7 LONG TITLE
8 General Description:
9 This bill modifies the Budgetary Procedures Act by amending provisions relating to
10 legislative review and approval requirements for internal service fund operations.
11 Highlighted Provisions:
12 This bill:
13 . provides that if an internal service fund agency operates more than one internal
14 service fund within the internal service fund agency, the internal service fund
15 agency shall comply with the legislative review and approval requirements for each
16 internal service fund;
17 . requires legislative approval for the number of full-time equivalent contract
18 employees of each internal service fund as part of the annual appropriation process;
19 . provides that if an internal service fund agency operates an internal service fund and
20 does not get the required legislative approvals, the internal service fund agency shall
21 rebate all rates, fees, and amounts collected to those who use the services for the
22 rates, fees, and amounts collected that were not approved; and
23 . makes conforming and technical changes.
24 Money Appropriated in this Bill:
26 Other Special Clauses:
27 This bill takes effect on July 1, 2014.
28 Utah Code Sections Affected:
30 63J-1-410 , as renumbered and amended by Laws of Utah 2009, Chapter 183
32 Be it enacted by the Legislature of the state of Utah:
33 Section 1. Section 63J-1-410 is amended to read:
34 63J-1-410. Internal service funds -- Governance and review.
35 (1) For purposes of this section:
36 (a) "Agency" means a department, division, office, bureau, or other unit of state
37 government, and includes any subdivision of an agency.
38 (b) "Do not replace vehicles" means a vehicle accounted for in the Division of Fleet
39 Operations for which charges to an agency for its use do not include amounts to cover
40 depreciation or to accumulate assets to replace the vehicle at the end of its useful life.
41 (c) "Internal service fund agency" means an agency that provides goods or services to
42 other agencies of state government or to other governmental units on a capital maintenance and
43 cost reimbursement basis, and which recovers costs through interagency billings.
44 (d) "Revolving loan fund" means each of the revolving loan funds defined in Section
45 63A-3-205 .
46 (2) An internal service fund agency is not subject to this section with respect to its
47 administration of a revolving loan fund.
48 (3) (a) An internal service fund agency may not bill another agency for services that it
49 provides for each internal service fund operated by the agency, unless the Legislature has:
51 budget request;
53 fees, and other amounts that it charges those who use its services and included those rates, fees,
54 and amounts in an appropriation act;
56 service fund [
57 (iv) approved the number of full-time equivalent contract employees of each internal
58 service fund as part of the annual appropriation process; and
60 fund's estimated revenue based upon the rates and fee structure that are the basis for the
62 (b) If an internal service fund agency operates more than one internal service fund
63 within the internal service fund agency, the internal service fund agency shall comply with the
64 review and approval requirements under Subsection (3)(a) for each internal service fund.
65 (c) If an internal service fund agency operates an internal service fund and does not get
66 the approvals required under Subsection (3)(a) or (4)(b), the internal service fund agency shall
67 rebate all rates, fees, and amounts collected to those who use the services for the rates, fees,
68 and amounts collected that were not approved under Subsection (3)(a) or (4)(b).
69 (4) (a) Except as provided in Subsection (4)(b), an internal service fund agency may
70 not charge rates, fees, and other amounts that exceed the rates, fees, and amounts established
71 by the Legislature in the appropriations act.
72 (b) (i) An internal service fund agency that begins a new service or introduces a new
73 product between annual general sessions of the Legislature may establish and charge an interim
74 rate or amount for that service or product.
75 (ii) The internal service fund agency shall submit that interim rate or amount to the
76 Legislature for approval at the next annual general session.
77 (5) The internal service fund agency budget request shall separately identify the capital
78 needs and the related capital budget.
79 (6) In the fiscal year that the accounting change referred to in Subsection 51-5-6 (2) is
80 implemented by the Division of Finance, the Division of Finance shall transfer equity created
81 by that accounting change to any internal service fund agency up to the amount needed to
82 eliminate any long-term debt and deficit working capital in the fund.
83 (7) No new internal service fund agency may be established unless reviewed and
84 approved by the Legislature.
85 (8) (a) Except as provided in Subsection (8)(f), an internal service fund agency may not
86 acquire capital assets unless legislative approval for acquisition of the assets has been included
87 in an appropriations act for the internal service fund agency.
88 (b) An internal service fund agency may not acquire capital assets after the transfer
89 mandated by Subsection (6) has occurred unless the internal service fund agency has adequate
90 working capital.
91 (c) The internal service fund agency shall provide working capital from the following
92 sources in the following order:
93 (i) first, from operating revenues to the extent allowed by state rules and federal
95 (ii) second, from long-term debt, subject to the restrictions of this section; and
96 (iii) last, from an appropriation.
97 (d) (i) To eliminate negative working capital, an internal service fund agency may incur
98 long-term debt from the General Fund or Special Revenue Funds to acquire capital assets.
99 (ii) The internal service fund agency shall repay all long-term debt borrowed from the
100 General Fund or Special Revenue Funds by making regular payments over the useful life of the
101 asset according to the asset's depreciation schedule.
102 (e) (i) The Division of Finance may not allow an internal service fund agency's
103 borrowing to exceed 90% of the net book value of the agency's capital assets as of the end of
104 the fiscal year.
105 (ii) If an internal service fund agency wishes to purchase authorized assets or enter into
106 equipment leases that would increase its borrowing beyond 90% of the net book value of the
107 agency's capital assets, the agency may purchase those assets only with money appropriated
108 from another fund, such as the General Fund or a special revenue fund.
109 (f) (i) Except as provided in Subsection (8)(f)(ii), capital assets acquired through
110 agency appropriation may not be transferred to any internal service fund agency without
111 legislative approval.
112 (ii) Vehicles acquired by agencies from appropriated funds or money appropriated to
113 agencies to be used for vehicle purchases may be transferred to the Division of Fleet
114 Operations and, when transferred, become part of the Fleet Operations Internal Service Fund.
115 (iii) Vehicles acquired with funding from sources other than state appropriations or
116 acquired through the federal surplus property donation program may be transferred to the
117 Division of Fleet Operations and, when transferred, become part of the Fleet Operations
118 Internal Service Fund.
119 (iv) Unless otherwise approved by the Legislature, vehicles acquired under Subsection
120 (8)(f)(iii) shall be accounted for as "do not replace" vehicles.
121 (9) The Division of Finance shall adopt policies and procedures related to the
122 accounting for assets, liabilities, equity, revenues, expenditures, and transfers of internal
123 service funds agencies.
124 Section 2. Effective date.
125 This bill takes effect on July 1, 2014.
Legislative Review Note
as of 2-7-14 12:29 PM