Budget & Tax, Good Government

LOFT may be used more by watchdogs than lawmakers

May 31, 2019

Ray Carter

This year, lawmakers created the Legislative Office of Fiscal Transparency (LOFT), which will audit agency budgets and evaluate the effectiveness of state programs and services, issuing published reports of resulting conclusions.

Supporters say the office will lead to better legislative oversight and more efficient use of taxpayer dollars. But officials in other states with similar programs say private-sector watchdogs, rather than politicians, often make better use of the resulting data.

In New Mexico, the Legislative Finance Committee serves a role comparable to the newly created LOFT.

“We’re an independent think tank,” said Kristina G. Fisher, associate director at Think New Mexico. “We are constantly citing their analysis because they have access to more data than we do, because they can force agencies to turn information over to them and we can’t.”

Paul Gessing, president of the Rio Grande Foundation, said New Mexico’s Legislative Finance Committee provides useful analysis, but that doesn’t guarantee legislators will use the data.

“It has generally been ignored by policymakers overall,” Gessing said. “But from a think tank perspective, I think having another set of eyes out there, kind of like the GAO looking at what government is doing and doing studies and trying to take a look at government bureaucracies and programs and whatnot, I think that’s generally for the better.”

Senate President Pro Tempore Greg Treat, R-Oklahoma City, was a vocal champion of LOFT. When he carried related legislation, Senate Bill 1, Treat said, “We’re in the minority of states that don’t have a similar entity, and I think this will be an extremely invaluable tool in the budgeting process.” In a press release, Treat said LOFT would be “a game-changer for the Legislature and the public in holding state agencies accountable. Armed with objective data and research from LOFT and not the agencies themselves, legislators will be able to make more informed decisions when setting budgets and evaluating program performance.” During a press availability following adjournment of this year’s legislative session, Treat said he was “excited to see what LOFT brings about and uncovers and allows us to do our job better.”

He said LOFT, which received a $1.7 million appropriation, would begin its work in July. State law requires all agencies, boards and commissions to turn over to LOFT all records, documents, and budgets requested, and to make personnel available. LOFT will also have subpoena and investigation authority.

A spokesman for Treat said the pro tempore consulted with a wide range of officials when developing LOFT, but New Mexico and Mississippi were among the states examined. In Mississippi, the state equivalent of LOFT is the Joint Legislative Committee on Performance Evaluation and Expenditure Review (PEER).

Dallas Breen, executive director of the John C. Stennis Institute of Government at Mississippi State University, said PEER has benefited public debate.

“I think it is definitely something that helps, because you get a designated research arm to help provide some of that information that may not be available to legislators,” Breen said.

He said the Stennis Institute and PEER may do studies on similar topics. When they independently reach similar conclusions, it boosts the validity of both.

“The more opportunities you have to put more data out there, the better off everybody is,” Breen said. “If somebody is not going to listen to one group, they’re probably going to listen to another.”

While Fisher said the work of New Mexico’s Legislative Finance Committee may be more readily accepted by outside groups than lawmakers, she said its reports occasionally do prompt legislative response. She cited an analysis that showed administrative spending was increasing faster than classroom spending in New Mexico schools. Think New Mexico produced similar research, and advocated for placing caps on the growth of school district central administrative spending. Lawmakers adopted some of those ideas in a recent state budget.

“In some cases, they’ve gotten the Legislature to adjust how it spends money,” Fisher said.

Similarly, Gessing said New Mexico’s Legislative Finance Committee’s work on the proliferation of college campuses led the prior governor to oppose continued expansion.

Maurice McTigue, vice president for outreach at the Mercatus Center at George Mason University, said it is normal for research produced by LOFT-style groups to be of greater initial use to outside entities.

“That is typical,” McTigue said, “because the political process responds to pressure from outside and hardly ever initiates something unless it’s getting pressure from somebody over one issue or another. So the work that a group like this does, if it does its work well, will certainly help other organizations.”

He said LOFT-style groups work best when they focus on outcomes

“You can put a lot more money into education spending, but did you get better-educated kids?” McTigue said. “And the answer in many instances, is ‘no.’ But if an appropriation, say, for reading recovery was linked to having to identify how many more children now read at their biological age as a result of going through this program, then you can get a real measure of ‘Is it working?’ But you can also get a real measure of which providers do it better. Often there are big differences between providers, and legislatures often don’t have good mechanisms to be able to compare providers in terms of their results.”

As a cabinet minister and member of parliament in his native New Zealand, McTigue helped enact market-driven reforms. He said there are several basic questions that should be applied to any government program. Is there evidence a problem exists? What evidence suggests a proposal will fix the problem? How much will a program cost? And when will the problem be “cured” so government no longer needs to spend money addressing it?

McTigue said it is “surprising how many proposals actually floundered when you got to that last question.” Yet when people don’t ask that question, he said it increases the likelihood that politicians address “the consequences of a problem, not the cause.”

In some cases, the decision of other states’ politicians to ignore the recommendations of LOFT-style entities already has parallels in Oklahoma.

Gessing said New Mexico’s Legislative Finance Committee produced research showing that state’s film subsidies were wasteful, but lawmakers ignored those conclusions and instead expanded the program. Similarly, consultants hired by Oklahoma’s Incentive Evaluation Commission concluded this state’s film rebate program does nothing to permanently boost the Oklahoma film industry and does little for the state’s image. They recommended the program be ended. Instead, Oklahoma lawmakers doubled program payments this year and even voted to allow some filmmakers to get payments from the Oklahoma Quick Action Closing Fund, sending millions out of state.

Will Oklahoma lawmakers respond more favorably to the recommendations of LOFT than they have to similar evaluators, including their own fiscal staff?

“It depends upon the mood of the politicians on a particular day,” McTigue said. “It tends to be a shifting scenario.”