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Fee system, revenues out of control?

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While a number of conservative GOP state legislators like to complain that state government spending is growing too fast, during each Legislature they rarely look hard at one of the fastest growing state revenues — fees and licenses.

And state bureaucrats are falling down on the fee-raising process, a new report says.

Tuesday, the Legislature's main budget committee heard testimony that the fees and licenses most Utahns pay — nearly 3,000 total fees, from fishing licenses to professional certifications — are growing faster than the state's $11 billion a year budget. Last year, the state took in $263 million in fees — not exactly chump change.

Not only are legislators not closely watching fee changes they themselves approve, but state agencies are sending through fee hikes for legislative approval when legislators by law should not be approving those fees.

And some fees are set by state bureaucrats, even though citizens may be blaming lawmakers for such fee hikes. Those fees include things that many people pay, like camping fees at state parks, to fees everyday Joes rarely see, such as a charge for easements across state lands.

"The implementation of the (fee statute) is inconsistent," the legislators' budget staffers reported. "Many state agencies submit more (fees) than just the regulatory fees (they need to) to the Legislature for approval, but in some cases, fees (that are supposed to be legislative-approved) are not reviewed or approved" by lawmakers.

In some instances, state agencies who themselves should be holding public hearings before raising a fee, instead are just considering a legislative budget hearing as meeting the public hearing requirement.

In other words, control of who is raising state fees and how the public interacts with that process is faulty.

Over the last decade, from 1997 to 2007, the fees charged by state departments have grown by 148 percent, on average. That's compared to the growth in the state's general fund (the main tax fund) of around 80 percent.

While state fees make up only 2.5 percent of all of state revenues, fees are still growing faster than other revenues coming into the state, like taxes and federal funds, legislative leaders, who make up the Executive Appropriations Committee, were told by their budget staffers.

Each 45-day general session, a bill is run that includes thousands of state fee adjustments. While technically all legislators vote on that budget bill and approve it, in reality legislators rarely try to make amendments to the big fee bill.

Theoretically, each fee is set to raise enough money as to provide the specific service that the purchaser desires. State agencies are not supposed to "make money" on fees.

But the new report shows that the Commerce Department took in $33 million in fees last year, while its own budget is only $21 million. So that department collected fees worth 154 percent of its budget, the report shows.

Senate President John Valentine, R-Orem, who in recent years has taken it upon himself to study the fee adjustment bill, said he doesn't see why fee revenue should be growing faster than other state revenues.

"This is important work that our staff has done" in working several months to detail the several thousand state fees, said Sen. Lyle Hillyard, R-Logan, the Senate's budget chairman.

At the very least, legislators were told, they should make sure that all the fees they are supposed to vote on, but now don't, are brought back into the legislative budget-setting process.

E-mail: bbjr@desnews.com