Current Status Bill Number:2 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19970114 Primary Sponsor:Passailaigue All Sponsors:Passailaigue and Williams Drafted Document Number:RES1123.ELP Residing Body:Senate Current Committee:Finance Committee 06 SF Subject:Lottery Fund created, lottery bonds for highway projects, bonds or notes, gambling
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
Senate 19970114 Introduced, read first time, 06 SF
referred to Committee
View additional legislative information at the LPITS web site.
TO AMEND CHAPTER 11, TITLE 57 OF THE 1976 CODE, RELATING TO FINANCIAL MATTERS OF HIGHWAYS, BY ADDING ARTICLE 5, SO AS TO PROVIDE FOR THE STATE LOTTERY FUND AND TO PROVIDE FOR THE ISSUANCE OF STATE LOTTERY BONDS; AND TO AMEND SECTION 11-17-10, RELATING TO BOND ANTICIPATION NOTES, SO AS TO ADD LOTTERY BONDS TO THE DEFINITION OF BONDS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 11, Title 57 of the 1976 Code is amended by adding Article 5:
Section 57-11-500. As used in this article:
(1) `Board' is the State Budget and Control Board.
(2) `Commission' is the administrative and governing body of the Department of Transportation.
(3) `Highway projects' are those projects undertaken to construct, reconstruct, maintain, or improve roads or bridges within this State.
(4) `Lottery bonds' are bonds issued pursuant to Article X, Section 13(6)(c) of the State Constitution, 1895, as amended and this article.
Section 57-11-510. There is created the State Lottery Fund comprised of the gross revenue from the operation of the state lotteries authorized in Section 7, Article XVII of the State Constitution. This fund is separate and distinct from the general fund of the State, with all deposits to be invested by the State Treasurer with interest earned remaining a part of the fund. No more than seven percent of the gross revenues each year may be used for operational expenses of state lotteries, and of the net revenue remaining after payment of operational expenses, fifty percent must be expended in prizes. The remaining revenues, including interest, must be used as the basis for issuing lottery bonds for highway projects, according to this article.
Section 57-11-520. (A) The amount in the State Lottery Fund, less operational expenses of state lotteries and expenditures for prizes, after the close of the fiscal year, must be used as follows:
(1) No more than ninety percent of the remaining revenue must be used as a basis of a bond pledge to finance highway projects. This amount must be sufficient to meet the payment of principal and interest on lottery bond debt then due.
(2) At least ten percent of the remaining revenue must be reserved each year. This amount is the reserve fund.
(B) If funds are needed to service existing bond obligations, the board may retrieve funds from the reserve fund as is necessary. However, the amount retrieved must be restored to the reserve fund out of future revenues until the ten percent minimum is reached.
(C) Except as provided in subsection (B), any revenue remaining in the reserve fund at the end of the fiscal year remains in the reserve fund.
Section 57-11-530. To raise money for highway projects and monies to refund any lottery bonds then outstanding, the commission may make a request to the board for the issuance of lottery bonds pursuant to this article. The request must be in the form of a resolution adopted at any regular or special meeting of the commission and must include:
(1) the amount then required for highway projects;
(2) a tentative time schedule setting forth the period during which the sum requested will be expended;
(3) a debt service table showing the annual principal and interest requirements for all lottery bonds then outstanding;
(4) the amount of revenues derived from the lotteries during the preceding fiscal year; and
(5) the amount, as estimated by the commission, that will be derived from the lotteries during the then current and the next ensuing fiscal years during which it is expected that the lottery bonds then sought to be issued will be outstanding.
Section 57-11-540. The board must review the request received pursuant to Section 57-11-530. If the board approves the request, it may, by resolution, effect the issuance of lottery bonds, or pending the issuance of them, effect the issuance of bond anticipation notes pursuant to Chapter 17 of Title 11.
The board's certified copy of the resolution providing for the issuance of lottery bonds must be transmitted to the Governor and to the State Treasurer, with the request that they issue and deliver lottery bonds in accordance with the terms and conditions of the resolution. The resolution must include:
(1) the amount, denomination, and numbering of lottery bonds to be issued;
(2) the date as of which they shall be issued;
(3) the maturity schedule for the retirement of the lottery bonds;
(4) the redemption provisions, if any, applicable to the bonds;
(5) the maximum rate or rates of interest the bonds will bear;
(6) the purposes for which the bonds are to be issued;
(7) the occasion on which bids will be received for the sale of the bonds;
(8) the form of advertisement of sale;
(9) the form of the bonds of the particular issue;
(10) other matters necessary to effect the sale, issuance, and delivery of the bonds; and
(11) a finding by the board that the actual receipts, for the preceding fiscal year, from the lotteries equaled or exceeded the maximum annual debt service requirements for all lottery bonds then outstanding and lottery bonds then proposed to be issued.
Following receipt of a certified copy of the resolution of the board, the Governor and State Treasurer must issue lottery bonds according to the provisions of the resolution of the board.
Section 57-11-550. The maximum annual debt service on general obligation bonds issued or outstanding as lottery bonds may not exceed the debt service limits established in Article X, Section 13 of the South Carolina Constitution. Within these limitations, lottery bonds may be issued for state highway projects or to refund lottery bonds from time to time under the conditions prescribed by this article.
Section 57-11-560. The full faith, credit, and taxing power of the State of South Carolina is pledged to pay the principal of and interest on lottery bonds (whether now outstanding or hereafter issued), as they come due. In addition, the State Treasurer may use all of the monies derived from the state lotteries to pay the principal and interest of lottery bonds, without further action of the commission, as the bonds mature.
Section 57-11-570. Lottery bonds are issued as fully registered bonds with both principal and interest made payable only to the registered holder. Fully registered bonds are subject to transfer under the conditions as the board prescribes.
Section 57-11-580. Lottery bonds must bear interest, payable on the prescribed occasions not more than twenty-five years after the date of issuance. The installments or series may be equal or unequal in amount. Lottery bonds may, in the discretion of the board, be made subject to redemption at par and accrued interest, plus the redemption premium as it approves and on the occasions as it prescribes. Lottery bonds may not be redeemable before maturity unless they contain a statement to that effect.
Section 57-11-590. Lottery bonds issued under this article, and the interest thereon, are exempt from all state, county, municipal, school district, and other taxes or assessments, direct or indirect, general or special, imposed by the State of South Carolina, whether imposed for general revenue or otherwise, except inheritance, estate, or transfer taxes.
Section 57-11-600. Lottery bonds are sold by the Governor and the State Treasurer upon sealed proposals, after publication of notice of the sale one or more times at least seven days before the sale, in a newspaper of general circulation in the State and also in a financial paper published in New York City that regularly publishes notices of sale of state or municipal bonds. The bonds must be awarded to the bidder offering to purchase the lottery bonds at the lowest net interest cost to the State at a price of not less than ninety-nine percent of par and accrued interest to the date of delivery, but the State reserves the right to reject all bids and to readvertise the bonds for sale and to waive technicalities in the bidding.
For the purpose of bringing about successful sales of the bonds, the board may do all things ordinarily and customarily done in connection with the sale of state or municipal bonds. All expenses incident to the sale of the bonds are paid from the proceeds of the sale of the bonds.
Section 57-11-610. Executors, administrators, guardians, and other fiduciaries and all sinking fund commissions, including the State Budget and Control Board of South Carolina as manager and administrator of other state sinking funds, may invest any monies in their hands in lottery bonds.
Section 57-11-620. The proceeds of the sale of lottery bonds are received by the State Treasurer and applied by him to the purposes for which issued, except that the accrued interest, if any, is used to discharge in part the first interest to become due on the bonds, and the premium, if any, is used to discharge the payment of the first installment of principal to become due on the bonds, but the purchasers of the bonds are not liable for the proper application of the proceeds to the purposes for which they are intended.
Section 57-11-630. The proceeds derived from the sale of lottery bonds may be applied only to the purposes set forth in the resolution of the board pursuant to which the bonds are issued.
Section 57-11-640. Lottery bonds are issued in accordance with the provisions of this article and Chapter 47 of Title 2 of the 1976 Code, as amended."
SECTION 2. Section 11-17-10(a) of the 1976 Code is amended to read:
"Section 11-17-10(a). The term `bonds' shall mean means general obligation bonds payable from ad valorem taxes, general obligation bonds additionally secured by any pledge of any assessments, or any pledge of revenues derived by the borrower from any revenue-producing facility, bonds payable solely from the revenues of any revenue-producing facility, and bonds payable solely from any assessments. The term `bonds' shall also include also includes state highway bonds as defined pursuant to the provisions of item (10) of Section 57-11-210, as amended and state lottery bonds as defined in Section 57-11-500."
SECTION 3. This act takes effect upon approval by the Governor.