HOUSE BILL REPORT
HB 1359
As Reported by House Committee On:
Judiciary
Appropriations
Title: An act relating to the interest rate on legal financial obligations.
Brief Description: Revising the interest rate on legal financial obligations.
Sponsors: Representatives Darneille, Jarrett, Grant, Appleton, Kirby, Walsh, Kagi, Pettigrew, Lovick, Lantz, Campbell, Fromhold, Haigh, Priest, Kessler, Hinkle, Buck, Ormsby, Upthegrove, Dickerson, McIntire, Chase, McDermott and Holmquist.
Brief History:
Judiciary: 2/2/05, 2/11/05 [DPS];
Appropriations: 2/24/05, 2/28/05 [DP2S(w/o sub JUDI)].
Brief Summary of Second Substitute Bill |
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HOUSE COMMITTEE ON JUDICIARY
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 8 members: Representatives Lantz, Chair; Flannigan, Vice Chair; Williams, Vice Chair; Priest, Ranking Minority Member; Campbell, Kirby, Springer and Wood.
Minority Report: Without recommendation. Signed by 2 members: Representatives Rodne, Assistant Ranking Minority Member; and Serben.
Staff: Edie Adams (786-7180).
Background:
When a defendant is convicted of a crime, the court may impose financial obligations as part
of the judgment and sentence. Financial obligations that may be imposed on a defendant
include: victim restitution; crime victims' compensation fees; court costs; court-appointed
attorneys' fees and costs of defense; fines; and other costs associated with the offense or
sentence.
Judgments for financial obligations in criminal proceedings bear interest from the date of
judgment at the same rate that is applicable to civil judgments. The rate of interest generally
applicable to civil judgments is the greater of 12 percent or four points above the 26-week
treasury bill rate. As a result of low treasury bill rates, 12 percent has been the applicable
interest rate on criminal financial obligation judgments for at least the last decade.
In 2004, the Legislature established a new method of calculating the interest rate applicable
to tort judgments; previously the rate was the same as the general civil judgment rate. The
interest rate now established for tort judgments is two percentage points above the 26-week
treasury bill rate.
Interest that accrues on the restitution portion of a criminal financial obligation is paid to the
victim of the offense. All other interest accruing on the judgment is split between the state
and the county as follows:
The public safety and education account is used to fund a variety of programs, including criminal justice training, crime victim's compensation, indigent representation, the judicial information system, and highway and traffic safety. The judicial information system account is used to acquire the equipment, software, supplies, and services necessary to provide information systems for the judiciary and information systems access to non-court users. The county current expense fund is the general county fund used to fund county expenses.
Summary of Substitute Bill:
The interest rate applicable to financial obligations imposed in a criminal judgment is
changed to the rate applicable to tort judgments two percentage points above the 26-week
treasury bill rate.
This new method of calculating interest on criminal financial obligations applies to
judgments entered on or after the effective date of the act and to the accrual of interest on
existing judgments from the effective date of the act. Interest that has accrued on a judgment
prior to the effective date of the act is not affected by the change in the interest rate.
Substitute Bill Compared to Original Bill:
The proposed substitute makes a conforming amendment to another provision of law that
specifies the rate of interest applicable to criminal financial obligations.
Appropriation: None.
Fiscal Note: Available.
Effective Date of Substitute Bill: The bill takes effect 90 days after adjournment of session in which bill is passed.
Testimony For: Our entire criminal justice system is presumably geared to the hope that the
person, through the course of his or her punishment, will not commit another crime. There
are a couple of areas of law that degrade that hope. The interest rate on financial obligations
is one of those issues.
Successful reentry of offenders into society is critical to reduce recidivism rates that are
currently driving the high costs of our criminal justice system. Prison costs are eating up our
education budgets and our health care budgets. The impacts go beyond just prison costs
when you consider the impacts on the offender's family, which the state may end up having to
support.
The Bush administration has urged states to look at all aspects of the system to try to resolve
the recidivism problem. The interest rate is one of the aspects of current law that inhibits an
offender's ability to reenter society. The demoralizing effect of unmanageable debt keeps
offenders from being able to support themselves and their families. The 12 percent interest
rate is punitive, unreasonable, and unfair. The Legislature decided last year that two points
above the T-bill rate is a fair interest rate. If an offender is able to succeed, he or she will
have more funds to repay restitution and financial obligations over time.
(With concerns) The main concern of county officials is not the loss of revenues to the
counties, but that by tying it to the tort interest rate, you are ignoring the fact that the general
civil rate is still 12 percent. The Legislature has already authorized courts to waive interest if
the offender has been diligent in making payments. It is also important to remember that this
will impact victims who will receive less in interest on their restitution payments. Ultimately
this is about the victims, not about the loss to the counties.
Testimony Against: None.
Persons Testifying: (In support) Representative Darneille, prime sponsor; Daniel Clark,
Transition and Reentry Reform Coalition; Paul Benz, Lutheran Office on Public Policy; and
Roger Kluck, Friends Commission on Public Policy.
(With concerns) Debbie Wilke, Washington Association of County Officials.
HOUSE COMMITTEE ON APPROPRIATIONS
Majority Report: The second substitute bill be substituted therefor and the second substitute bill do pass and do not pass the substitute bill by Committee on Judiciary. Signed by 23 members: Representatives Sommers, Chair; Fromhold, Vice Chair; McDonald, Assistant Ranking Minority Member; Buri, Clements, Cody, Conway, Darneille, Dunshee, Grant, Haigh, Hinkle, Hunter, Kagi, Kenney, Kessler, Linville, McDermott, McIntire, Miloscia, Priest, Schual-Berke and Walsh.
Minority Report: Do not pass. Signed by 5 members: Representatives Alexander, Ranking Minority Member; Anderson, Assistant Ranking Minority Member; Bailey, Pearson and Talcott.
Staff: Nona Snell (786-7153).
Summary of Recommendation of Committee On Appropriations Compared to
Recommendation of Committee On Judiciary:
The interest rate on legal financial obligations is based on the date of judgment, and the
interest rate is readjusted annually instead of monthly.
Appropriation: None.
Fiscal Note: Available.
Effective Date of Second Substitute Bill: The bill takes effect 90 days after adjournment of session in which bill is passed.
Testimony For: Helping offenders reenter society successfully reduces the societal costs and the impact on the budget because they will be less likely to re-offend. If people are demoralized by financial obligations with large interest rates, they may feel like they will never get ahead and may not pay. If the rate is lower, they may be more likely to pay.
Testimony Against: None.
Persons Testifying: Representative Darnielle, prime sponsor; and Roger Kluck, Friends Committee on Washington Public Policy.