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SJR106.....................................................by STATE AFFAIRS REVENUE-GENERATING FACILITIES - Proposing an amendment to the Constitution of the State of Idaho to provide that any city may own, purchase, construct, extend or equip revenue-generating public facilities; to allow revenue bonds to be issued for the facilities if approved by a two-thirds vote of the qualified electors; to provide that revenue derived from fees, rates and charges shall be utilized to pay principal and interest on the bonds; to provide that any city or other political subdivision of the state may purchase, construct or refurbish other revenue-generating public facilities; to allow revenue bonds to be issued for the facilities if approved by a majority of the qualified electors; to provide that fees, rates and charges shall be utilized to pay the principal and interest on the bonds; to provide that, so long as no tax revenue is to be obligated for repayment, indebtedness or liabilities may be incurred by owners or operators of public hospitals without the necessity of voter approval for certain expenditures; and to provide that multiyear contracts shall not constitute indebtedness under certain circumstances. 03/07 Senate intro - 1st rdg - to printing 03/10 Rpt prt - to St Aff
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE SENATE SENATE JOINT RESOLUTION NO. 106 BY STATE AFFAIRS COMMITTEE 1 A JOINT RESOLUTION 2 PROPOSING AN AMENDMENT TO SECTION 3, ARTICLE VIII, OF THE CONSTITUTION OF THE 3 STATE OF IDAHO, RELATING TO LIMITATIONS ON COUNTY AND MUNICIPAL INDEBTED- 4 NESS TO PROVIDE THAT ANY CITY MAY OWN, PURCHASE, CONSTRUCT, EXTEND, OR 5 EQUIP, WITHIN OR WITHOUT THE CORPORATE LIMITS OF THE CITY REVENUE- 6 GENERATING PUBLIC FACILITIES AND TO ALLOW REVENUE BONDS TO BE ISSUED IF 7 APPROVED BY A TWO-THIRDS VOTE OF THE QUALIFIED ELECTORS VOTING ON THE 8 QUESTION AT AN ELECTION AND TO PROVIDE THAT REVENUE DERIVED FROM FEES, 9 RATES AND CHARGES SHALL BE UTILIZED TO PAY PRINCIPAL AND INTEREST ON THE 10 BONDS, TO PROVIDE THAT ANY CITY OR OTHER POLITICAL SUBDIVISION OF THE 11 STATE MAY OTHERWISE PURCHASE, CONSTRUCT OR REFURBISH WITHIN OR WITHOUT THE 12 CORPORATE LIMITS OF SUCH CITY OR POLITICAL SUBDIVISION, OTHER REVENUE- 13 GENERATING PUBLIC FACILITIES, TO ALLOW REVENUE BONDS TO BE ISSUED FOR 14 THESE FACILITIES IF APPROVED BY A MAJORITY OF THE QUALIFIED ELECTORS VOT- 15 ING ON THE QUESTION AT AN ELECTION AND TO PROVIDE THAT FEES, RATES AND 16 CHARGES SHALL BE UTILIZED TO PAY THE PRINCIPAL AND INTEREST ON THE BONDS 17 AND TO PROVIDE THAT SO LONG AS NO TAX REVENUE IS TO BE OBLIGATED FOR 18 REPAYMENT, INDEBTEDNESS OR LIABILITIES MAY BE INCURRED BY OWNERS OR OPERA- 19 TORS OF PUBLIC HOSPITALS WITHOUT THE NECESSITY OF VOTER APPROVAL TO ALLOW 20 THE PURCHASE, CONTRACT, LEASE, CONSTRUCTION OR OTHER MANNER OF ACQUISITION 21 OF FACILITIES, EQUIPMENT, TECHNOLOGY AND REAL PROPERTY FOR HEALTH CARE 22 OPERATIONS, PROVIDED FURTHER, THAT MULTIYEAR CONTRACTS FOR GOODS, SER- 23 VICES, PURCHASE OF CAPACITY OR OUTPUT OR LEASEHOLD INTERESTS SHALL NOT 24 CONSTITUTE INDEBTEDNESS OR LIABILITIES LIMITED BY THIS SECTION OF THE CON- 25 STITUTION IF THEY DO NOT EXTEND BEYOND A DURATION OF FIVE YEARS OR IF THEY 26 CONSTITUTE CONTRACTS FOR GOODS, SERVICES, CAPACITY, OUTPUT OR LEASEHOLD 27 INTERESTS TO BE PAID FOR SOLELY BY USER FEES, RATES AND CHARGES, OR THEY 28 ALLOW AN OPPORTUNITY FOR TERMINATION BY BUDGETARY DECISION IN THE SOLE 29 DISCRETION OF THE PUBLIC AGENCY NO LESS FREQUENTLY THAN ANNUALLY; STATING 30 THE QUESTION TO BE SUBMITTED TO THE ELECTORATE; DIRECTING THE LEGISLATIVE 31 COUNCIL TO PREPARE THE STATEMENTS REQUIRED BY LAW; AND DIRECTING THE SEC- 32 RETARY OF STATE TO PUBLISH THE AMENDMENT AND ARGUMENTS AS REQUIRED BY LAW. 33 Be It Resolved by the Legislature of the State of Idaho: 34 SECTION 1. That Section 3, Article VIII, of the Constitution of the State 35 of Idaho be amended to read as follows: 36 SECTION 3. LIMITATIONS ON COUNTY AND MUNICIPAL INDEBTEDNESS. No 37 county, city, board of education, or school district, or other subdivi- 38 sion of the state, shall incur any indebtedness, or liability, in any 39 manner, or for any purpose, exceeding in that year, the income and reve- 40 nue provided for it for such year, without the assent of two-thirds of 41 the qualified electors thereof voting at an election to be held for that 42 purpose, nor unless, before or at the time of incurring such indebted- 43 ness, provisions shall be made for the collection of an annual tax suffi- 2 1 cient to pay the interest on such indebtedness as it falls due, and also 2 to constitute a sinking fund for the payment of the principal thereof, 3 within thirty years from the time of contracting the same. Any indebted- 4 ness or liability incurred contrary to this provision shall be void: Pro- 5 vided, that this section shall not be construed to apply to the ordinary 6 and necessary expenses authorized by the general laws of the state and 7 provided further that any city may own, purchase, construct, extend, or 8 equip, within and without the corporate limits of such city,off street9parking facilities,revenue-generating publicrecreationfacilities,and10air navigation facilities,and for the purpose of paying the cost thereof 11 may, without regard to any limitation herein imposed, with the assent of 12 two-thirds of the qualified electors voting at an election to be held for 13 that purpose, issue revenue bonds therefor, the principal and interest of 14 which to be paid solely from revenue derived from fees, rates and charges 15 for the use of, and the service rendered by, such facilities as may be 16 prescribed by law, and provided further, that any city or other political 17 subdivision of the state may own, purchase, construct, extend, or equip, 18 within and without the corporate limits of such city or political subdi- 19 vision, water systems, sewage collection systems, water treatment plants, 20 sewage treatment plants, and may rehabilitate existing electrical gener- 21 ating facilities, and may otherwise purchase, construct or refurbish 22 other revenue-generating public facilities the use of which is at the 23 discretion of a facility user, and for the purpose of paying the cost 24 thereof, may, without regard to any limitation herein imposed, with the 25 assent of a majority of the qualified electors voting at an election to 26 be held for that purpose, issue revenue bonds therefor, the principal and 27 interest of which to be paid solely from revenue derived from fees, rates 28 and charges for the use of, and the service rendered by such systems, 29 plants and facilities, as may be prescribed by law; and provided further 30 so long as no tax revenue is to be obligated for repayment, indebtedness 31 or liabilities may be incurred by owners or operators of public hospitals 32 without the necessity of voter approval to allow the purchase, contract, 33 lease, construction or other manner of acquisition of facilities, equip- 34 ment, technology and real property for health care operations; provided 35 further, that multiyear contracts for goods, services, purchase of capac- 36 ity or output or leasehold interests shall not constitute indebtedness or 37 liabilities limited by this section if they do not extend beyond a dura- 38 tion of five years or if they constitute contracts for goods, services, 39 capacity, output or leasehold interests to be paid for solely by user 40 fees, rates and charges, or they allow an opportunity for termination by 41 budgetary decision in the sole discretion of the public agency no less 42 frequently than annually; and provided further that any port district, 43 for the purpose of carrying into effect all or any of the powers now or 44 hereafter granted to port districts by the laws of this state, may con- 45 tract indebtedness and issue revenue bonds evidencing such indebtedness, 46 without the necessity of the voters of the port district authorizing the 47 same, such revenue bonds to be payable solely from all or such part of 48 the revenues of the port district derived from any source whatsoever 49 excepting only those revenues derived from ad valorem taxes, as the port 50 commission thereof may determine, and such revenue bonds not to be in any 51 manner or to any extent a general obligation of the port district issuing 52 the same, nor a charge upon the ad valorem tax revenue of such port dis- 53 trict. 54 SECTION 2. The question to be submitted to the electors of the State of 3 1 Idaho at the next general election shall be as follows: 2 "Shall Section 3, Article VIII, of the Constitution of the State of Idaho 3 be amended to provide: 4 (1) That any city may own, purchase, construct, extend, or equip, within 5 or without the corporate limits of the city revenue-generating public facili- 6 ties and to allow revenue bonds to be issued for these facilities if approved 7 by a two-thirds vote of the qualified electors voting on the question at an 8 election and to provide that revenue derived from fees, rates and charges 9 shall be utilized to pay principal and interest on the bonds; 10 (2) That any city or other political subdivision of the state may other- 11 wise purchase, construct or refurbish within or without the corporate limits 12 of such city or political subdivision, other revenue-generating public facili- 13 ties, to allow revenue bonds to be issued for those facilities if approved by 14 a majority of the qualified electors voting on the question at an election and 15 to provide that fees, rates and charges shall be utilized to pay the principal 16 and interest on the bonds; and 17 (3) That so long as no tax revenue is to be obligated for repayment, 18 indebtedness or liabilities may be incurred by owners or operators of public 19 hospitals without the necessity of voter approval to allow the purchase, con- 20 tract, lease, construction or other manner of acquisition of facilities, 21 equipment, technology and real property for health care operations; and pro- 22 vided further, that multiyear contracts for goods, services, purchase of 23 capacity or output or leasehold interests shall not constitute indebtedness or 24 liabilities limited by this section of the Constitution if they do not extend 25 beyond a duration of five years or if they constitute contracts for goods, 26 services, capacity, output or leasehold interests to be paid for solely by 27 user fees, rates and charges, or they allow an opportunity for termination by 28 budgetary decision in the sole discretion of the public agency no less fre- 29 quently than annually?". 30 SECTION 3. The Legislative Council is directed to prepare the statements 31 required by Section 67-453, Idaho Code, and file the same. 32 SECTION 4. The Secretary of State is hereby directed to publish this pro- 33 posed constitutional amendment and arguments as required by law.
STATEMENT OF PURPOSE
RS18014
Article VIII, Section 3 of the Idaho Constitution restricts multi-
year debts and liabilities for political subdivisions of the state.
In 2006, the Idaho Supreme court rendered a decision in City of
Boise v. Frazier, 143 Idaho 1 (2006), that addressed the "ordinary
and necessary" exception to voter approval included in that
provision. Although the decision only addressed the subject matter
of the case (a parking garage at the Boise Airport), it created
uncertainty as to many other types of local government financing
which previously were believed to be constitutional, based on case
law prior to the Frazier decision.
As a consequence many financing options that had been available to
meet the needs of local governments became unavailable. Many of
those financing options require an unqualified opinion from bond
counsel concerning the legality of the transaction, but the Frazier
decision raises serious uncertainty regarding earlier case law,
also affecting important contracts for goods or services not
requiring bond counsel opinions.
As a consequence, local government interests and financial service
providers convened to discuss options to allow the efficient
conduct of public business, while maintaining requirements of voter
approval before incurring extraordinary indebtedness or
liabilities. A proposes amendment of the Idaho Constitution is the
result of those discussions.
The proposal keeps much of what has long been Idaho law - 2/3 voter
approval for general obligations and many revenue-funded
obligations, and majority voter approval of health and safety-
related revenue-funded obligations (water and sewer). It proposes
changes to accomplish the following:
1. Allows majority vote approval of revenue-funded facilities
supported solely by user charges that are purely voluntary
(for example, improvements such as parking or recreational
facilities).
2. Authorizes public hospitals to fund capital needs without
voter authorization, so long as tax dollars are not
obligated.
3. Allows political subdivisions to enter into multi-year
contracts for goods, services, leasing or purchase of
output or capacity so long as the contracts do not extend
beyond five (5) years, or are to be paid only by user fees,
rates and charges or if the contracts allow for termination
at least once each year by budgetary decision.
The intent is to provide a measure of certainty to financial service
providers, investors in local government bonds, suppliers of goods
and services and political subdivisions, and thereby to allow local
governments to engage in commercially prudent business practices to
conduct their everyday business while sustaining the voter-approval
requirements already part of Article VIII, section 3. Having such
options available would allow political subdivisions to avoid
volatile market swings and to more fairly allocate costs of services
among all who might benefit from their availability.
FISCAL NOTE
There will be a fiscal impact on the state general fund for the
additional costs associated with adding the amendment to the general
election ballot in the amount of approximately $200,000.00.
Contact
Name: Ken Harward, Executive Director
Association of Idaho Cities
Phone: 208-344-8594
Daniel Chadwick, Executive Director
Idaho Association of Counties,
Phone: 208-345-9126
Steven A. Millard, President
Idaho Hospital Association
Phone: 208-338-5100
STATEMENT OF PURPOSE/FISCAL NOTE SJR 106