2008 Legislation
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SENATE JOINT RESOLUTION NO. 106<br /> – Public facilities/revenue-generatng

SENATE JOINT RESOLUTION NO. 106

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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

Bill Text




                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                                       IN 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  street
  9    parking  facilities, revenue-generating public recreation facilities, and
 10    air 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 / Fiscal Impact



                       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