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

SPONSOR King

ORIGINAL DATE

LAST UPDATED

2/06/07

2/14/07 HB 875

SHORT TITLE Torrance County Emergency Loan Retirement

SB

ANALYST Propst

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$381.0

Non-recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

HB 875 appropriates $381.0 from the General Fund to the Local Government Division of the

Department of Finance and Administration to retire the emergency loans made by the State

Board of Finance to Torrance County.

FISCAL IMPLICATIONS

The appropriation of $318.0 contained in this bill is a non-recurring expense to the General

Fund. Any unexpended or unencumbered balance remaining at the end of FY08 shall revert to

the General Fund.

SIGNIFICANT ISSUES

Historically, smaller counties have experienced difficulty in meeting the high cost of

incarcerating prisoners. Torrance County is no exception. In order to continue jail operations the

County was forced in 2004 and 2006 to obtain emergency loans totaling $381.0 from the State

Board of Finance. In January, 2005 the County imposed both increments of the Corrections

Gross Receipts Tax, however, the County continues to struggle to meet incarceration costs.

House Bill 875 – Page

2

Torrance County’s repayment plan calls for the first installment in the amount of $82,750 due

July, 2007. DFA reports that, although Torrance County is keeping up with their current

incarceration costs, it is more than likely that the County will not be able to meet their first Board

of Finance loan installment.

ALTERNATIVES

In addition to Torrance County, other smaller counties have also borrowed money from the State

Board of Finance to pay for escalating incarceration costs. The counties are forced to do this in

order to continue operating and meeting required services to county citizens. In all likelihood,

these counties do not have the recurring funding sources to meet these recurring costs. A more

appropriate remedy may be to appropriate recurring funding to smaller counties, such as

proposed in SB 410 or HB 316

WEP/nt