SENATE BILL REPORT

SHB 1577

BYHouse Committee on State Government (originally sponsored by Representatives R. Fisher, McLean, Holland, Silver, H. Sommers, Anderson and Winsley; by request of Office of Financial Management)

Establishing liability for state trust funds.

House Committe on State Government

Senate Committee on Governmental Operations

Senate Hearing Date(s):March 30, 1989; February 15, 1990

Majority Report:  Do pass.

      Signed by Senators McCaslin, Chairman; Thorsness, Vice Chairman; DeJarnatt, Patrick, Sutherland.

Senate Staff:Rod McAulay (786-7754)

                  February 15, 1990

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, FEBRUARY 15, 1990

BACKGROUND:

Accounting procedures in state government are decentralized.  Agencies use separate systems and procedures to manage their individual accounts receivable based on guidelines developed by the Office of Financial Management (OFM).

A 1987 audit by the Legislative Budget Committee (LBC) found that the total accounts receivable owed by non-governmental entities were worth $1.5 billion.  Receivables delinquent over 90 days were worth $225 million.  The LBC report included a number of recommendations designed to improve the management of accounts receivable.

State Trust Fund Accountability:  State trust funds are monies collected by a corporation on behalf of the state, such as retail sales taxes.  If a corporation is dissolved, state law makes the person in control of the retail sales tax trust funds liable for any unpaid trust funds.  Such liability does not exist for the employees' share of workers' compensation or fees collected from motor vehicle owners for emissions testing.

SUMMARY:

State trust funds are defined as all moneys collected from another on behalf of the state, including the state's share of vehicle emission testing fees and the employees' share of workers' compensation contributions.

When a corporation responsible for a state trust fund is terminated or dissolved, the officer in charge of the trust fund is personally liable for the unpaid trust funds, if that person willfully fails to pay the amounts due to the state.  If any law requires interest or penalties for the non-payment of state trust funds, then the individual responsible for the trust funds is also liable for the interest or penalties.

A person is only liable for funds collected while he or she was responsible for such funds.  Liability does not apply if non-payment is due to events beyond the person's control.  The provisions apply if the agency determines there is no other means of collecting directly from the corporation.  The liability provisions only apply to trust funds that become due on or after the effective date of the bill.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Bob Jacobs, OFM