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Jared Hunt: Statehouse estimates are rarely accurate

After learning last week that Gov. Earl Ray Tomblin would like to attach a jobs impact statement to future bills, I couldn't help but think, "Hey, that's a great idea — except that it's not."

Don't get me wrong. Requiring elected officials to review the economic impact of the laws they consider is a great idea.

But two years of covering the Legislature has given me a somewhat jaded point of view.

Under the Tomblin plan, the state Development Office, enlisting the aid of various state agencies, would estimate the short-term and long-term effects that various bills would have on the state's labor market.

The process would be similar to the one used to prepare fiscal notes - often mispronounced as  "physical" notes at the statehouse — which attempt to measure how a bill will affect state government revenues.

The problem: State agencies have a less-than-stellar track record in producing accurate estimates.

Legislative Auditor Aaron Allred's office has studied the issue over the years and found agencies have a habit of overestimating effects of legislation.

Reviews of past estimates found that 69 percent of fiscal notes prepared in 2008 and 84 percent of those prepared in 2007 had been overestimated.

In fact, only 13 percent of the fiscal notes prepared in both years came within 10 percent of actual results.

My Magic 8 Ball has a better track record.

Lawmakers in both parties have complained about these agency-prepared fiscal notes over the years.

They will tell you the estimates often are influenced by the policy preferences of the governor or whoever is in charge of a particular state agency.

Sen. Erik Wells, D-Kanawha, provided a particularly stunning example of this. His bill requiring daily physical education classes in schools was not popular with state education officials.

When the state Department of Education's fiscal note came in, the price tag was a whopping $1.5 billion. (Makes you wonder what a jobs impact statement would have said.)

Agencies have tried their hand at job estimates in the past.

Last year, executive branch officials told the Legislature that a $20 million annual tax credit package would help Century Aluminum create about 400 jobs at its shuttered Ravenswood smelter.

The complex tax credit proposal was passed. How'd that work out?

 Frustration over skewed estimates has led lawmakers to consider founding their own independent fiscal and policy analysis office. That way they would no longer have to rely on estimates provided by executive branch agencies.

Lawmakers also have discussed working with West Virginia and Marshall universities to create independent job analyses for bills.

Of course, we would need fiscal notes for such strategies, but both approaches would be a good way to provide balance and credibility to the system.

So, by all means, let's start measuring the real economic impact of legislation. But how about we do it in a way that's better than a shake of the 8 Ball?  


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