Budget Amendment ID: FY2015-S4-131-R1
Redraft GOV 131
Debt Issuance Practices
Mr. Joyce moved that the proposed new text be amended moved that the bill be amended by inserting after section 4 the following new section:-
“SECTION 4A. Section 97 of chapter 6 of the General Laws, as so appearing, is hereby amended by adding the following subsection:-
(c) Whenever a state entity issues bonds or notes maturing at a time later than 3 years from their dates, excepting such bonds or notes as are to be issued for the investment of cash in any of the sinking or other established funds of the commonwealth, the state entity shall solicit bids for the purchase thereof and shall provide reasonable notice to the public of such solicitations. The state entity may reserve the right to reject any or all bids. If no bid is accepted, the whole or any part of the loan may be awarded to any person. Compliance with this section may be waived with respect to an issue of bonds or notes upon the approval of the state finance and governance board established in this section.”; and
by inserting after section 44 the following 3 sections:-
SECTION 44A. Chapter 44 of the General Laws is hereby amended by inserting after section 2 the following section:-
Section 2A. (a) Whenever a municipality issues bonds or notes maturing at a time later than 3 years from their dates, excepting such bonds or notes as are to be issued for the investment of cash in any of the sinking or other established funds of the commonwealth, the municipality shall solicit bids for the purchase thereof and shall provide reasonable notice to the public of such solicitations. The municipality may reserve the right to reject any or all bids. If no bid is accepted, the whole or any part of the loan may be awarded to any person. Compliance with this section may be waived with respect to an issue of bonds or notes upon the approval of the municipal finance oversight board.
(b) Any municipality issuing bonds or notes pursuant to subsection (a) may seek the consultation of the municipal finance oversight board as defined in section 1 of chapter 44A.
(c) Annually, on or before July 15, a municipal issuer shall submit a report to the municipal finance oversight board that includes, but shall not be limited to:
(i) a copy of the municipality’s debt management-related policies;
(ii) compliance with restrictions on debt issuance including, but not limited to, the restrictions set forth in this chapter 44;
(iii) total debt outstanding;
(iv) existing borrowing capacity; and
(v) credit ratings and rating agencies management and communications.
SECTION 44B. Section 1 of chapter 44A of the General Laws, as appearing in the 2012 Official Edition, is hereby amended by striking out the definition of “Municipal finance oversight board” or “Board” and inserting in place thereof the following definition:-
“Municipal finance oversight board” or “Board”, a board composed of the following voting members: the state treasurer, who shall serve as chair; the secretary of administration and finance; the comptroller; the attorney general; the state auditor; the director of accounts in the department of revenue; 1 person to be appointed by the governor who shall be an expert in public finance and who shall be a resident of the commonwealth; and 2 persons to be appointed by the state treasurer who shall be local government finance officials; provided, however, that the board shall also be composed of the following nonvoting members: the chairs and the ranking minority members of the senate and house committees on bonding, capital expenditures and state assets and the chairs and ranking minority members of the senate and house committees on ways and means; provided further, that a voting member may delegate that member's appointment; provided further, that the person appointed by the governor and the state treasurer shall serve terms established by their appointing authority but not longer than 4 years; and provided further, that each appointed person may second or subsequent terms and may continue to serve after the expiration of their term if desired by the appointing authority.”; and
SECTION 44C. Said chapter 44A is hereby further amended by inserting after section 1 the following section:-
SECTION 1A. (a) The board shall provide technical assistance and continuing education to local government officials on the practices and strategies for public debt issuance and investing public funds and shall assist local financing authorities and commissions in carry out their responsibilities. The assistance may include, but shall not be limited to, the following:-
(i) the terms of the debt to be issued including, but not limited to, the purpose of the issuance, the amount issued, the interest rate and the amortization period;
(ii) prudent issuance costs including, but not limited to, rating agency fees, bond insurance premiums, printing costs, filing fees, trustee or paying agent fees, financial advisor fees and legal fees;
(iii) the selection process for professional services, where applicable;
(iv) the method of sale determination, whether competitive or negotiated; and
(v) the effect of the issuance on the entity’s debt affordability and borrowing capacity.
(b) The board shall submit an annual report to the clerks of the senate and house of representatives not later than October 1. The annual report shall include: (i) a comprehensive list of the local financing authorities assisted, including the type of assistance provided and the terms of any debt issued following the board’s assistance; (ii) a comprehensive analysis of the information provided to the board under section 2A of chapter 44; and (iii) recommendations on legislative, policy, regulatory and administrative changes to improve the sale and servicing of debt, if any.”