Dynamic Scoring of Fiscal Notes y g An attempt to predict - PowerPoint PPT Presentation

Dynamic � Scoring � of � Fiscal � Notes y g An � attempt � to � predict � the � impact � of � An � attempt � to � predict � the � impact � of � fi fi fiscal � policy � changes � by � forecasting � fiscal � policy � changes � by � forecasting � l l li li h h b f b f i i the � economic � reactions � to � the � policy � the � economic � reactions � to � the � policy � change change h

The � Current � Debate • Static � scoring � does � not � take � into � account � all � St ti St ti Static � scoring � does � not � take � into � account � all � i i d d t t k i t t t k i t t ll t ll fiscal � impacts � generated � by � tax � changes � fiscal � impacts � generated � by � tax � changes �� � tax � tax � cuts � may � also � increase � revenues cuts � may � also � increase � revenues t t l l i i • Dynamic � scoring � poses � a � number � of � problems � Dynamic � scoring � poses � a � number � of � problems � � Cannot � accurately � measure � future � changes, � Cannot � accurately � measure � future � changes, � impact � is � relatively � small, � etc. impact � is � relatively � small, � etc.

Philosophies, � Politics � and � Projections p , j One’s view of the usefulness or value of dynamic scoring can One’s view of the usefulness or value of dynamic scoring can One’s � view � of � the � usefulness � or � value � of � dynamic � scoring � can � One’s � view � of � the � usefulness � or � value � of � dynamic � scoring � can � be � directly � tied � to � one’s � political � or � philosophical � leanings be � directly � tied � to � one’s � political � or � philosophical � leanings • Conservative � versus � liberal � tendencies Conservative � versus � liberal � tendencies • Media, � think � tanks � and � administrations M di Media, � think � tanks � and � administrations M di thi k t thi k t k k d d d d i i t i i t ti ti • Joint � Select � Committee � on � Deficit � Reduction Joint � Select � Committee � on � Deficit � Reduction

Issues • Assumptions • Assumptions • Consistency • Comparability • Controls • Guidelines

Questions Q • Will it impact legislative desire to enact or Will � it � impact � legislative � desire � to � enact � or � reject � a � particular � policy � change? • • Can future impact be predicted and Can � future � impact � be � predicted � and � defined?

Current � Use � in � Utah Raising � the � cigarette � tax: • Static measure of the increase Static � measure � of � the � increase • Cost � per � pack � times � the � current � volume � of � sales • Dynamic � measure y • Reduction � in � sales � volume � due � to � increase � in � price

Challenges � of � Static � Scoring g g • Timing Timing • Complexity/Multiple � Agencies • Dispute � Resolution i l i • Defined � Guidelines • Follow � up • Historical Basis or Trend Historical � Basis � or � Trend

Applying � Challenges � to � Dynamic � Scoring pp y g g y g • Timing Timing • Complexity/Multiple � Agencies • Dispute � Resolution i l i • Defined � Guidelines • Follow � up • Historical Basis or Trend Historical � Basis � or � Trend

Can � a � Balance � Be � Achieved? Static Static Dynamic Dynamic Scoring Scoring Can � the � use � of � dynamic � scoring � (similar � to � what � is � done � now � C th f d i i ( i il t h t i d with � static � scoring) � be � effectively � used � to � predict � with � any � accuracy � the � future � economic � impact � of � a � change � to � revenue � or � costs?

Can � a � Balance � Be � Achieved? Static Static Dynamic Dynamic Scoring Scoring Limited � use � on � relatively � small � economic � impacts � may � be � Li it d l ti l ll i i t b beneficial � if � using � generally � agreed � upon � assumptions

What � Is � Needed? • More � research • Independent � group � to � oversee p g p • Standard � set � of � guidelines The � more � that � assumptions � or � bias � enter � the � equations, � the � more � unreliable � are � the � results q ,

Remember The � value � we � gain � from � dynamic � scoring � of � fiscal � y g notes � will � be � in � direct � proportion � to � the � effort � and � p p time � we � put � into � it