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F I S C A L I M P A C T R E P O R T





SPONSOR: Heaton DATE TYPED: 02/22/01 HB 644
SHORT TITLE: Municipal Utility Permanent Fund SB
ANALYST: Padilla


APPROPRIATION



Appropriation Contained
Estimated Additional Impact
 Recurring

or Non-Rec

 Fund

Affected

FY01 FY02 FY01 FY02
NFI NFI



(Parenthesis ( ) Indicate Expenditure Decreases)



SOURCES OF INFORMATION



LFC Files

Secretary of State

Public Regulation Commission



No Response

Department of Finance and Administration (DFA)



SUMMARY



Synopsis of Bill



House Bill 644 enacts a new section of law to authorize a municipality's governing body to establish a municipal utility permanent fund for each utility owned and operated by the municipalitiy, the income of which can be used for the operation, maintenance and improvement of the utility.



Significant Issues



Municipal utilities include gas, water, sewer and electric services.



The bill provides the following:



- A municipal utility permanent fund would comprise money from the sale of municipal utility assets or any part of the unappropriated cash surplus of the utility in excess of fifty percent of the prior fiscal year's municipal utility budget.



- Investments of the fund would be made pursuant to current statute governing municipal investments.



- The fund's earnings could be used for any purpose related to the operation, maintenance and improvement of the utility or could flow back to the fund.



- The municipality's voters would have to approve any expenditure of money in the fund in a special election.



FISCAL IMPLICATIONS



This bill contains no appropriations and has no fiscal impact on state government.



ADMINISTRATIVE IMPLICATIONS



Municipalities would be responsible for managing the fund and administering the elections necessary to gain voter approval of expenditure of the fund.



OTHER SUBSTANTIVE ISSUES



A municipality currently has the authority to establish a "local government permanent fund," into which can be deposited an amount of the municipality's general fund surplus. Income from the local government permanent fund can be used for any purpose of the municipality, subject to voter approval.



The provisions in the bill regarding elections are identical to the election provisions for voter approval of expenditure from a municipality's permanent fund.



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