House Bill No. 240

Introduced By _______________________________________________________________________________



A Bill for an Act entitled: "An Act prohibiting state agencies and local government entities that set and collect charges for services from maintaining in a fund receiving the charges a cash balance that is greater than necessary to finance the services of the agency or entity for more than 2 years; requiring reduction of charges for services in certain instances; providing definitions and exceptions; requiring reports; and providing a delayed effective date and a retroactive applicability date."



WHEREAS, some state agencies and local government entities set and collect charges for all or part of the cost of some public services; and

WHEREAS, there is a growing concern that some state agencies and local government entities are building large reserves in operating revenue due to the amount of charges for services; and

WHEREAS, governments must be responsible to the people they serve and always be vigilant not to charge or retain more in charges for services than is justified by the operating expenses of the government programs supported by the charges.



Be it enacted by the Legislature of the State of Montana:



NEW SECTION. Section 1.  Definitions. As used in [sections 1 through 4], unless the context requires otherwise, the following definitions apply:

(1) "Approving authority" means:

(a) in the case of a state agency, the approving authority as defined in 17-7-102;

(b) in the case of a local government entity, the local government entity's governing body.

(2) "Capital project" means the planned and necessary replacement or upgrade of equipment that is budgeted for by a state agency or a local government entity.

(3) (a) "Charge for services" or "charge" means a fee, charge, levy, or other assessment that is established by state agency rule or local government entity ordinance and that is:

(i) charged by the state agency or local government entity to a user of a service provided by the state agency or local government entity;

(ii) charged by the state agency or local government entity in exchange for a license, permit, or other type of grant of authority by the state agency or local government entity; or

(iii) collected exclusively to provide promotional or marketing services to the person on whom the charge is levied and that is not assessed or collected pursuant to Title 15.

(b) For the purposes of [section 2(1) or (3)(a) or 4], the term includes a fee, charge, levy, or other assessment established as provided in subsection (3)(a) and a fee, charge, levy, or other assessment established by statute.

(4) "Governing body" means the:

(a) board of county commissioners in the case of a county;

(b) municipal commission in the case of a municipality;

(c) commission in the case of a consolidated government; or

(d) town meeting legislative body in the case of a town.

(5) "Legislative audit division" means the legislative audit division established by 5-13-301.

(6) "Local charge for services fund" or "local fund" means an accounting fund maintained by a local government entity for which the exclusive source of revenue is one or more charges for services or interest or other income on the fund.

(7) "Local government entity" means a county, city, consolidated government, or town.

(8) "Operating plan" means the financial plan used by a state agency or local government entity showing in detail the purposes for which the state agency's or local government entity's operating revenue will be spent in the current fiscal year of the state agency or local government entity and the fund from which the expenditures will be made.

(9) "State agency" means an agency as defined in 17-7-102.

(10) "State charge for services fund" or "state fund" means an account within the special revenue fund established by 17-2-102 for which the exclusive source of revenue is one or more charges for services or interest or other income on the fund.



NEW SECTION. Section 2.  Limitation on balance in state or local charge for services fund -- exceptions -- audits. (1) Except as provided in this section, a state agency that deposits money into a state charge for services fund or a local government entity that deposits money into a local charge for services fund may not maintain a cash balance in the fund greater than twice the annual appropriation for that year or greater than the biennial appropriation from the account for the biennium, which includes that year from the state fund or local fund as shown in the state agency's or local government entity's initial operating plan.

(2) A state agency may maintain more money in a state fund or a local government entity may maintain more money in a local fund than is allowed by subsection (1) if the approving authority for the state agency certifies to the legislative finance committee, established by 5-12-201, or the manager of the service or function of the local government entity using money in a local fund certifies to the governing body of that entity:

(a) the date on which the state fund or local fund balance exceeded the limitation provided in subsection (1);

(b) the amount of money by which the state fund or local fund balance exceeded the limitation provided in subsection (1);

(c) the amount of money usually needed in the state fund or local fund for the operation of the service or function of the state agency or local government entity for 1 year, along with supporting facts;

(d) whether the amount of money within the state fund or local fund that is in excess of the limitation provided in subsection (1) is necessary for the operation of the service or function of the state agency or local government entity because of:

(i) an emergency;

(ii) an unusual circumstance; or

(iii) a fluctuation in the service, function, or charges for services of the agency or entity; and

(e) the facts and circumstances demonstrating the emergency, unusual circumstance, or fluctuation claimed in subsection (2)(d).

(3) The legislative audit division shall include in financial audits performed by or at the direction of the legislative audit division and an independent auditor shall include in an audit performed by the independent auditor pursuant to Title 2, chapter 7, part 5, a determination of whether money is or has been retained in a state charge for services fund or in a local charge for services fund contrary to the requirements of:

(a) this section; or

(b) [section 3].

(4) Except as otherwise provided in [section 1(3)(b)], this section does not apply to:

(a) a charge for services made by one state agency to another state agency or by one local government entity to another local government entity;

(b) a state charge for services fund or a local charge for services fund used only for replacement of buildings or to pay the costs of other future capital projects;

(c) a fee, charge, tax, levy, or other assessment the amount of which is established by statute; or

(d) charges for services deposited in accordance with law into:

(i) the state general fund;

(ii) a county general fund; or

(iii) a city, town, or consolidated government general fund.



NEW SECTION. Section 3.  Reduction of charge required. A state agency that maintains a cash balance in a state charge for services fund or a local government entity that maintains a cash balance in a local charge for services fund contrary to the limitation provided in [section 2(1)] for more than 60 days shall, within 90 days after the end of the 60-day period, reduce the charge for services or, in the case of a state fund or local fund into which two or more charges for service are deposited, reduce one or more charges for services specified by the state agency or local government entity until the cash balance in the state fund or local fund complies with the limitation in [section 2(1)].



NEW SECTION. Section 4.  Reports required. (1) The approving authority for a state agency shall annually report in writing to the legislative finance committee by August 1:

(a) each state agency that had a cash balance in a state charge for services fund contrary to the limitation provided in [section 2(1)] during the previous 12 months;

(b) the facts certified for each state agency by the approving authority pursuant to [section 2(2)];

(c) each state agency that has complied with the requirements of [section 3] and the circumstances of the agency's compliance; and

(d) each state agency that has not complied with [section 3] and the circumstances of the agency's noncompliance.

(2) The director of the department of commerce shall report to the legislature at the time and in the manner required by 5-11-210 a list of each local government entity that had a balance in a local charge for services fund contrary to the limitation provided by [section 2(1)], that failed to reduce the charge as provided in [section 3], or both, during the previous 12 months.



NEW SECTION. Section 5.  Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to charges for services, as defined in [section 1], collected prior to [the effective date of this act].



NEW SECTION. Section 6.  Effective date. [This act] is effective July 1, 1998.

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