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The 190th General Court of the Commonwealth of Massachusetts

Section 60A: General obligations of the commonwealth, full faith and credit; negotiable instruments; direct debt limit

Section 60A. Unless otherwise specifically provided, provisions contained in any act heretofore or hereafter enacted by a vote, taken by the yeas and nays of 2/3 of each house of the general court present and voting thereon, and approved by the governor, authorizing the state treasurer to issue and sell bonds or notes of the commonwealth or authorizing the commonwealth to borrow money requiring that the principal of and interest on such bonds or notes shall be (i) paid by or from a particular fund or funds of the commonwealth now existing or hereafter created, (ii) part of the debt and expenses of a particular district, or (iii) assessed by particular methods, or other provisions or words of similar import, shall not affect the status of such bonds and notes as general obligations of the commonwealth to which the full faith and credit of the commonwealth is pledged for the payment of principal and interest when due. All bonds and notes executed under this chapter shall be deemed to be general obligations of the commonwealth to which its full faith and credit is pledged for the payment of principal and interest when due, unless specifically provided on the face of such bond or note to the contrary. All bonds or notes of the commonwealth executed under this chapter shall have all of the qualities and incidents of negotiable instruments under the Uniform Commercial Code.

There is hereby established a direct debt limit for the commonwealth which shall apply to any direct bonds issued whose issuance would cause the sum of the principal amounts of all direct bonds issued by the commonwealth and then outstanding to exceed the limit set in this section; provided, however, that bonds for the payment or redemption of which, either at or prior to maturity, refunding bonds shall have been issued, shall be excluded in the computation of outstanding bonds; and provided, further, that for purposes of this section, the principal amount of bonds issued and outstanding shall be used in the computation of outstanding bonds. For the fiscal year starting July 1, 2011, such limit shall be $17,070,000,000. For each subsequent fiscal year, the limit shall be the product of the limit established for the previous fiscal year and 1.05. The calculation described in this paragraph shall be announced by the treasurer not later than September 30 of any year. The preceding paragraph shall not apply to direct bonds in excess of the direct debt limit. The treasurer may issue regulations enforcing this paragraph. Under no circumstances shall this paragraph be interpreted to impair any bond covenants or other guarantees to bond holders relative to any such bonds or notes issued prior to July 1, 1990.