2008 Legislation
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SENATE JOINT RESOLUTION NO. 107<br /> – Public facilities/revenue-generatng

SENATE JOINT RESOLUTION NO. 107

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Bill Status



SJR107.....................................................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 not
including those owned by investor-owned utilities 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.

03/14    Senate intro - 1st rdg - to printing
    Rpt prt - to St Aff
03/19    Rpt out - rec d/p - to 2nd rdg
03/20    2nd rdg - to 3rd rdg
    Rls susp - PASSED - 34-0-1
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Geddes, Goedde,
      Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
      Lodge, Malepeai(Sagness), McGee, McKague, McKenzie, Pearce,
      Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- Gannon
    Floor Sponsor - Stegner
    Title apvd - to House
03/25    House intro - 1st rdg - to St Aff
04/01    Rpt out - rec d/p - to 2nd rdg
    Rls susp - FAILED - 36-33-1
      AYES -- Anderson, Andrus, Bell, Black, Block, Bock, Boe, Chavez,
      Chew, Clark, Durst, Eskridge, Henbest, Henderson, Jaquet, Killen,
      King, Lake, LeFavour, Pasley-Stuart, Pence, Raybould, Ringo, Ruchti,
      Rusche, Sayler, Shepherd(02), Shirley, Shively, Smith(30), Smith(24),
      Snodgrass, Stevenson, Thomas, Trail, Mr. Speaker
      NAYS -- Barrett, Bayer, Bedke, Bilbao, Bolz, Bowers, Brackett,
      Bradford, Collins, Crane, Hagedorn, Hart, Harwood, Kren, Labrador,
      Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer, Moyle,
      Nielsen, Nonini, Patrick, Roberts, Schaefer, Shepherd(08), Thayn,
      Vander Woude, Wills, Wood(27), Wood(35)
      Absent and excused -- Chadderdon
    Floor Sponsor - Stevenson
    Ret'd to Senate
    Filed in Office of the Secretary of Senate

Bill Text




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

                                                                       

                                       IN THE SENATE

                              SENATE JOINT RESOLUTION NO. 107

                                 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, NOT INCLUDING THOSE OWNED BY  INVESTOR-OWNED
 14        UTILITIES,   TO  ALLOW  REVENUE BONDS TO BE ISSUED FOR THESE FACILITIES IF
 15        APPROVED BY A MAJORITY OF THE QUALIFIED ELECTORS VOTING ON THE QUESTION AT
 16        AN ELECTION AND TO PROVIDE THAT FEES, RATES AND CHARGES SHALL BE  UTILIZED
 17        TO PAY THE PRINCIPAL AND INTEREST ON THE BONDS AND TO PROVIDE THAT SO LONG
 18        AS  NO  TAX REVENUE IS TO BE OBLIGATED FOR REPAYMENT, INDEBTEDNESS OR LIA-
 19        BILITIES MAY BE INCURRED BY OWNERS OR OPERATORS OF PUBLIC HOSPITALS  WITH-
 20        OUT  THE  NECESSITY  OF  VOTER  APPROVAL  TO ALLOW THE PURCHASE, CONTRACT,
 21        LEASE, CONSTRUCTION OR OTHER MANNER OF ACQUISITION OF  FACILITIES,  EQUIP-
 22        MENT,  TECHNOLOGY  AND  REAL PROPERTY FOR HEALTH CARE OPERATIONS, PROVIDED
 23        FURTHER, THAT MULTIYEAR CONTRACTS FOR GOODS, SERVICES, PURCHASE OF  CAPAC-
 24        ITY  OR OUTPUT OR LEASEHOLD INTERESTS SHALL NOT CONSTITUTE INDEBTEDNESS OR
 25        LIABILITIES LIMITED BY THIS SECTION OF THE CONSTITUTION  IF  THEY  DO  NOT
 26        EXTEND BEYOND A DURATION OF FIVE YEARS OR IF THEY CONSTITUTE CONTRACTS FOR
 27        GOODS,  SERVICES,  CAPACITY,  OUTPUT OR LEASEHOLD INTERESTS TO BE PAID FOR
 28        SOLELY BY USER FEES, RATES AND CHARGES, OR THEY ALLOW AN  OPPORTUNITY  FOR
 29        TERMINATION  BY  BUDGETARY  DECISION  IN THE SOLE DISCRETION OF THE PUBLIC
 30        AGENCY NO LESS FREQUENTLY THAN ANNUALLY; STATING THE QUESTION TO  BE  SUB-
 31        MITTED TO THE ELECTORATE; DIRECTING THE LEGISLATIVE COUNCIL TO PREPARE THE
 32        STATEMENTS  REQUIRED  BY LAW; AND DIRECTING THE SECRETARY OF STATE TO PUB-
 33        LISH THE AMENDMENT AND ARGUMENTS AS REQUIRED BY LAW.

 34    Be It Resolved by the Legislature of the State of Idaho:

 35        SECTION 1.  That Section 3, Article VIII, of the Constitution of the State
 36    of Idaho be amended to read as follows:

 37             SECTION 3.  LIMITATIONS ON COUNTY AND MUNICIPAL INDEBTEDNESS. No
 38        county, city, board of education, or school district, or other subdi-
 39        vision of the state, shall incur any indebtedness, or  liability,  in
 40        any  manner,  or  for any purpose, exceeding in that year, the income
 41        and revenue provided for it for such year, without the assent of two-
 42        thirds of the qualified electors thereof voting at an election to  be
 43        held for that purpose, nor unless, before or at the time of incurring

                                       2

  1        such  indebtedness, provisions shall be made for the collection of an
  2        annual tax sufficient to pay the interest on such indebtedness as  it
  3        falls  due,  and also to constitute a sinking fund for the payment of
  4        the principal thereof, within thirty years from the time of contract-
  5        ing the same. Any indebtedness or liability incurred contrary to this
  6        provision shall be void: Provided, that this  section  shall  not  be
  7        construed  to apply to the ordinary and necessary expenses authorized
  8        by the general laws of the state and provided further that  any  city
  9        may  own,  purchase,  construct, extend, or equip, within and without
 10        the corporate limits of such city,  off  street  parking  facilities,
 11        revenue-generating  public  recreation facilities, and air navigation
 12        facilities, and for the purpose of paying the cost thereof may, with-
 13        out regard to any limitation herein imposed, with the assent of  two-
 14        thirds of the qualified electors voting at an election to be held for
 15        that  purpose, issue revenue bonds therefor, the principal and inter-
 16        est of which to be paid solely from revenue derived from fees,  rates
 17        and charges for the use of, and the service rendered by, such facili-
 18        ties as may be prescribed by law, and provided further, that any city
 19        or  other  political subdivision of the state may own, purchase, con-
 20        struct, extend, or equip, within and without the corporate limits  of
 21        such  city or political subdivision, water systems, sewage collection
 22        systems, water treatment plants, sewage  treatment  plants,  and  may
 23        rehabilitate  existing  electrical  generating  facilities,  and  may
 24        otherwise  purchase,  construct or refurbish other revenue-generating
 25        public facilities, not including those owned by investor-owned utili-
 26        ties, the use of which is at the discretion of a facility  user,  and
 27        for  the  purpose  of paying the cost thereof, may, without regard to
 28        any limitation herein imposed, with the assent of a majority  of  the
 29        qualified electors voting at an election to be held for that purpose,
 30        issue  revenue bonds therefor, the principal and interest of which to
 31        be paid solely from revenue derived from fees, rates and charges  for
 32        the  use  of,  and  the  service rendered by such systems, plants and
 33        facilities, as may be prescribed by law; and provided further so long
 34        as no tax revenue is to be obligated for repayment,  indebtedness  or
 35        liabilities  may  be incurred by owners or operators of public hospi-
 36        tals without the necessity of voter approval to allow  the  purchase,
 37        contract,  lease,  construction  or  other  manner  of acquisition of
 38        facilities, equipment, technology and real property for  health  care
 39        operations;  provided  further,  that  multiyear contracts for goods,
 40        services, purchase of capacity or output or leasehold interests shall
 41        not constitute indebtedness or liabilities limited by this section if
 42        they do not extend beyond a duration of five years or if they consti-
 43        tute contracts for goods, services,  capacity,  output  or  leasehold
 44        interests  to  be paid for solely by user fees, rates and charges, or
 45        they allow an opportunity for termination by  budgetary  decision  in
 46        the  sole  discretion  of  the  public agency no less frequently than
 47        annually; and provided further that any port district, for  the  pur-
 48        pose  of carrying into effect all or any of the powers now or hereaf-
 49        ter granted to port districts by the laws of this state, may contract
 50        indebtedness and issue revenue bonds  evidencing  such  indebtedness,
 51        without  the necessity of the voters of the port district authorizing
 52        the same, such revenue bonds to be payable solely from  all  or  such
 53        part  of  the  revenues  of the port district derived from any source
 54        whatsoever excepting only those  revenues  derived  from  ad  valorem
 55        taxes, as the port commission thereof may determine, and such revenue

                                       3

  1        bonds  not  to be in any manner or to any extent a general obligation
  2        of the port district issuing the same, nor a charge upon the ad valo-
  3        rem tax revenue of such port district.

  4        SECTION 2.  The question to be submitted to the electors of the  State  of
  5    Idaho at the next general election shall be as follows:
  6        "Shall  Section 3, Article VIII, of the Constitution of the State of Idaho
  7    be amended to provide:
  8        (1)  That any city may own, purchase, construct, extend, or equip,  within
  9    or  without the corporate limits of the city revenue-generating public facili-
 10    ties and to allow revenue bonds to be issued for these facilities if  approved
 11    by  a  two-thirds  vote of the qualified electors voting on the question at an
 12    election and to provide that revenue derived  from  fees,  rates  and  charges
 13    shall be utilized to pay principal and interest on the bonds;
 14        (2)  That  any city or other political subdivision of the state may other-
 15    wise  purchase, construct or refurbish within or without the corporate  limits
 16    of such city or political subdivision, other revenue-generating public facili-
 17    ties,  not including those owned by investor-owned utilities, to allow revenue
 18    bonds to be issued for those facilities if approved by a majority of the qual-
 19    ified electors voting on the question at an election and to provide that fees,
 20    rates and charges shall be utilized to pay the principal and interest  on  the
 21    bonds; and
 22        (3)  That  so  long  as  no  tax revenue is to be obligated for repayment,
 23    indebtedness or liabilities may be incurred by owners or operators  of  public
 24    hospitals  without the necessity of voter approval to allow the purchase, con-
 25    tract, lease, construction or  other  manner  of  acquisition  of  facilities,
 26    equipment,  technology  and real property for health care operations; and pro-
 27    vided further, that multiyear  contracts  for  goods,  services,  purchase  of
 28    capacity or output or leasehold interests shall not constitute indebtedness or
 29    liabilities  limited by this section of the Constitution if they do not extend
 30    beyond a duration of five years or if they  constitute  contracts  for  goods,
 31    services,  capacity,  output  or  leasehold interests to be paid for solely by
 32    user fees, rates and charges, or they allow an opportunity for termination  by
 33    budgetary  decision  in  the sole discretion of the public agency no less fre-
 34    quently than annually?".

 35        SECTION 3.  The Legislative Council is directed to prepare the  statements
 36    required by Section 67-453, Idaho Code, and file the same.

 37        SECTION 4.  The Secretary of State is hereby directed to publish this pro-
 38    posed constitutional amendment and arguments as required by law.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE

                             RS18113

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).  This provision would not allow the creation 
        of debt for the purchase of investor owned utilities.

     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 107