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(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB425

SOURCES OF INFORMATION

Public Regulation Commission

Environment Department

General Services Department, Property Control Division

Commission on Higher Education

SUMMARY

Synopsis of SJC Amendments

The Senate Judiciary Committee amendments to SB 210 remove the requirement that a budget adjustment request (BAR) must be approved prior to the appropriation of utility cost savings funds. The SJC amendments provide that utility cost savings funds may be encumbered for payment of guaranteed utility savings contracts.

Synopsis of Bill

The bill amends certain sections of Chapter 6, Article 23, which allow governmental units to enter into guaranteed utility savings contracts with qualified providers to reduce energy, water or conservation-related operating costs under certain conditions. The bill would provide for the pledging of funds authorized pursuant to the Public Building Energy Efficiency and Water Conservation Act to guaranteed utility savings contracts; budget adjustment of the funds which have been carried forward to pay for guaranteed utility savings contracts; unencumbered balances in the agency's utility line item to be carried over as a reserved designated fund balance from one fiscal year to the next; and appropriation or pledging of state institution special funds to pay for guaranteed utility savings contracts.

TECHNICAL ISSUES

The bill does not clarify what is meant by "special funds of institutions" in Section 3. The CHE indicates that if the intent of the bill is simply to allow institutions to use any sources of funds at their disposal(in addition to land and permanent fund revenues), then clarification of that intent is required.

The bill makes references to "the fiscal year" in 6-23-6.1(A) and (B) but does not specify which fiscal year. The bill's intent may be the fiscal year in which the contract becomes effective.

OTHER SUBSTANTIVE ISSUES

The General Services Department, Property Control Division, indicates the limited number of providers of equipment and services that would be able to qualify for this type of project limit a competitive procurement process, and could lead to abuses due to conflict of interest by other user agencies. The opportunities for savings and for additions to capital equipment are increased due to the oversight for the program residing with the provider, rather than with the institution.

Additionally, GSD raises questions regarding the constitutionality of pledging savings from one fiscal year to another, depending on the revenue source. Also, the creation of these contracts involves the granting of security interests in state property which raises constitutional issues regarding waiver of sovereign immunity.

RAE/prr:gm