SB2819 93RD GENERAL ASSEMBLY

LRB093 18374 LRD 44081 b

93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
SB2819

Introduced 2/5/2004, by Peter J. Roskam

SYNOPSIS AS INTRODUCED:

New Act
15 ILCS 405/16.2 rep.
30 ILCS 5/3-8.5 rep.

Creates the Illinois Fee Management and Transparency Act. Provides that State agencies may assess user charges or fees against identifiable recipients of special benefits that derive from State activities that are beyond the benefits that the general public receives so that the State can recover the cost of providing the benefit. Sets conditions for imposing user charges or fees. Creates exceptions. Provides that legislation to implement a user charge or fee must meet certain conditions. Requires each agency to file a Fee Imposition Report Form with the Comptroller that details user charges or fees imposed by the agency. Provides that each agency must review its user charges and fees every 2 years to determine whether they should be adjusted. Provides that the Auditor General must evaluate each agency user charge and fee at least every 5 years and determine whether those charges and fees should be adjusted. Provides that the provisions of the Act are severable. Amends the State Comptroller Act to repeal a Section concerning Agency Fee Imposition Report Forms. Amends the Illinois State Auditing Act to repeal a Section concerning Agency Fee Imposition Report Forms. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning fees.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Illinois Fee Management and Transparency Act.

Section 5. Purpose. The purpose of this Act is to implement a uniform management, reporting, and oversight program for the administration and assessment of State-imposed fees and user charges. The use of fees and user charges to fund special State programs and services can be a positive funding tool and one that can have distinct advantages over general fund support. This Act establishes State policy regarding fees and user charges assessed for government services and for the sale or use of government goods or resources.

Section 10. General policy.

(a) A State agency may assess a user charge or fee against identifiable recipients of special benefits derived from State activities beyond those received by the general public.

(b) If a service or privilege provides special benefits to an identifiable recipient beyond those that accrue to the general public, a charge may be imposed to recover the appropriate cost to the State for providing the special benefit or to compensate the State for the market price of the good or service rendered. A special benefit will be considered to accrue and a user charge may be imposed when a State service:

(i) enables the beneficiary to obtain more immediate or substantial gains or values, which may or may not be measurable in monetary terms, than those that accrue to the general public, including, but not limited to receiving a license to carry on a specific activity or specific business or for use of public lands; or

(ii) provides business stability or contributes to public confidence in the business activity of the beneficiary by regulating competencies, including, but not limited to, insuring deposits in commercial banks or setting and monitoring compliance with educational requirements and competencies for specific skills rendered to the public; or

(iii) is performed at the request of or for the convenience of the recipient, and is beyond the services regularly received by other members of the same industry or group or by the general public, including, but not limited to, receiving expedited or after hour services.

Section 15. Exemptions from Act. User charges or fees shall not be assessed if it is not cost effective to do so, if it is inconsistent with government policy objectives, or if it would unduly stifle competition or industry innovation. The following State charges or assessments are not considered a user charge or fee subject to the provisions of this Act:

(1) General taxes;

(2) Any form of inter-agency or inter-governmental charge;

(3) Any government business enterprise operating in a competitive or potentially competitive market;

(4) Repayments of loans to the State; and

(5) Asset sales, rental of property, or royalties.

Section 20. Determining the amount of the user charge or fee to assess.

(a) Except as otherwise provided in this Act, user charges or fees assessed by the State shall not exceed the full cost to the State of providing the service, resource, or good when the State is acting in its governmental capacity. Partial cost recovery may apply if new programs, services, or resources are being phased in, if there are government-endorsed community service obligations, or to achieve explicit government policy purposes contained in the implementing legislation.

(b) User charges shall be based on market prices if the State, while not acting in its governmental capacity, is leasing or selling goods or resources or is providing a service, including but not limited to, leasing space in a State-owned building. Under these business-type conditions, user charges need not be limited to the recovery of full cost and may yield net revenues.

(c) User charges shall be collected in advance of or simultaneously with the rendering of services, unless appropriations and authority are provided in advance to allow reimbursable services.

(d) No charge shall be made for a service if the identification of the specific beneficiary is obscure and the service can be considered as primarily benefiting the general public.

(e) Charges may be made to the direct recipient of the special benefit even though all or part of the special benefit may then be passed on to others.

Section 25. Determining full cost.

(a) For the purposes of this Act, the term "full cost" includes all direct and indirect costs to any entity of State government associated with providing a good, resource, or service. These costs include an appropriate share of:

(1) Direct and indirect personnel costs, including salaries and fringe benefits such as medical insurance and retirement. Retirement costs include all funded or unfunded accrued costs not covered by employee contributions.

(2) Physical overhead, consulting, and other indirect costs including material and supply costs, utilities, insurance, travel, and rents or imputed rents on land, buildings, and equipment. If imputed rental costs are applied, they shall include:

(i) depreciation of structures and equipment, based on official Internal Revenue Service depreciation guidelines unless better estimates are available; and

(ii) an annual rate of return that is equal to the average long-term Treasury bond rate on land, structures, equipment and other capital resources used.

(3 ) Management and supervisory costs.

(4) The costs of enforcement, collection, research, establishment of standards, and regulation, including any required environmental impact statements.

(b) Full cost shall be determined or estimated from the best available records of the agency, and new cost accounting systems need not be established solely for this purpose.

Section 30. Determining market price.

(a) For the purposes of this Act, the term "market price" means the price for a good, resource, or service that is based on competition in open markets, and creates neither a shortage nor a surplus of the good, resource, or service.

(b) If a substantial competitive demand exists for a good, resource, or service, its market price shall be determined using one of the following commercial practices:

(i) competitive bidding; or

(ii) reference to prevailing prices in competitive markets for goods, resources, or services that are the same or similar to those provided by the State, with adjustments as appropriate that reflect demand, level of service, and quality of the good or service.

(c) In the absence of substantial competitive demand, market price shall be determined by taking into account the prevailing prices for goods, resources, or services that are the same or substantially similar to those provided by the State and then adjusting the supply made available and price of the good, resource, or service so that there will be neither a shortage nor a surplus.

Section 35. Implementing user charges by legislation.

Legislation to impose a new user charge or fee must:

(1) Clearly define the program or service to be funded and its scope and intent.

(2) Prepare a fiscal note that forecasts first-year start-up costs and estimates annual costs of the program or service. The methodology for preparing the fiscal note must be made public and readily accessible. No legislation shall progress past second reading in the General Assembly unless a fiscal note is filed.

(3) State whether the proposed fee or user charge is intended to cover the full cost of the program or service or offset only a portion of the program or service costs.

(4) Take into consideration other programs that provide special benefits to the same or similar user populations and design proposals that will avoid the duplication of collection efforts and costs and ease the burden on users.

(5) Consider the fiscal and competitive impact of the user charge or fee on persons or entities that are subject to the user charge or fee.

Section 40. Agency implementation of user charges or fees. Agencies are responsible for the initiation and adoption of user charge or fee schedules consistent with the provisions of this Act. Each agency must complete a Fee Imposition Report Form that details each current user charge or fee imposed and any new user charge or fee. The Fee Imposition Report Form shall be filed with the Comptroller at the time and in the manner the Comptroller specifies by rule. The Comptroller must submit to the General Assembly by September 1 of each year a report detailing, by agency, the information required under the Agency Fee Imposition Report Form. The Fee Imposition Report Form must include a list and description of all fees imposed by the agency. For each fee, the agency shall:

(1) State the special benefit conferred by the State justifying the imposition of the fee or user charge pursuant to Section 10;

(2) Provide the statutory authority for the fee;

(3) Identify the population affected by the fee;

(4) Determine the full cost or market price of the special benefit in accordance with Sections 20 and 25. The information used to establish the amount of the fee or user charge and the specific methodology used to compute the amount of the fee shall be maintained by the agency and be made readily accessible to the public;

(5) Identify all funds into which the fees are deposited;

(6) Identify the specific use of the moneys generated by the fee; and

(7) State whether the fee pays for the full cost of the State program, resource, or service provided as a special benefit to the users or whether the fee pays only partial costs or generates revenues in excess of the full cost of the program.

Section 45. Biennial review of agency fees. Each agency shall review all fees assessed and collected by the agency every 2 years to determine whether the existing fee amount should be adjusted to reflect unanticipated changes in costs or market value. If the user charge or fee merits review and adjustment, the agency head shall request an Auditor General review of the user charge or fee pursuant to Section 50. If the Auditor General's evaluation of the user charge or fee under Section 50 recommends an adjustment to the user charge or fee, the agency shall proceed with the rulemaking process, which shall include a public hearing on the recommended change or recommend necessary legislation.

Section 50. Auditor General evaluation of fees and user charges. Unless requested sooner by an agency, the Auditor General shall evaluate each agency user charge and fee at least every 5 years. The Auditor General shall determine whether an adjustment to increase or decrease the user charge or fee amount is warranted after an audit of the agency program or service as provided by this Section. As part of the user charge or fee evaluation, the Auditor General shall:

(1) Evaluate the methodology used to compute the fee amount;

(2) Analyze administrative efficiencies in administering the program and agency processes for reporting of revenues and expenditures and recommend where agency efficiencies or cost reductions can be implemented;

(3) Analyze the effectiveness of the program or service in terms of legislative intent.

(4) If revenues exceed the full cost of the program or service by more than 20% for 3 consecutive years, the Auditor General must recommend a fee decrease to more accurately reflect the full cost of administering the program or service.

(5) If General Revenue Funds are necessary to subsidize a particular program or service, the Auditor General shall determine the amount of general revenue funds used per year to support the program and make a recommendation as to whether the fee or user charge should be increased to recover the full cost of the program.

Section 55. Special Funds. Resources from funds established in the State treasury to receive fees and user charges for special purposes may not be used for general purposes.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

(15 ILCS 405/16.2 rep.)

Section 105. The State Comptroller Act is amended by repealing Section 16.2.

(30 ILCS 5/3-8.5 rep.)

Section 110. The Illinois State Auditing Act is amended by repealing Section 3-8.5.

Section 999. Effective date. This Act takes effect upon becoming law.