Purpose and Scope
The purpose of this Administrative Bulletin is to describe the process for setting fees, pursuant to G.L. c. 7, § 3B. This law charges the Secretary of Administration and Finance ("A&F") with responsibility of establishing appropriate fees on behalf of all state agencies except the Judiciary. In addition to fees set pursuant to G.L. c. 7, § 3B, there are two other methods of setting fees. In some cases the Legislature may delegate fee-setting authority directly to an agency; in others the Legislature itself sets the fees in statute.
Constitutional principles govern the fee-setting process. In Emerson College vs. City of Boston (1984) 1 the Supreme Judicial Court established a three-prong test to distinguish fees from taxes. The Court stated that fees are:
- Based on services being performed or delivered;
- Legitimate when the services received for the fee are provided only to the beneficiaries of the services, rather than the general public; and
- Paid by choice.
Only a legislative body has the authority to assess taxes, which have the following three characteristics:
- Enforced contribution to provide for the general support of government;
- Levied for a broad range of services, or the General Fund; and
- Not exclusive to meet expenses incurred in providing a service.
Fees may not be used purely as a tool to raise revenue, but should reflect the government's expense in providing the service associated with the fee. Expenses may be defined as the reasonable costs imposed on an agency for providing a service or regulating an activity, including administrative and enforcement costs.
Fee Setting Process
In order to ensure that fees are commensurate with the cost of providing a service, ANF evaluates all fees, whether set in statute or regulation, on an annual basis. Unless there is a compelling reason, as demonstrated in writing by the requesting agency, changes in fees set by regulation will not be considered outside of this process.
To create a new or amend an existing fee, agencies must follow this procedure:
- Agencies submit a completed electronic copy of the Fee Proposal Form to the Budget Director and their A&F Analyst for approval of a new fee. The department head and secretary must sign the first page of the form.
- A&F approves, denies or returns the application (in cases where insufficient information is provided). Through the process established in this Bulletin, A&F will work with agencies to complete a comprehensive analysis to determine if the fee provides an appropriate level of reimbursement for the costs to provide the service or enforcement.
- Upon approval by A&F, the requesting agency sets a public hearing date. The public hearing must be held at least 30 days before the effective date of the fee change.
- At least 60 days before the effective date of the fee, the following shall be notified in writing by the requesting agency of the purpose of the fee and an estimate of the revenue to be raised or reduced:
- Clerk of the House of Representatives
- Clerk of the Senate
- House Committee on Ways and Means
- Senate Committee on Ways and Means
- Office of the Secretary of State, Regulations Division
- The requesting agency shall give notice of the public hearing as required by G.L. c. 30A, § 2. The requesting agency shall also post notice of the meeting on the agency's website and through electronic mail serves or other information distribution systems maintained by the department.
- The requesting agency distributes copies of the proposed fee to interested parties.
- The requesting agency collects any written comments during the comment period.
- The requesting agency holds public hearing(s), maintaining a written record summarizing the testimony.
- The requesting agency must file two copies of the "Regulation Filing"; one attested copy with the Secretary of State's Regulations Division, for publication in the Massachusetts Register; and one copy at the Secretary of State's Filing Regulations Information page. A copy of the Regulation Filing should also be forwarded to the agency's A&F Analyst.
- The effective date of the new or amended fee is the date of publication in the Massachusetts Register or the date set forth in the fee request.
Throughout this process the agency should communicate any material changes or issues raised during the public comment process to their A&F Analyst. Each requesting agency must maintain a hard copy file of their fee requests. The file should also contain testimony, written comments and correspondence.he proposed fee is included in an emergency regulation, the requesting agency must file a "Regulation Filing" with the Secretary of State. The emergency regulation and fee is effective as of the date of the A&F approval. Emergency regulations are temporary and must be made permanent within 3 months. The process for making an emergency fee permanent is the same as outlined above.
Forms and Links
To assist agencies in the fee setting process, A&F provides a standard form, with detailed instructions; these can be found at the link below:
A&F Secretary Approval and Effective Date
This Administrative Bulletin published by the Executive Office for Administration and Finance shall be effective as of the date specified below:
Leslie A. Kirwan, Secretary
Effective Date June 25, 2008
for Procedures for Setting Fees (A&F 6)