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PROPOSED LEGISLATION Three ways to evaluate the cost by A. ALAN POST What will it cost private business to implement state requirements for separate eating and working facilities for smokers and non-smokers? What are the costs to industry and citizens of installing government required smog control devices on cars? What will it cost the state to expand state-supported medical care programs for the indigent? Questions such as these arise over and over when legislation is discussed on any government level. Opponents offer widely differing projections of costs and benefits to bolster their positions. Which side is the voter or legislator to believe? Unfortunately, recent history is full of examples of programs whose actual costs far exceeded original estimates. This is especially true for health, welfare, and social services programs. Similarly, costs of governmental regulations imposed on other levels of government or on the private sector are staggering. Yet attention is seldom paid to such costs, because they are passed on to someone else. Recent developments are further compounding the problem: • Because government services are highly labor intensive, costs for these services are among the fastest growing in our inflationary economy and, therefore, more difficult to predict. • Growing taxpayer revolt is limiting the money available to state and local governments to comply with requirements mandated, but not paid for, by other levels of government. • The soaring costs of regulating the private sector may be counterproductive to national programs designed to spur the economy and constrain inflation. Clearly, accurate cost estimates of new laws and regulations are essential if officials are to make sound decisions on what programs should be passed and how they will be paid for. And since the cost estimates must be accurate, those doing the estimating should be not only qualified but also independent. A growing number of state and local governments are responding to this challenge by creating an independent office within the government to analyze costs of new or expanded legislation or regulations. California was the first state to do so. The Office of Legislative Analyst for the state was set up in 1941. Since then, most states have established a similar function, and a number of local governments and special districts are exploring similar possibilities. What exactly is the role of the analyst? Basically he analyzes three types of legislative costs: —Those incurred by the sponsoring governmental unit. —Those passed on to some other level of government. —Those passed on to private industry and consumers. Cost to Sponsor Analyzing the cost to the sponsoring level of government is the most common function of these offices, and the one for which most were originally created. This level of analysis is generally the easiest to conduct, because the language of proposed legislation or regulations generally spells out the role of the sponsoring unit. However, there are still numerous problems in developing data bases and arriving at cost estimates. • The impact of inflation in future years on government services is difficult to predict, as noted earlier. A major problem in estimating costs of Medicare and Medicaid, for example, was the unforeseen explosion of health care costs. • The number of persons to be served by a new program may be difficult to determine in advance. Thus, accurate data may not be available on the number of people who meet the eligibility criteria for a new human services program. • Some proposals may involve new actions or initiatives, for which there is not prior experience or comparable data to draw on. • Required data may be available, but difficult or costly to collect. 26
Object Description
Title |
Proposed legislation: Three ways to evaluate the cost |
Author |
Post, A. Alan |
Subject |
Legislation -- Compliance costs -- United States Public administration -- costs |
Citation |
Tempo, Vol. 25, no. 1 (1979), p. 26-28 |
Date-Issued | 1979 |
Source | Originally published by: Touche Ross, & Co. |
Rights | Copyright and permission to republish held by: Deloitte |
Type | Text |
Format | PDF page image with corrected OCR scanned at 400 dpi |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi Library. Accounting Collection |
Date-Digitally Created | 2010 |
Language | eng |
Identifier | Tempo_1979_Spring-p26-28 |