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.