SENATE BILL REPORT

SB 5582

BYSenators McCaslin, Lee, DeJarnatt and Rasmussen; by request of Office of Financial Management

Allowing state agencies to charge interest on debts.

Senate Committee on Governmental Operations

Senate Hearing Date(s):February 14, 1989; March 1, 1989

Majority Report:  Do pass.

      Signed by Senators McCaslin, Chairman; Thorsness, Vice Chairman; Conner, Sutherland.

Senate Staff:Barbara Howard (786-7410)

                  March 1, 1989

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, MARCH 1, 1989

BACKGROUND:

Total amounts of accounts receivable for state agencies are increasing each year.  A recent Legislative Budget Committee study indicated that uncollected accounts constitute significant loss of revenue.  It is common practice in private business to charge interest on past-due receivables.  The state itself must pay 1 percent per month on accounts that are more than 30 days past due.

The Departments of Revenue, Employment Security and Labor and Industries already have authority to charge interest.  Some other agencies do not.

SUMMARY:

State agencies must charge interest on unpaid accounts receivable and other debts owed to the state.  The interest accrues at the rate of 1 percent per month or portion thereof beginning on the due date or any date specified by contract or regulation.  This authority may be used instead of, but not in addition to, any other statutory authority to charge interest.

Other governmental units are exempt from the interest provisions.  The Office of Financial Management may adopt rules defining criteria by which state agencies may waive interest, including conditions where collection would not be cost- effective.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: Bob Jacobs, Accounting Services, OFM