Amendment 313 - Withdrawn

Budget Amendment ID: FY2017-S4-313

GOV 313

Debt Issuance Practices

Mr. Joyce moved that the proposed new text be amended by inserting, after section __, the following new sections:-

SECTION XX. Section 97 of chapter 6 of the General Laws, as appearing in the 2012 Official Edition, is hereby amended by inserting 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 under this section.

SECTION XX. Chapter 29 of the General Laws is hereby amended by inserting the following new section:-

Section 60C. (a) In this section, the following words shall, unless the context clearly requires otherwise, have the following meanings.

"Commission,” Massachusetts Debt Advisory Commission.

"Debt,” any debt issued by a municipality or a state entity, as defined in section 97 of chapter 6, including debt issued on a short-term basis in anticipation of receipts from taxes and other sources.

(b) This section shall not be construed to affect the authority of the governor to submit any bills under the procedures established in Article XLII or XLIII of the Amendments to the Constitution, or the authority of the general court to continue its independent analysis of commonwealth debt affordability or to consider bills that authorize commonwealth debt or appropriations bills under said Article XLII or XLIII of the Amendments to the Constitution.

(c) There shall be within the state treasurer’s office, but not subject to its supervision or control, a Massachusetts Debt and Investment Advisory Commission consisting of the following voting members: the treasurer, who shall chair the commission; the secretary of administration and finance who shall chair the committee; the comptroller; the attorney general; the state auditor, and the director of accounts in the department of revenue; 1 individual appointed by the governor who shall be an expert in public finance and who shall be a resident of the commonwealth and employed by an authority of the commonwealth that is determined to be a component unit of the commonwealth that has the authority to issue bonds or notes; and 2 individuals appointed by the treasurer who shall be local government finance officials. The house and senate chairs and the ranking minority members of the committees on bonding, capital expenditures and state assets and the committees on ways and means shall be nonvoting members of the commission. Any voting member may delegate that member's appointment. Each individual appointed by the secretary or treasurer shall serve terms established by the appointing authority, but not longer than 4 years. Each appointed individual may serve a second or subsequent terms, and each appointed individual may continue to serve after the individual's term expires if desired by the appointing authority.

(d) The chairman shall call meetings of the commission as needed to perform its duties.

(e) The commission shall:

(1) Review on a continuing basis the issuance of all debt by any municipality or state agency;

(2) Collect an itemized summary of the cost of issuing debt, as required by section 60D of chapter 29 and section 10A of chapter 44 of the General Laws;

(3) Provide technical assistance and continuing education to state and local government officials on the practices and strategies for public debt issuance and investing public funds;

(4) Recommend legislative, policy, regulatory, and administrative changes to improve the sale and servicing of debt; and

(5) Assist state and local financing authorities and commissions to carry out their responsibilities.

(f) On or before December 15 of each year, the commission shall submit to the governor and the general court a summary of all debt issuance for the prior fiscal year.

(g) On or before December 15 of each even numbered year, the commission shall submit to the governor and the general court a recommendation for legislative, policy, regulatory and administrative changes to improve the sale and servicing of state and local debt, considering:

(1) The current debt issuance practices of Massachusetts municipalities, counties, and state agencies;

(2) The estimated cost of said practices; and

(3) The methods and best practices to maximize efficiencies and reduce the cost of issuing debt.

SECTION XX. Chapter 29 is hereby amended by inserting the following new section:-

Section 60D. (a) Within forty five days of the issuance of debt, state agencies, section 97 of chapter 6, shall submit a report to the Massachusetts Debt Advisory Commission, established by section 60C of this chapter, including, but not limited to, the following:

(1) The terms of the debt issued including, but not limited to, the purpose of the issuance, the amount issued, the interest rate, and the amortization period;

(2) An itemized summary of the 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;

(3) The selection process for professional services, where applicable;

(4) The method of sale determination, whether competitive or negotiated; and

(5) The effect of the issuance on the entity’s debt affordability and borrowing capacity.

(b) On or before July 15 of each year, state agencies, as defined in section 97 of chapter 6, shall submit a report to the Massachusetts Debt Advisory Commission, established by section 60C of this chapter, including, but not limited to, the following:

(1) A copy of the entity’s Debt Management-Related Policies, as required by the State Finance and Governance Board under section 97 of chapter 6;

(2) The number of waivers sought under either section 97 of chapter of the General Laws 6 or 53 of chapter 29 of the General Laws during the prior fiscal year;

(3) The number of waivers received under either section 97 of chapter of the General Laws 6 or 53 of chapter 29 of the General Laws during the prior fiscal year;

(4) Compliance with restrictions on debt issuance;

(5) Total debt outstanding;

(6) Existing borrowing capacity; and

(7) Credit ratings and rating agencies management and communications.

SECTION XX. Chapter 44 is hereby amended by inserting the following new section:-

Section 2A. 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 board established under this section.

SECTION XX. Chapter 44 is hereby amended by inserting the following new section:-

Section 10A. (a) Within forty five days of the issuance of debt any municipal shall submit a report to the Massachusetts Debt Advisory Commission, established by section 60C of chapter 29 of the General Laws, including, but not limited to, the following:

(1) The terms of the debt issued including, but not limited to, the purpose of the issuance, the amount issued, the interest rate, and the amortization period;

(3) The selection process for professional services, where applicable;

(4) The method of sale determination, whether competitive or negotiated; and

(5) The effect of the issuance on the entity’s debt affordability and borrowing capacity.

(b) On or before July 15 of each year, any municipal issuer shall submit a report to the Massachusetts Debt Advisory Commission, established by section 60C of chapter 29 of the General Laws, including, but not limited to, the following:

(1) A copy of the municipality’s debt management-related policies;

(2) The number of waivers sought under section 2A of this chapter during the prior fiscal year;

(3) The number of waivers received under section 2A of this chapter during the prior fiscal year;

(4) Compliance with restrictions on debt issuance, including, but not limited to the restrictions set forth in chapter 44 of the General Laws;

(5) Total debt outstanding;

(6) Existing borrowing capacity; and

(7) Credit ratings and rating agencies management and communications.