HOUSE BILL REPORT
SSB 5611
As Reported by House Committee On:
Judiciary
Title: An act relating to the interest rate on legal financial obligations.
Brief Description: Changing the interest rate on legal financial obligations.
Sponsors: Senate Committee on Judiciary (originally sponsored by Senators Esser, Kline, Regala, Hewitt, Fairley, McCaslin, Zarelli, Weinstein, Stevens, Johnson, Brandland, Hargrove and Franklin).
Brief History:
Judiciary: 2/22/06 [DPA].
Brief Summary of Substitute Bill (As Amended by House Committee) |
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HOUSE COMMITTEE ON JUDICIARY
Majority Report: Do pass as amended. Signed by 9 members: Representatives Lantz, Chair; Flannigan, Vice Chair; Williams, Vice Chair; Priest, Ranking Minority Member; Rodne, Assistant Ranking Minority Member; Campbell, Serben, Springer and Wood.
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 non-tort civil judgments. The rate of interest
generally applicable to non-tort 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 Amended Bill:
The interest rate applicable to financial obligations imposed in a criminal judgment is
changed to two percentage points above the 26-week treasury bill rate for the December
preceding the date of entry of the judgment. The interest rate is readjusted annually on
January 1 of each year and the readjusted rate applies to the accrual of interest during that
year.
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.
Amended Bill Compared to Substitute 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 Amended Bill: The bill takes effect 90 days after adjournment of session in which bill is passed.
Testimony For: (In support) It is fundamentally unfair to charge a 12 percent interest rate on
legal financial obligations. The 12 percent rate is excessive and saddles an offender with an
impossible obligation. The interest accrues even while the offender is incarcerated and
unable to earn money to repay it. Interest accumulates at a rate that is far in excess of what
the person is able to pay. Many offenders work to pay off the debt, but are unable to keep up
with the crushing interest accumulations, which can often far exceed the amount of the
underlying obligation. This leads to a hopelessness that can result in the offender giving up
and stopping payment altogether. The underlying obligation should be paid, but the interest
rate that is applied to that obligation should be reasonable. The Legislature decided two years
ago that two points above the T-bill rate is a reasonable interest rate. Lowering the rate will
help the person succeed, which will enable the person to have more funds to repay their
restitution and financial obligations over time.
(With concerns) Legal financial obligation issues have an impact on victims because these
financial obligations include victim restitution and crime victims compensation fees. It is
important to keep victim's interests in mind when discussing changes relating to legal
financial obligations. It is also important to think about alternative ways of addressing these
issues that may not have as significant an impact on crime victims.
Testimony Against: None.
Persons Testifying: (In support) Roger Kluck, Friends Committee on Washington Public
Policy.
(Concerns) Dave Johnson, Washington Coalition of Crime Advocates.