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S1503aa....................................................by STATE AFFAIRS
SCHOOL DISTRICTS - BONDS - Adds to and amends existing law to provide for
state guarantee of repayment of school district bonds.
02/17 Senate intro - 1st rdg - to printing
02/18 Rpt prt - to Educ
03/03 Rpt out - to 14th Ord
03/05 Rpt out amen - to engros
03/06 Rpt engros - 1st rdg - to 2nd rdg as amen
03/09 2nd rdg - to 3rd rdg as amen
03/10 3rd rdg as amen - PASSED - 31-1-3
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes, Hansen,
Hawkins, Ingram, Ipsen, Keough, King, McLaughlin, Noh, Parry, Riggs,
Risch, Sandy, Schroeder, Stennett, Sweeney, Thorne, Wheeler,
Whitworth
NAYS--Lee
Absent and excused--Richardson, Sorensen, Twiggs
Floor Sponsors - Sandy, Keough
Title apvd - to House
03/11 House intro - 1st rdg as amen - to Educ
S1503|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE SENATE SENATE BILL NO. 1503, As Amended BY STATE AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO THE STATE GUARANTEEING SCHOOL DISTRICT BONDS; AMENDING TITLE 33, 3 IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 52, TITLE 33, IDAHO CODE, TO 4 PROVIDE A SHORT TITLE, TO DEFINE TERMS, TO PROVIDE FOR THE STATE'S GUARAN- 5 TEE OF BONDS, TO PROVIDE PROGRAM ELIGIBILITY AND THE OPTION TO FOREGO 6 GUARANTY, TO PROVIDE FOR MONITORING OF FINANCIAL SOLVENCY AND TO PROVIDE 7 THAT THE STATE TREASURER SHALL MONITOR THE FISCAL SOLVENCY OF SCHOOL DIS- 8 TRICTS, TO PROVIDE FOR NOTICE BY THE PAYING AGENT TO THE STATE TREASURER, 9 TO PROVIDE FOR A STATE FINANCIAL ASSISTANCE INTERCEPT MECHANISM AND TO 10 PROVIDE FOR INTEREST AND PENALTY PROVISIONS, TO PROVIDE FOR BACKUP LIQUID- 11 ITY ARRANGEMENTS AND ISSUANCE OF NOTES, TO PROVIDE UNLIMITED SALES TAX 12 ACCOUNT PLEDGE TO LOAN FUNDS AND TO PROVIDE DUTIES OF THE STATE TAX COM- 13 MISSION, AND TO PROVIDE WHEN THE CREDIT ENHANCEMENT PROGRAM FOR SCHOOL 14 DISTRICT BONDS WILL TAKE EFFECT; AMENDING SECTION 63-3638, IDAHO CODE, TO 15 PROVIDE FOR THE REMITTANCE OF MONEYS FROM THE SALES TAX ACCOUNT UPON CER- 16 TAIN FACTORS OCCURRING AND TO MAKE TECHNICAL CORRECTIONS; AMENDING CHAPTER 17 7, TITLE 57, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 57-728, IDAHO 18 CODE, TO PROVIDE A CREDIT ENHANCEMENT PROGRAM FOR SCHOOL DISTRICT BONDS BY 19 THE ENDOWMENT FUND INVESTMENT BOARD; AND PROVIDING AN EFFECTIVE DATE IF 20 CERTAIN CONTINGENCIES OCCUR. 21 Be It Enacted by the Legislature of the State of Idaho: 22 SECTION 1. That Title 33, Idaho Code, be, and the same is hereby amended 23 by the addition thereto of a NEW CHAPTER to be known and desig- 24 nated as Chapter 52, Title 33, Idaho Code, and to read as follows: 25 CHAPTER 52 26 IDAHO SCHOOL BOND GUARANTY ACT 27 33-5201. TITLE. This chapter shall be known as the "Idaho School Bond 28 Guaranty Act." 29 33-5202. DEFINITIONS. (1) "Board" means the board of trustees of a 30 school district, including a specially chartered district, existing now or 31 later under the laws of the state. 32 (2) "Bond" means any general obligation bond or refunding bond issued 33 after the effective date of this chapter. 34 (3) "Default avoidance program" means the school bond guaranty program 35 established by this chapter. 36 (4) "General obligation bond" means any bond, note, warrant, certificate 37 of indebtedness, or other obligation of a board payable in whole or in part 38 from revenues derived from property taxes and that constitutes an indebtedness 39 within the meaning of any applicable constitutional or statutory debt limita- 40 tion. 41 (5) "Paying agent" means the corporate paying agent selected by the board 2 1 for a bond issue who is: 2 (a) Duly qualified; and 3 (b) Acceptable to the state treasurer. 4 (6) "Public school guarantee fund" means the fund described in section 5 2, article VIII of the constitution of the state of Idaho. 6 (7) "Refunding bond" means any general obligation bond issued by a board 7 for the purpose of refunding its outstanding general obligation bonds. 8 (8) "School district" means any school district, including a specially 9 chartered district, existing now or later under the laws of the state. 10 33-5203. STATE'S GUARANTEE -- MONITORING OF FINANCIAL SOLVENCY CONTRACT 11 WITH BONDHOLDERS -- GUARANTEE -- LIMITATION AS TO CERTAIN REFUNDED BONDS. 12 (1) (a) The state of Idaho pledges to and agrees with the holders of any 13 bonds that the state will not alter, impair, or limit the rights vested by 14 the default avoidance program with respect to the bonds until the bonds, 15 together with applicable interest, are fully paid and discharged. 16 (b) Notwithstanding subsection (1)(a) of this section, nothing contained 17 in this chapter precludes an alteration, impairment, or limitation if ade- 18 quate provision is made by law for the protection of the holders of the 19 bonds. 20 (c) Each school district may refer to this pledge and undertaking by the 21 state in its bonds. 22 (2) (a) The sales tax of the state is pledged to guarantee full and 23 timely payment of the principal of (either at the stated maturity or by 24 any advancement of maturity pursuant to a mandatory sinking fund payment) 25 and interest on, voter approved bonds which were voted on by the elector- 26 ate on and after January 1, 1999, as such payments shall become due 27 (except that in the event of any acceleration of the due date of such 28 principal by reason of mandatory or optional redemption or acceleration 29 resulting from default or otherwise, other than any advancement of matu- 30 rity pursuant to a mandatory sinking fund payment, the payments guaranteed 31 shall be made in such amounts and at such times as such payments of prin- 32 cipal would have been due had there not been any such acceleration). 33 (b) This guaranty does not extend to the payment of any redemption pre- 34 mium. 35 (c) Reference to this chapter by its title on the face of any bond con- 36 clusively establishes the guaranty provided to that bond under provisions 37 of this chapter. 38 (3) (a) Any bond guaranteed under this chapter that is refunded and con- 39 sidered paid for, no longer has the benefit of the guaranty provided by 40 this chapter from and after the date on which that bond was considered to 41 be paid. 42 (b) Any refunding bond issued by a board that is itself secured by gov- 43 ernment obligations until the proceeds are applied to pay refunded bonds 44 is not guaranteed under the provisions of this chapter, until the refund- 45 ing bonds cease to be secured by government obligations. 46 (4) Only validly issued bonds issued after the effective date of this 47 chapter are guaranteed under this chapter. 48 33-5204. PROGRAM ELIGIBILITY -- OPTION TO FOREGO GUARANTY. 49 (1) (a) Any school district through its board of trustees or its superin- 50 tendent may request that the state treasurer issue a certificate evidenc- 51 ing eligibility for the state's guaranty of its eligible bonds under this 52 chapter. 53 (b) After reviewing the request, if the state treasurer determines that 3 1 the board is eligible, the state treasurer shall promptly issue the cer- 2 tificate and provide it to the requesting board. 3 (c) (i) The school district receiving the certificate and all 4 other persons may rely on the certificate as evidencing eligibility 5 for the guaranty for one (1) year from and after the date of the cer- 6 tificate, without making further inquiry of the state treasurer dur- 7 ing the year. The certificate of eligibility shall state that the 8 guarantee is good for the life of the bond. This guarantee shall be 9 printed on all bonds guaranteed pursuant to this chapter or shall be 10 an addendum attached to all bonds guaranteed pursuant to this chap- 11 ter. 12 (ii) The certificate of eligibility is valid for the life of the 13 bond, even if the state treasurer later determines that the school 14 district is ineligible. If the state treasurer later determines that 15 the school district is ineligible, the treasurer shall publish a 16 twenty (20) days' notice as provided in section 60-109, Idaho Code, 17 in a newspaper of general circulation in the county of the school 18 district and in a newspaper in the county where the state capitol is 19 located regarding the ineligibility. Additionally, the treasurer 20 shall notify the underwriter of the bonds and the bond counsel of its 21 office's finding. The underwriter and the bond counsel shall make a 22 good faith effort to notify holders of the bonds of the treasurer's 23 determination. 24 (2) Any board that chooses to forego the benefits of the guaranty pro- 25 vided by this chapter for a particular issue of bonds may do so by not referr- 26 ing to this chapter on the face of its bonds. 27 (3) Any district that has bonds, the principal of or interest on which 28 has been paid, in whole or in part, by the state under this chapter may not 29 issue any additional bonds guaranteed by this act until: 30 (a) All payment obligations of the district to the state under the 31 default avoidance program are satisfied; and 32 (b) The state treasurer certifies in writing, to be kept on file by the 33 state treasurer, that the school district is fiscally solvent. 34 (4) Bonds not guaranteed by this chapter are not included in the defini- 35 tion of "bond" in section 33-5202, Idaho Code, as used generally in this chap- 36 ter, are not subject to the requirements of and do not receive the benefits of 37 this chapter. 38 33-5205. STATE TREASURER TO MONITOR FISCAL SOLVENCY OF SCHOOL DISTRICTS 39 -- DUTIES OF STATE TREASURER AND ATTORNEY GENERAL. (1) The state treasurer 40 shall: 41 (a) Monitor the financial affairs and condition of each school district 42 in the state to evaluate each school district's financial solvency; 43 (b) At least annually, report his conclusions to the governor, the legis- 44 lature and the state superintendent of public instruction; and 45 (c) Report immediately to the governor and superintendent of public 46 instruction any circumstances suggesting that a school district will be 47 unable to timely meet its debt service obligations and recommend a course 48 of remedial action. 49 (2) (a) After examining the report of the school district, the state 50 treasurer shall determine whether or not the financial affairs and condi- 51 tion of a board are such that it would be imprudent for the state to guar- 52 antee the bonds of that school district. 53 (b) If the state treasurer determines that the state should not guarantee 54 the bonds of that board, the state treasurer shall: 4 1 (i) Prepare a determination of ineligibility; and 2 (ii) Keep it on file in the office of the state treasurer; 3 (iii) Make the necessary advertisements and notifications as provided 4 in section 33-5204, Idaho Code. 5 (c) The state treasurer may remove a district from the status of ineligi- 6 bility when a subsequent report of the school district or other informa- 7 tion made available to the state treasurer evidences that it is no longer 8 imprudent for the state to guarantee the bonds of that board. 9 (3) Nothing in this section affects the state's guaranty of bonds of a 10 board issued: 11 (a) Before determination of ineligibility; 12 (b) After the eligibility of the board is restored; or 13 (c) Under a certificate of eligibility issued under this chapter. 14 33-5206. PAYING AGENT TO PROVIDE NOTICE -- STATE TREASURER TO EXECUTE 15 TRANSFER TO PAYING AGENTS -- EFFECT OF TRANSFER. 16 (1) (a) The superintendent of each school district with outstanding, 17 unpaid bonds shall transfer moneys sufficient for the scheduled debt ser- 18 vice payment to its paying agent at least fifteen (15) days before any 19 principal or interest payment date for the bonds. 20 (b) The paying agent may, if instructed to do so by the superintendent, 21 invest the moneys at the risk and for the benefit of the board until the 22 payment date. 23 (c) A superintendent who is unable to transfer the scheduled debt service 24 payment to the paying agent fifteen (15) days before the payment date 25 shall immediately notify the paying agent and the state treasurer by: 26 (i) Telephone; 27 (ii) A writing sent by facsimile transmission; and 28 (iii) A writing sent by first-class United States mail. 29 (2) If sufficient funds are not transferred to the paying agent as 30 required by subsection (1) of this section, the paying agent shall notify the 31 state treasurer of that failure in writing at least ten (10) days before the 32 scheduled debt service payment date by: 33 (a) Telephone; 34 (b) A writing sent by facsimile transmission; and 35 (c) A writing sent by first-class United States mail. 36 (3) (a) If sufficient moneys to pay the scheduled debt service payment 37 have not been transferred to the paying agent, the state treasurer shall, 38 on or before the scheduled payment date, transfer sufficient moneys to the 39 paying agent to make the scheduled debt service payment. 40 (b) The payment by the treasurer: 41 (i) Discharges the obligation of the issuing board to its bondhold- 42 ers for the payment; and 43 (ii) Transfers the rights represented by the general obligation of 44 the board from the bondholders to the state. 45 (c) The board shall pay the transferred obligation to the state as pro- 46 vided in this chapter. 47 33-5207. STATE FINANCIAL ASSISTANCE INTERCEPT MECHANISM -- STATE TREA- 48 SURER DUTIES -- INTEREST AND PENALTY PROVISIONS. 49 (1) (a) If one (1) or more payments on bonds are made by the state trea- 50 surer as provided in this chapter, the state treasurer shall: 51 (i) Immediately intercept any payments from the public school fund 52 or from any other source of operating moneys provided by the state to 53 the board that issued the bonds that would otherwise be paid to the 5 1 board by the state; and 2 (ii) Apply the intercepted payments to reimburse the state for pay- 3 ments made pursuant to the state's guaranty until all obligations of 4 the board to the state arising from those payments, including inter- 5 est and penalties, are paid in full. 6 (b) The state has no obligation to the district or to any person or 7 entity to replace any moneys intercepted under the authority of this sub- 8 section. 9 (2) The school district that issued bonds for which the state has made 10 all or part of a debt service payment shall: 11 (a) Reimburse all moneys drawn by the state treasurer on its behalf; 12 (b) Pay interest to the state on all moneys paid by the state from the 13 date the moneys drawn to the date they are repaid at a rate not less than 14 the average prime rate for national money center banks plus one percent 15 (1%); and 16 (c) Pay all penalties required by this chapter. 17 (3) (a) The state treasurer shall establish the reimbursement interest 18 rate after considering the circumstances of any prior draws by the dis- 19 trict on the state, market interest and penalty rates, and the cost of 20 funds, if any, that were required to be borrowed by the state to make pay- 21 ments on the bonds. 22 (b) The state treasurer may, after considering the circumstances giving 23 rise to the failure of the board to make payment on its bonds in a timely 24 manner, impose on the board a penalty of not more than five percent (5%) 25 of the amount paid by the state pursuant to its guaranty for each instance 26 in which a payment by the state is made. 27 (4) (a) (i) If the state treasurer determines that amounts 28 obtained under this section will not reimburse the state in full 29 within one (1) year from the state's payment of a district's sched- 30 uled debt service payment, the state treasurer shall pursue any legal 31 action, including mandamus, against the district and its board to 32 compel it to: 33 (A) Levy and provide tax revenues to pay debt service on its 34 bonds when due; and 35 (B) Meet its repayment obligations to the state. 36 (ii) In pursuing its rights under paragraph (a) of this subsection, 37 the state shall have the same substantive and procedural rights as 38 would a holder of the bonds of a school district. 39 (b) The attorney general shall assist the state treasurer in these 40 duties. 41 (c) The school district shall pay the attorney's fees, expenses, and 42 costs of the state treasurer and the attorney general. 43 (5) (a) Except as provided in paragraph (c) of this subsection, any dis- 44 trict whose operating funds were intercepted under this section may 45 replace those funds from other district moneys or from property taxes, 46 subject to the limitations provided in this subsection. 47 (b) A district may use property taxes or other moneys to replace inter- 48 cepted funds only if the property taxes or other moneys were derived from: 49 (i) Taxes originally levied to make the payment but which were not 50 timely received by the district; 51 (ii) Taxes from a supplemental levy made to make the missed payment 52 or to replace the intercepted moneys; 53 (iii) Moneys transferred from the undistributed reserve, if any, of 54 the district; or 55 (iv) Any other source of money on hand and legally available. 6 1 (c) Notwithstanding the provisions of paragraphs (a) and (b) of this sub- 2 section, a district may not replace operating funds intercepted by the 3 state with moneys collected and held to make payments on bonds if that 4 replacement would divert moneys from the payment of future debt service on 5 the bonds and increase the risk that the state's guaranty would be called 6 upon a second time. 7 33-5208. BACKUP LIQUIDITY ARRANGEMENTS -- ISSUANCE OF NOTES. 8 (1) (a) If, at the time the state is required to make a debt service pay- 9 ment under its guaranty on behalf of a school district, sufficient moneys 10 of the state are not on hand and available for that purpose, the state 11 treasurer may: 12 (i) Seek a loan from the public school guarantee fund sufficient to 13 make the required payment; or 14 (ii) Issue state notes as provided in subsection (2) of this section. 15 (b) Nothing in this subsection requires the public school fund to lend 16 moneys to the state treasurer. 17 (c) Each series of notes issued may not mature later than twelve (12) 18 months from the date the notes are issued, or the end of the fiscal year, 19 whichever is sooner. 20 (d) Notes issued may be refunded using the procedures set forth in this 21 chapter for the issuance of notes, in an amount not more than the amount 22 necessary to pay principal of an accrued but unpaid interest on any 23 refunded notes plus all costs of issuance, sale and delivery of the 24 refunding notes, rounded up to the nearest natural multiple of five thou- 25 sand dollars ($5,000). 26 (e) Each series of refunding notes may not mature later than twelve (12) 27 months from the date the refunding notes are issued, or the end of the 28 fiscal year, whichever is sooner. 29 (2) (a) Before issuing or selling any note to other than a state fund or 30 account, the state treasurer shall: 31 (i) Prepare a written plan of financing; and 32 (ii) File it with the governor. 33 (b) The plan of financing shall provide for: 34 (i) The terms and conditions under which the notes will be issued, 35 sold and delivered; 36 (ii) The taxes or revenues to be anticipated; 37 (iii) The maximum amount of notes that may be outstanding at any one 38 (1) time under the plan of financing; 39 (iv) The sources of payment of the notes; 40 (v) The rate or rates of interest, if any, on the notes or a 41 method, formula or index under which the interest rate or rates on 42 the notes may be determined during the time the notes are outstand- 43 ing; and 44 (vi) All other details relating to the issuance, sale and delivery 45 of the notes. 46 (c) In identifying the taxes or revenues to be anticipated and the 47 sources of payment of the notes in the financing plan, the state treasurer 48 may include: 49 (i) The taxes authorized by this chapter; 50 (ii) The intercepted revenues authorized by this chapter; 51 (iii) The proceeds of refunding notes; or 52 (iv) Any combination of subparagraphs (i), (ii) and (iii) of this 53 paragraph. 54 (d) The state treasurer may include in the plan of financing the terms 7 1 and conditions of arrangements entered into by the state treasurer on 2 behalf of the state with financial and other institutions for letters of 3 credit, standby letters of credit, reimbursement agreements, and 4 remarketing, indexing and tender agreements to secure the notes, including 5 payment from any legally available source of fees, charges or other 6 amounts coming due under the agreements entered into by the state trea- 7 surer. 8 (e) When issuing the notes, the state treasurer shall issue an order set- 9 ting forth the interest, form, manner of execution, payment, manner of 10 sale, prices at, or below face value, and all details of issuance of the 11 notes. 12 (f) The order and the details set forth in the order shall conform with 13 any applicable plan of financing and with this chapter. 14 (g) (i) Each note shall recite that it is a valid obligation of the 15 state and that the full faith, credit, and resources of the state are 16 pledged for the payment of the principal of and interest on the note 17 from the taxes or revenues identified in accordance with its terms 18 and the constitution and laws of Idaho. 19 (ii) These general obligation notes do not constitute debt of the 20 state for the purposes of the debt limitation of section 1, article 21 VIII, of the constitution of the state of Idaho. 22 (h) Immediately upon the completion of any sale of notes, the state trea- 23 surer shall: 24 (i) Make a verified return of the sale to the state controller, 25 specifying the amount of notes sold, the persons to whom the notes 26 were sold, and the price, terms and conditions of the sale; and 27 (ii) Credit the proceeds of the sale, other than accrued interest and 28 amounts required to pay costs of issuance of the notes, to the gen- 29 eral fund to be applied to the purpose for which the notes were 30 issued. 31 33-5209. UNLIMITED SALES TAX ACCOUNT PLEDGE -- STATE TAX COMMISSION 32 DUTIES. 33 (1) (a) In each year after the issuance of general obligation notes 34 under this chapter and until all outstanding notes are retired, there 35 shall be transferred from the state sales tax account pursuant to section 36 63-3638, Idaho Code, an amount sufficient to pay all principal of and 37 interest on the general obligation notes as they become due. 38 (b) If moneys expected to be intercepted under this chapter are expected 39 to be insufficient to reimburse the state for its payments of school dis- 40 tricts' scheduled debt service payments or it is necessary for the state 41 treasurer to borrow as provided in this chapter and amounts to be inter- 42 cepted under this chapter are expected to be insufficient to timely pay 43 the general obligation notes issued or other borrowing undertaken under 44 that section, the state treasurer shall certify to and give notice to the 45 state tax commission of the amount of the deficiency. 46 (c) After receipt of that certified notice from the state treasurer, the 47 state tax commission shall: 48 (i) Immediately fix the amount necessary and in the amount of the 49 deficiency stated in the notice; and 50 (ii) Cause moneys to be transferred from the state sales tax account 51 pursuant to section 63-3638, Idaho Code. 52 (2) To the extent that other legally available revenues and funds of the 53 state are sufficient to meet the certified deficiency, the moneys transferred 54 from the sales tax account in section 63-3638, Idaho Code, is abated. 8 1 33-5210. WHEN CREDIT ENHANCEMENT PROGRAM TAKES EFFECT. The credit 2 enhancement program for school district bonds and loans pursuant thereto as 3 provided in section 57-728, Idaho Code, shall take effect if the state trea- 4 surer certifies that moneys from the sales tax account or from the provisions 5 of this chapter are insufficient to pay the principal of and interest on the 6 general obligation notes issued pursuant to section 33-5208, Idaho Code, and 7 due and payable, and so notifies the endowment fund investment board in writ- 8 ing. 9 SECTION 2. That Section 63-3638, Idaho Code, be, and the same is hereby 10 amended to read as follows: 11 63-3638. SALES TAX -- DISTRIBUTION. All moneys collected under this chap- 12 ter, except as may otherwise be required in section 63-3203, Idaho Code, shall 13 be distributed by the tax commission as follows: 14 (a) An amount of money shall be distributed to the state refund account 15 sufficient to pay current refund claims. All refunds authorized under this 16 chapter by the commission shall be paid through the state refund account, and 17 those moneys are continuously appropriated. 18 (b) Five hundred thousand dollars ($500,000) per year is continuously 19 appropriated and shall be distributed to the permanent building account, pro- 20 vided by section 57-1108, Idaho Code. 21 (c) Four million eight hundred thousand dollars ($4,800,000) per year is 22 continuously appropriated and shall be distributed to the water pollution con- 23 trol account established by section 39-3605, Idaho Code. 24 (d) (1) An amount equal to the sum required to be certified by the chair- 25 man of the Idaho housing and finance association to the state tax commis- 26 sion pursuant to section 67-6211, Idaho Code, in each year is continuously 27 appropriated and shall be paid to any capital reserve fund, established by 28 the Idaho housing and finance association pursuant to section 67-6211, 29 Idaho Code. Such amounts, if any, as may be appropriated hereunder to the 30 capital reserve fund of the Idaho housing and finance association shall be 31 repaid for distribution under the provisions of this section, subject to 32 the provisions of section 67-6215, Idaho Code, by the Idaho housing and 33 finance association, as soon as possible, from any moneys available there- 34 for and in excess of the amounts which the association determines will 35 keep it self-supporting. 36 (2) An amount equal to the sum required by the provisions of section 37 63-709, Idaho Code, is continuously appropriated and shall be paid as pro- 38 vided by section 63-709, Idaho Code. 39 (3) An amount required by the provisions of section 33-1002D, Idaho Code. 40 (4) An amount required by the provisions of chapter 52, title 33, 41 Idaho Code. 42 (e) Sixper centpercent (6%) is hereby appro- 43 priated and shall be paid to the county treasurer of each county in amounts to 44 be determined as follows: 45 (1) Each taxing district other than school districts shall be entitled to 46 a base share of sales tax moneys equal to the amount distributed to that 47 district for the fourth calendar quarter of 1979. The computation shall 48 not include any distributions made to the credit of either the former 49 county school levy or the state water pollution control levy. The percent- 50 age so determined for each taxing district shall be applied each quarter 51 to the above percentage of sales tax. The resulting sums shall be paid to 52 the county treasurer of each county for distribution to each taxing dis- 53 trict, except school districts, which received sales tax moneys in 1979. 9 1 Whenever a taxing district is dissolved, the dissolved district's share of 2 sales moneys shall be credited continuously to the county current expense 3 fund. 4 (2) Whenever the amount of nonschool district sales tax moneys distrib- 5 uted exceeds in any quarter the total amount of moneys distributed to non- 6 school districts for the base quarter, which is the fourth calendar quar- 7 ter of 1979, by tenper centpercent (10%), or 8 more, the excess of the base quarter shall be paid to the county treasurer 9 of each county for distribution to each taxing district in the county, 10 except school districts, in the following manner. 11 The state tax commission shall compute the percentage that the aver- 12 age amount of taxes collected from assessments for the years 1965, 1966 13 and 1967 on the personal property described as business inventory in sub- 14 sections (1) and (2) of section 63-602W, Idaho Code, for each county bears 15 to the average total amount of taxes collected from assessments for said 16 years on the personal property described as business inventory in subsec- 17 tions (1) and (2) of section 63-602W, Idaho Code, for all counties in the 18 state. The percentage so determined for each county shall be applied to 19 the sales tax distributed under this subsection and the resulting sum 20 shall be paid to the county treasurer of each county for distribution to 21 each taxing district, except school districts, in the county as follows: 22 (i) Each year the county commissioners in each county shall take 23 the tax charge, applicable to the current property roll equalized by 24 county commissioners sitting as a board of equalization, of each tax- 25 ing district within the county, except school districts, and divide 26 it by the total current tax charges applicable to the current prop- 27 erty roll of all taxing districts, except school districts, within 28 said county and the resulting percentages shall be applied to the 29 county's proportionate share of said sales tax account and the 30 resulting amount shall be distributed to each taxing district in the 31 county periodically but not less frequently than quarterly by the 32 county auditor and applied by such taxing districts in the same man- 33 ner and in the same proportions as revenues from property taxation. 34 (ii) The moneys set aside and appropriated to the county treasurer 35 out of the sales tax account above may be considered by the counties 36 and other taxing districts and budgeted against at the same time, in 37 the same manner and in the same year as revenues from taxation on all 38 classes of personal property which these moneys replace. 39 (3) All moneys distributed pursuant to subsection (e) shall be subject to 40 the redistribution provisions of section 40-801, Idaho Code, where appli- 41 cable. 42 (f) One dollar ($1.00) on each application for certificate of title to a 43 motor vehicle, or initial application for registration processed by the county 44 assessor or the Idaho transportation department excepting those applications 45 in which any sales or use taxes due have been previously collected by a 46 retailer, shall be a fee for the services of the assessor of the county or the 47 Idaho transportation department in collecting such taxes, and shall be paid 48 into the current expense fund of the county or state highway account estab- 49 lished in section 40-702, Idaho Code. 50 (g) Seven and three-quartersper centpercent 51 (7.75%) is continuously appropriated and shall be distributed to the revenue 52 sharing account which is created in the state operating fund, and the moneys 53 in the revenue sharing account will be paid by the tax commission as follows: 54 (1) One-half (1/2) shall be paid to the various cities as follows: 55 (i) Fiftyper centpercent (50%) of such 10 1 amount shall be paid to the various cities, and each city shall be 2 entitled to an amount in the proportion that the population of that 3 city bears to the population of all cities within the state; and 4 (ii) Fiftyper centpercent (50%) of such 5 amount shall be paid to the various cities, and each city shall be 6 entitled to an amount in the proportion that the preceding year's 7 market value for assessment purposes for that city bears to the pre- 8 ceding year's market value for assessment purposes for all cities 9 within the state. 10 (2) One-half (1/2) shall be paid to the state's general account or to the 11 various counties as follows: 12 (i) One million three hundred twenty thousand dollars ($1,320,000) 13 shall be distributed one forty-fourth (1/44) to each of the various 14 counties; and 15 (ii) The balance of such amount shall be paid to the various coun- 16 ties, and each county shall be entitled to an amount in the propor- 17 tion that the population of that county bears to the population of 18 the state. 19 (h) Any moneys remaining over and above those necessary to meet and 20 reserve for payments under other subsections of this section shall be distrib- 21 uted to the general account. 22 SECTION 3. That Chapter 7, Title 57, Idaho Code, be, and the same is 23 hereby amended by the addition thereto of a NEW SECTION , to be 24 known and designated as Section 57-728, Idaho Code, and to read as follows: 25 57-728. CREDIT ENHANCEMENT PROGRAM FOR SCHOOL DISTRICT BONDS. (1) The 26 endowment fund investment board shall administer a school district bond credit 27 enhancement program in accordance with this section and in conjunction with 28 chapter 52, title 33, Idaho Code, and may promulgate rules to implement it. 29 This program applies to voter approved bonds issued by school districts. The 30 program is intended to benefit school districts by purchasing notes issued by 31 the state of Idaho, whereby the state may guarantee payment of school dis- 32 trict bonded indebtedness in order to avoid an imminent default, providing 33 lower interest rates at which the bonds may be issued. 34 (2) A school district that seeks the guarantee of bonds under this pro- 35 gram shall apply to the state treasurer pursuant to section 33-5204, Idaho 36 Code. The state treasurer shall transmit all approved applications to the 37 board. The board may challenge an approved application within three (3) busi- 38 ness days of their receipt of the same. If no challenge is issued within three 39 (3) business days the application shall be deemed approved by the board. In 40 the event of a challenge in writing to the state treasurer, the treasurer and 41 the board shall have ten (10) business days to mutually approve the applica- 42 tion. If after a challenge by the board, the application is not mutually 43 approved within the ten (10) business days, the application shall be deemed 44 rejected. Nothing contained herein shall prohibit a school district from 45 reapplying following a rejected application. 46 (3) Upon approval of the credit enhancement program under this section, 47 the following shall be in effect: 48 (a) In the event moneys from the sales tax account or from the provisions 49 of section 33-5209, Idaho Code, are insufficient to pay the principal of 50 and interest on the notes issued by the state pursuant to section 33-5208, 51 Idaho Code, the endowment fund shall purchase new notes from the state, in 52 accordance with section 33-5208, Idaho Code, the proceeds of which shall 53 be sufficient to pay the principal of and the interest on the original 11 1 notes as they become due pursuant to section 33-5208, Idaho Code. The new 2 notes shall be subject to the following terms and conditions: 3 (i) The notes shall bear interest at a rate equal to the average 4 interest earned on the investments of the public school fund in the 5 four (4) calendar quarters preceding the quarter in which the loan 6 occurred; 7 (ii) The notes, including principal and interest, shall be repaid 8 from the district's next payments pursuant to chapter 8, title 33, 9 Idaho Code, as collected by the state treasurer; 10 (iii) The state may make additional payments on the note; 11 (iv) The endowment fund investment board may require the state trea- 12 surer to compel the school district to modify its fiscal practices 13 and its general operations if the board determines that there is a 14 substantial likelihood that the district will not be able to make 15 future payments required under this section. 16 (4) The provisions of this section shall not be deemed to interfere with 17 the state treasurer's ability in chapter 52, title 33, Idaho Code, to obtain 18 repayment of a delinquent obligation. 19 (5) For purposes of administering the provisions of this section, the 20 board shall make available the sum of at least four hundred million dollars 21 ($400,000,000) from the public school fund, for purposes of purchasing notes 22 as authorized by this section. 23 SECTION 4. This act shall be in full force and effect on and after the 24 adoption of Senate Joint Resolution No. 106 by the electorate of the state of 25 Idaho as provided by law.
STATEMENT OF PURPOSE
RS07728C 1
The purpose of this proposed legislation is to enact "the Idaho School Bond Guaranty Act."
There are similar mechanisms in place in other states which is to guarantee the debt of school districts
for building new classroom facilities in order to allow the districts to get a better interest rate and thereby
reduce costs to the taxpayers and also serve as an additional incentive for the local voters to pass bond
issues. This legislation would only take effect if a companion constitutional amendment is adopted by the
electorate at the 1998 general election. The mechanism for guarantee of payment is the state sales tax
account in the event of a default by a local district. If a district does default and the state is required to
step in, the state may intercept the school foundation support moneys or take other legal action against
the district to recover moneys expended for the guarantee to the bondholders.
FISCAL IMPACT
It is hoped that this mechanism will decrease substantially interest rates on bonds issued by
school districts for construction of new buildings and save the taxpayers a great deal of money. The
guarantee mechanism would only apply if a local school district passes a bond issue and then does not
make payments out of its property tax proceeds.
Contact: Senator John Sandy
(208)332-1305
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(at the request of Senator
Sandy)
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