendar year, the last fiscal year, last biennium or whatever it is we are using. The dollar amount should be (in most instances) easy to determine, and the impact is therefore a relatively straightforward calculation. (Keep in mind that the net impact might be zero (as to everybody), although some persons might pay more while others pay less.) I strongly suggest that we identify the net change in cost/price as relating to the particular period we are using in our calculations.
If it is a new program that has come into existence due to recent legislation, there may have been a fiscal note attached to the bill. You should probably check to see if we did a fiscal note for the bill, just so we don't inadvertently supply information that is in sharp contrast to what we previously supplied. Note that changes to the bill during the legislative process may have rendered the fiscal note estimates inaccurate, however.
3. What if we don't know how many people are going to be affected by the change?
If we don't have any basis whatsoever for making an estimate, we can say that we say that an unknown number of persons will be affected. For fees based on items where a single individual might be paying for more than one item during the period, we can say that we are basing the dollar amount on x items, and note that fewer than x persons might be affected some pay for more than one item. An example is building code permits - a single developer might obtain 20 or more permits in a year's time. Another example is a photocopy charge - we might be able to say roughly how many copies we billed for in the previous year, but don't have information on the number of persons making the requests.
4. Do I have to write an impact statement for every rule change?
No, only ones that relate to money paid by a member of the public to us, or that we are paying out to the public.
5. What if we are repealing a rule with a fee in it, and adopting a new rule with the same fee? Do I have to include the fiscal impact statement anyway, even though nothing is really being changed?
Yes, although you can (and should) note that the fee is not being changed.
6. What if there are a bunch of individual fees being changed? Do I have to make separate statements for each individual fee?
Probably yes. Montana law does not specifically address the question, but I believe it is the best practice to separately identify the various components on a fee-by-fee, user class-by-user class basis. We are unlikely to be criticized for providing too much information.
7. What other information needs to go into a fiscal impact statement?
I suggest including any other information which might help a reader understand what is really happening. For instance, it probably makes sense to explain that if a license has a two-year renewal cycle, and everybody renews at the same time, that's why the revenue is calculated on a biennial basis, or why the annual revenue projections fluctuate so much. You should give enough information so that a member of the Legislature could read the fiscal impact statement and understand it well enough to explain it to a constituent who might be affected by the proposed change.
8. Where in the Notice of Proposed Action does the fiscal impact statement belong?
There are at least two places in a Notice where it can go. It can be in a separately identified paragraph (following the paragraph about submitting comments), or it can go in the statement of reasonable necessity immediately following the rule with the proposed changes. My suggestion is to put it wherever it seems to make the most sense. If the statement is lengthy or complicated, a separate paragraph is probably appropriate.
9. What happens if I don't include a fiscal impact statement and one is needed?
A couple of things can happen. First, the Secretary of State's office probably won't accept your Notice of Proposed Action. (Actually, they will probably call and tell us that we need to draft one before they will publish it.) Second, the Legislative Services Division and/or the Economic Affairs Interim Committee will formally object if the Notice somehow gets in to the MAR without it - which means that you will have to start the notice process over again with publication of an amended Notice of Proposed Action. It may even prompt a request for an "economic impact statement" pursuant to 2-4-405, MCA, which means much more work for you.
10. Example:
NEW RULE I BUILDING PERMIT FEE SCHEDULE (1) The state board of wolves charges the following building permit fees for construction of a swine sty:
(a) straw construction $ 10
(b) stick construction 25
(c) brick construction 100
(d) modular (mobile or trailer-type) construction 15
(2) Building permits are required only for construction outside of the boundary of an incorporated city or town. If the construction site is within three miles of an existing donut shop or bakery, there is a permit surcharge of $ 100.
REASON: There is reasonable necessity for the Board of Wolves to establish a fee schedule to cover the cost of inspecting newly constructed structures for compliance with tornado and wind-resistance codes, as required by Chapter 1, Laws of 2009 (SB 123). Based on data supplied by the Department of Economic Fairy Tales, the Board of Wolves estimates that approximately 33 pigs will build a house of straw, 33 will build a house of sticks, 33 a house of bricks, and one pig will try to build a modular sty, for a total of approximately 100 pigs seeking building permits during the next fiscal year. The Board has no data upon which to make an estimate of the number of pigs who will build within three miles of a donut shop. The Board estimates its total annual revenue will be approximately $ 4,470.
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