INTEREST ON OVERDUE PAYMENT

(a) A payment begins to accrue interest on the date the payment becomes overdue. (b) The rate of interest that accrues on an overdue payment is the rate in effect on September 1 of the fiscal year in which the payment becomes overdue. The rate in effect on September 1 is equal to the sum of: (1) one percent; and (2) the prime rate as published in the Wall Street Journal on the first day of July of the preceding fiscal year that does not fall on a Saturday or Sunday. (c) Interest on an overdue payment stops accruing on the date the governmental entity or vendor mails or electronically transmits the payment. In this subsection, "governmental entity" does not include a state agency. (d) This subsection applies only if the comptroller is not responsible for issuing a warrant or initiating an electronic funds transfer to pay the principal amount owed by a state agency to a vendor. The accrual of interest on an overdue payment to the vendor: (1) stops on the date the agency mails or electronically transmits the payment; and (2) is not suspended during any period that a payment law prohibits the agency from paying the vendor. (e) This subsection applies only if the comptroller is responsible for issuing a warrant or initiating an electronic funds transfer to pay the principal amount owed by a state agency to a vendor. Interest on an overdue payment to the vendor: (1) stops accruing on its distribution date; and (2) does not stop accruing during any period that a payment law prohibits the comptroller from issuing the warrant or initiating the transfer.