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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
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN 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 publicrecreationfacilities,and air navigation12facilities,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
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