Current Status Bill Number:3002 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19950110 Primary Sponsor:Koon All Sponsors:Koon, Delleney, D. Smith, Knotts, Kirsh and Richardson Drafted Document Number:5136htc.95 Companion Bill Number:48 Residing Body:House Current Committee:Ways and Means Committee 30 HWM Subject:Constitutional debt limit for political subdivisions
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
House 19950110 Introduced, read first time, 30 HWM
referred to Committee
House 19941214 Prefiled, referred to Committee 30 HWM
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TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 11-27-110 SO AS TO PROVIDE THAT THE PRINCIPAL AMOUNT OF A LEASE PURCHASE OR FINANCING AGREEMENT IS SUBJECT TO THE CONSTITUTIONAL DEBT LIMIT FOR POLITICAL SUBDIVISIONS AND THAT PAYMENTS MADE BY THE STATE UNDER SUCH AN AGREEMENT ARE DEEMED GENERAL OBLIGATION DEBT SERVICE FOR PURPOSES OF THE CONSTITUTIONAL DEBT SERVICE LIMIT ON THE STATE, TO PROVIDE THAT THE CALCULATION OF THE LIMITATION ON GENERAL OBLIGATION BONDED INDEBTEDNESS FOR FUTURE GENERAL OBLIGATION BOND ISSUES MUST INCLUDE THE PRINCIPAL BALANCE OF ANY OUTSTANDING FINANCING AGREEMENT; AND TO AMEND THE 1976 CODE BY ADDING SECTION 59-17-120 SO AS TO PROVIDE THAT SCHOOL BONDS CALLED BEFORE MATURITY MAY BE REISSUED ONLY IF THE PAYOFF AMOUNT AND THE AMOUNT NECESSARY TO SERVICE THE REISSUED BONDS DOES NOT INCREASE BY MORE THAN EIGHT PERCENT IN A YEAR THE DEBT SERVICE ON THE ORIGINAL BONDED INDEBTEDNESS AND DOES NOT EXCEED THE DISTRICT'S DEBT LIMIT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 27, Title 11 of the 1976 Code is amended by adding:
"Section 11-27-110. (A) As used in this section:
(1) `asset' means any real property and permanent improvements thereon including structures, buildings, and fixtures;
(2) `bond act' means:
(a) the county bond act, as contained in Chapter 15 of Title 4;
(b) the municipal bond act, as contained in Article 5, Chapter 21 of Title 5;
(c) the school bond act as contained in Article 1, Chapter 71 of Title 59;
(d) the provisions contained in Articles 3 and 5 of Chapter 11 of Title 6 pertaining to special purpose districts;
(e) any provision of law by which the State may issue obligations secured in whole or in part by the full faith, credit, and taxing power of the State, and;
(f) any other law, general or special, providing for the issuance of general obligation bonds by the State or any of its political subdivisions;
(3) `constitutional debt limit' for the State or any political subdivision of the State which has the power to incur general obligation bonded indebtedness, means the limitation of the principal amount of general obligation bonded indebtedness specified in Article X of the Constitution;
(4) `enterprise financing agreement' means a financing agreement entered into to provide an asset for a governmental enterprise the revenues from which are expected to be sufficient to pay the amounts due under the financing agreement;
(5) `financing agreement' means any contract entered into after December 31, 1995, under the terms of which a governmental entity acquires the use of an asset which provides:
(a) for payments to be made in more than one fiscal year, whether by the stated term of the contract or under any renewal provisions, optional or otherwise,
(b) that the payments thereunder are divided into principal and interest components or which contain any reference to any portion of any payment under the agreement being treated as interest, and
(c) that title to the asset will be in the name of or be transferred to the governmental entity if all payments scheduled or provided for in the financing agreement are made, but the term excludes any contracts entered into in connection with issues of general obligation bonds or revenue bonds issued pursuant to authorization provided in Article X of the Constitution;
(6) `governmental enterprise' means any activity undertaken by a governmental entity which derives revenues from or because of the activity on a basis other than the exercise of the power of taxation by that governmental entity;
(7) `governmental entity' means:
(a) the State, whose general obligation debt service payments are limited pursuant to Section 13, Article X of the Constitution, or
(b) any political subdivision of the State including a municipality, county, school district, special purpose district, or similar entity, whose general obligation debt is limited as provided in Sections 14 and 15, in Article X of the Constitution;
(8) `limited bonded indebtedness' means the amount of bonded indebtedness that may be incurred by a governmental entity without a referendum or, where the context requires, the amount of such indebtedness then outstanding; and
(9) `principal balance' means the total amount, excluding any amount characterized as interest, payable as of any time of consideration under any financing agreement, including any renewals or extensions of the agreement.
(B) A governmental entity described in subsection (A)(7)(b) of this section may not enter into a financing agreement, other than an enterprise financing agreement, if the principal balance of the financing agreement, when added to the principal amount of limited bonded indebtedness outstanding on the date of execution of the financing agreement exceeds eight percent of the assessed value of taxable property in the jurisdiction of the governmental entity unless the financing agreement is approved by a majority of the electors voting on the agreement in a referendum duly called for this purpose by the governmental entity.
(C) If a governmental entity described in subsection (A)(7)(b) of this section has outstanding any financing agreement, other than an enterprise financing agreement on the date of issuance of any limited bonded indebtedness pursuant to any bond act, the amount of this limited bonded indebtedness plus the amount of all other limited bonded indebtedness of the governmental entity, when added to the principal balance under any financing agreement or agreements of the governmental entity must not exceed the amount of the governmental entity's constitutional debt limit unless this bonded indebtedness is approved by a majority of the electors voting on the bonded indebtedness in a referendum duly called for this purpose by the governmental entity. This requirement applies notwithstanding any other provision of any bond act and is in addition to the terms and conditions specified in any bond act.
(D) A payment made by the State pursuant to a financing agreement is deemed general obligation debt service subject to the debt service limitation provided in Section 13, Article X of the Constitution."
SECTION 2. Chapter 17, Title 59 of the 1976 Code is amended by adding:
"Section 59-17-120. Bonds issued by a school district under the bonded indebtedness limitation of Article X, Section 14(7)(a) of the South Carolina Constitution and called before the maturity date only may be reissued if the amount required to service the reissuance and to pay off the called bonds does not:
(1) increase by more than eight percent in any one year the amount of the district's budget needed to service the original bonded indebtedness; or
(2) exceed the debt limit of the district."
SECTION 3. This act takes effect upon approval by the Governor.