Illinois General Assembly - Full Text of HB3647
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Full Text of HB3647  94th General Assembly



State of Illinois
2005 and 2006


Introduced 2/24/2005, by Rep. Bob Biggins


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 a user charge or fee assessed shall be charged against each identifiable recipient for special benefits derived from State activities beyond those received by the general public. Sets forth procedures for determining fee amounts. Sets forth requirements for legislation that imposes fees. Sets forth requirements for State agencies to implement fees. Requires the State Comptroller to submit an annual report to the General Assembly concerning State agency fees. Requires each State agency to review its fees every 2 years. Requires the Auditor General to evaluate each agency fee at least once every 5 years. Amends the State Comptroller Act to repeal a Section concerning the reporting of agency fees. Amends the Illinois State Auditing Act to repeal a Section concerning Agency Fee Imposition Report Forms. Effective immediately.

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1     AN ACT concerning State government.
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4     Section 1. Short title. This Act may be cited as the
5 Illinois Fee Management and Transparency Act.
6     Section 5. State objective. The purpose of this legislation
7 is to implement a uniform management and oversight program for
8 the administration and assessment of State-imposed fees and
9 user charges. The use of fees to fund State programs and
10 services is a positive tool and one that has distinct
11 advantages over general tax increases. Fees can register public
12 demand for a service or program, improve operating efficiency
13 of government agencies, and prevent waste of State services or
14 resources. Fees should not be imposed to fund general public
15 services unrelated to the program or service for which the fee
16 is imposed but should be used to recover the full cost to the
17 State of providing special benefits and services beyond those
18 that accrue to the general taxpaying public. It is the
19 objective of the State of Illinois to ensure that each service,
20 sale, or use of State goods or resources provided by an agency
21 to specific recipients be self-sustaining and promote
22 efficient allocation of the State's resources by establishing
23 user charges or fees for special benefits provided to the
24 recipient that are at least as great as costs to the State of
25 providing the special benefit and that allow the private sector
26 to compete with State government without disadvantage in
27 supplying comparable services, resources, or goods where
28 appropriate. This Act establishes State policy regarding fees
29 assessed for government services and for the sale or use of
30 government goods or resources.
31     Section 10. General policy.



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1     (a) A user charge or fee shall be assessed against each
2 identifiable recipient for special benefits derived from State
3 activities beyond those received by the general public.
4     (b) Determining when special benefits exist. When a service
5 (or privilege) provides special benefits to an identifiable
6 recipient beyond those that accrue to the general public, a
7 charge shall be imposed to recover the full cost to the State
8 for providing the special benefit or to compensate the State
9 for the market price of the good or service rendered. A special
10 benefit is considered to accrue and a user charge shall be
11 imposed when a State service:
12         (i) enables the beneficiary to obtain more immediate or
13     substantial gains or values (which may or may not be
14     measurable in monetary terms) than those that accrue to the
15     general public (e.g., receiving a license to carry on a
16     specific activity or specific business or for use of public
17     lands);
18         (ii) provides business stability or contributes to
19     public confidence in the business activity of the
20     beneficiary by regulating competencies (e.g., insuring
21     deposits in commercial banks or setting and monitoring
22     compliance with educational requirements and competencies
23     for specific skills rendered to the public); or
24         (iii) is performed at the request of or for the
25     convenience of the recipient and is beyond the services
26     regularly received by other members of the same industry or
27     group or by the general public (e.g., receiving expedited
28     or after hour services).
29     Section 15. Exemptions. In general, user charges or fees
30 should not be assessed where it is not cost effective to do so,
31 where it is inconsistent with government policy objectives, or
32 where it would unduly stifle competition or industry
33 innovation. The following State charges or assessments are not
34 considered a user charge or fee subject to the provisions of
35 this Act:



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1         (a) general taxes;
2         (b) any form of inter-agency or inter-governmental
3     charge;
4         (c) any government business enterprise operating in a
5     competitive or potentially competitive market;
6         (d) repayments of loans to the State;
7         (e) asset sales, rental of property, or royalties;
8         (f) fines and pecuniary assessments or penalties; and
9         (g) fees charged by courts and tribunals.
10     Section 20. Determining the amount of user charge to
11 assess.
12     (a) Except as otherwise provided by this Act, user charges
13 or fees assessed by a State agency must be sufficient to
14 recover the full cost to the State of providing the service,
15 resource, or good when the State is acting in its governmental
16 capacity. Partial cost recovery may apply where new programs,
17 services, or resources are being phased in, where there are
18 government-endorsed community service obligations, or for
19 explicit government policy purposes contained in the
20 implementing legislation.
21     (b) User charges must be based on market prices when the
22 State, not acting in its governmental capacity, is leasing or
23 selling goods or resources or is providing a service (e.g.,
24 leasing space in a State-owned building). Under these business
25 conditions, user charges need not be limited to the recovery of
26 full cost and may yield net revenues.
27     (c) User charges shall be collected in advance of, or
28 simultaneously with, the rendering of services unless
29 appropriations and authority are provided in advance to allow
30 reimbursable services.
31     (d) No charge may be made for a service when the
32 identification of the specific beneficiary is obscure, and the
33 service can be considered primarily as benefiting broadly the
34 general public.
35     (e) Charges shall be made to the direct recipient of the



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1 special benefit even though all or part of the special benefits
2 may then be passed on to others.
3     Section 25. Determining full cost.
4     (a) "Full cost" includes all direct and indirect costs to
5 any part of the State government of providing a good, resource,
6 or service. These costs include, but are not limited to, an
7 appropriate share of all of the following:
8         (1) Direct and indirect personnel costs, including
9     salaries and fringe benefits such as medical insurance and
10     retirement. Retirement costs include all (funded or
11     unfunded) accrued costs not covered by employee
12     contributions.
13         (2) Physical overhead, consulting, and other indirect
14     costs including material and supply costs, utilities,
15     insurance, travel, and rents or imputed rents on land,
16     buildings, and equipment. If imputed rental costs are
17     applied, they must include:
18             (A) depreciation of structures and equipment,
19         based on official Internal Revenue Service
20         depreciation guidelines unless better estimates are
21         available; and
22             (B) an annual rate of return (equal to the average
23         long-term Treasury bond rate) on land, structures,
24         equipment, and other capital resources used.
25         (3) Management and supervisory costs.
26         (4) The costs of enforcement, collection, research,
27     establishment of standards, and regulation, including any
28     required environmental impact statements.
29     (b) Full cost shall be determined or estimated from the
30 best available records of the agency, and new cost accounting
31 systems need not be established solely for this purpose.
32     Section 30. Determining market price.
33     (a) "Market price" means the price for a good, resource, or
34 service that is based on competition in open markets and



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1 creates neither a shortage nor a surplus of the good, resource,
2 or service.
3     (b) When a substantial competitive demand exists for a
4 good, resource, or service, its market price shall be
5 determined using commercial practices, for example:
6         (i) by competitive bidding; or
7         (ii) by reference to prevailing prices in competitive
8     markets for goods, resources, or services that are the same
9     or similar to those provided by the government with
10     adjustments as appropriate that reflect demand, level of
11     service, and quality of the good or service.
12     (c) In the absence of substantial competitive demand,
13 market price shall be determined by taking into account the
14 prevailing prices for goods, resources, or services that are
15 the same or substantially similar to those provided by the
16 government, and then adjusting the supply made available or
17 price of the good, resource, or service so that there is
18 neither a shortage nor a surplus.
19     Section 35. Implementing user charges by legislation.
20 Legislation to impose a new user charge or fee must:
21         (1) Clearly define the program or service to be funded
22     and its scope and intent.
23         (2) Contain a fiscal note that forecasts first-year
24     start up costs and estimates annual costs of the program or
25     service. The fiscal note must be public and readily
26     accessible.
27         (3) State whether the proposed fee or user charge is
28     intended to cover the full cost of the program or service
29     or offset only a portion of the program or service costs.
30         (4) Whenever possible, not specify the precise fee
31     amount, but allow for the fee amount to be developed by
32     rulemaking of the administering State agency to allow
33     administrative updating of fees to reflect changing costs
34     and market values and for input of the affected public
35     through the rulemaking process.



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1         (5) Take into consideration other programs that
2     provide special benefits to the same or similar user
3     populations and design proposals to avoid the duplication
4     of collection efforts and costs and ease the burden on
5     users.
6         (6) Consider the fiscal and competitive impact of the
7     user charge or fee on those subject to the user charge or
8     fee. User charges or fees imposed in other states shall be
9     considered only in determining whether proposed user
10     charges or fees or increases in existing user charges or
11     fees would be fiscally or competitively detrimental to
12     those subject to the assessment and not to justify user
13     charge or fee amounts in excess of the full cost of the
14     program, service, or resource.
15     Section 40. Agency implementation of user charges or fees.
16 Agencies are responsible for the initiation and adoption of
17 user charge or fee schedules consistent with the provisions of
18 this Act. Each agency must complete a Fee Imposition Report
19 Form for each current user charge or fee imposed or for any new
20 user charge or fee proposed by the agency. The Fee Imposition
21 Report Form shall be filed with the Comptroller at the time the
22 Comptroller specifies by rule. The Comptroller shall submit to
23 the General Assembly by September 1 of each year a report
24 detailing, by agency, the information required under the Agency
25 Fee Imposition Report Form. The Fee Imposition Report Form
26 shall include a list and description of all fees imposed by the
27 agency. For each fee, the agency shall:
28         (1) state the special benefit conferred by the State
29     justifying the imposition of the fee or user charge
30     pursuant to this Act;
31         (2) provide the statutory authority for the fee;
32         (3) identify the population affected by the fee;
33         (4) determine the full cost or market price of the
34     special benefit in accordance with this Act. The
35     information used to establish the amount of the fee or user



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1     charge and the specific methodology used to compute the
2     amount of the fee shall be maintained by the agency and be
3     made readily accessible to the public;
4         (5) identify all funds into which the fees are
5     deposited;
6         (6) identify the specific use of the funds generated by
7     the fee; and
8         (7) state whether the fee pays for the full cost of the
9     State program, resource, or service provided as a special
10     benefit to the users or whether the fee pays only partial
11     costs or generates revenues in excess of the full cost of
12     the program.
13     Section 45. Biennial review of agency fees. Each agency
14 shall review all fees assessed and collected by the agency
15 every 2 years to determine whether the existing fee amount
16 should be adjusted to reflect unanticipated changes in costs or
17 market value. If an adjustment to the user charge or fee merits
18 review and adjustment, the agency head shall request an Auditor
19 General review of the user charge or fee pursuant to Section 50
20 of this Act. If the Auditor General's evaluation of the user
21 charge or fee pursuant to Section 50 of this Act recommends an
22 adjustment to the user charge or fee, the agency shall proceed
23 with the rulemaking process or recommend necessary
24 legislation.
25     Section 50. Auditor General evaluation of fees and user
26 charges. Unless requested sooner by an agency, the Auditor
27 General shall evaluate each agency user charge or fee no less
28 often than every 5 years. The Auditor General shall determine
29 whether an adjustment to increase or decrease the user charge
30 or fee amount is warranted after an audit of the agency program
31 or service as provided by this Section. As part of the user
32 charge or fee evaluation, the Auditor General shall:
33         (1) evaluate the methodology used to compute the fee
34     amount;



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1         (2) analyze administrative efficiencies in
2     administering the program and agency processes for
3     reporting revenues and expenditures and recommend where
4     agency efficiencies or cost reductions could be
5     implemented; and
6         (3) analyze the effectiveness of the program or service
7     in terms of legislative intent.
8      If revenues exceed the full cost of the program or service
9 by more than 20% for 3 consecutive years, the Auditor General
10 shall recommend a fee decrease to more accurately reflect the
11 full cost of administering the program or service.
12     If moneys from the General Revenue Fund are necessary to
13 subsidize a particular program or service, the Auditor General
14 shall determine the amount of those moneys used per year to
15 support the program and make a recommendation as to whether the
16 fee or user charge should be increased to recover the full cost
17 of the program.
18     Section 55. Severability. The Provisions of this Act are
19 severable under Section 1.31 of the Statute on Statutes.
20     (15 ILCS 405/16.2 rep.)
21     Section 900. The State Comptroller Act is amended by
22 repealing Section 16.2.
23     (30 ILCS 5/3-8.5 rep.)
24     Section 905. The Illinois State Auditing Act is amended by
25 repealing Section 3-8.5.
26     Section 999. Effective date. This Act takes effect upon
27 becoming law.