Legislative Budget Office director outlines fiscal-note process as commissioners press for stronger review

Christian Larson, director of the Legislative Budget Office, told the Legislative Budget Office Oversight Commission on Sept. 3 that the offices core role is to ensure the legislature understands the fiscal effect of proposed legislation.

"Fiscal notes are really answering the question: what is the fiscal effect to the state budget of a piece of proposed legislation," Larson said, describing the process by which fiscal-note requests originate in finance committees, are assigned to impacted agencies for assumptions and estimates, and are reviewed by the LBO against uniform standards before release to the legislature.

Larson walked the commission through recent workload and capacity metrics. He said an operating-session year typically sees about 1,000 fiscal-note requests (2023 spiked to roughly 1,400), that historically 60 to 70 percent of requests are completed, and that the default due date in the tracking system is eight business days. He added that recent years have seen higher agency-assignment ratios per request (about three agency assignments per fiscal request in the last session), which has strained timelines and reduced the share of notes completed by their assigned due dates.

Commission members pressed how responsibility is apportioned between agencies and the LBO. Larson said agencies develop implementation assumptions and estimates and the LBO independently reviews whether those estimates meet the standards set in the Fiscal Uniform Standards and Procedures before approving a fiscal note for release.

Some commissioners urged stronger pushback on agency assumptions. "We've had the same conversation around 'death by fiscal note,'" Senator Eric Pratt said, invoking a phrase used to describe when agency assumptions produce high projected costs that can stall a bill. Pratt urged either giving the LBO "more teeth" to challenge assumptions or for the legislature to more consistently exercise its authority to insist on credible estimates.

LBO staff explained that fiscal notes are advisory for most items; forecasted or formula-driven programs carry different, binding budget implications. The commission has authority to approve or clarify the uniform standards within statutory limits; Larson said the commission cannot exceed statutory bounds but can provide clarity and expectations that shape how agencies produce estimates.

Larson also described local-impact notes (statutory process under Minn. Stat. 3.9863.989) as far more resource-intensive and less frequent than fiscal notes: local-impact work often requires surveying cities, counties and school districts and typically takes weeks to months depending on data availability. He reviewed the LBOs budget and staffing: the office is budgeted for 19 FTE, with the bulk of expenses going to employee compensation, a fiscal-tracking system lease, and growing contracted services tied to tax-expenditure evaluations.

Commissioners asked about system upgrades and coordination across multiple agencies assigned to a single fiscal note. Larson said the LBO notifies all impacted agencies when a request is filed and attempts to coordinate assumptions, but complex, multi-agency requests take longer to reconcile.

The commission did not adopt any new rules at the meeting. Larson said LBO staff will continue to refine timeliness and accuracy metrics and will bring proposals to the commission when appropriate. The commission signaled interest in further discussion of whether the LBO or the legislature should take additional steps to strengthen the credibility of fiscal notes going forward.

The commission adjourned after hearing a public comment urging study of dynamic budgeting models.