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Sponsors: Senators Richardson and Elliott
Document Path: l:\council\bills\ggs\22838htc05.doc
Companion/Similar bill(s): 3220
Introduced in the Senate on January 11, 2005
Currently residing in the Senate Committee on Finance
Summary: Impose a petroleum franchise fee
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number ------------------------------------------------------------------------------- 12/15/2004 Senate Prefiled 12/15/2004 Senate Referred to Committee on Finance 1/11/2005 Senate Introduced and read first time SJ-134 1/11/2005 Senate Referred to Committee on Finance SJ-134
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VERSIONS OF THIS BILL
TO AMEND CHAPTER 28, TITLE 12, CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 4 IMPOSING A PETROLEUM FRANCHISE FEE AND PROVIDING FOR THE USE OF THE FEE REVENUES, AND TO AMEND CHAPTER 11 OF TITLE 57, BY ADDING ARTICLE 5 AUTHORIZING THE ISSUE OF HIGHWAY REVENUE BONDS PLEDGING THE REVENUES OF THE PETROLEUM FRANCHISE FEE IMPOSED PURSUANT TO THIS ACT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 28, Title 12 of the 1976 Code is amended by adding:
Section 12-28-410. There is imposed a petroleum franchise fee on all suppliers of motor fuels sold and delivered within the State. The fee equals five percent of the retail value of all motor fuel subject to the user fee sold by each supplier. Retail value is an average retail price of each grade of motor fuel published by the Department of Revenue on June thirtieth and December thirty-first of each year. The average retail value published by the Department of Revenue remains in effect for six months. The average retail price must be inclusive of all local, state, and federal fees and taxes in addition to the base price of the motor fuel. The measurement of motor fuels applicable to the petroleum franchise fee is subject to the same requirements set forth in this chapter for the measurement of user fees. Except when specifically otherwise provided in this article, for all purposes of reporting, payment, collection, and enforcement, this petroleum franchise fee is deemed to be imposed pursuant to Article 3 of this chapter.
Section 12-28-420 (A) All proceeds derived from the petroleum franchise fee imposed pursuant to this article must be turned over to the Department of Transportation and half of the proceeds placed in an account known as the Highway Maintenance Fund and half of the proceeds placed in an account known as the State Construction Program Fund. All interest derived from these accounts must accrue to these accounts.
(B) Proceeds placed into the Highway Maintenance Fund must be used exclusively for the purpose of highway maintenance and safety enhancements such as resurfacing, removing obstacles, adding or improving medians, widening lanes and shoulders, adding turn lanes, and improving or replacing road markings and traffic signs. These improvements must be undertaken for the purpose of reducing the likelihood of vehicle crashes and fatalities and protecting the state's investment in its highway system.
(C) Proceeds placed into the State Construction Program Fund must be used exclusively for the purpose of highway construction, including widening, intersection and interchange improvements, overpasses, urban loops, by-passes, and other highway system upgrades on all state roads.
(D) Notwithstanding any other provision of law, proceeds from the petroleum franchise fee imposed pursuant to this article may be used by the Department of Transportation as the source of payment of principal and interest on highway revenue bonds issued pursuant to Article 5, Chapter 11 of Title 57 and used to finance qualified projects. The application for the bonds must be filed by the Department of Transportation with the State Treasurer, who shall forward the application to the State Budget and Control Board. The Budget and Control Board shall consider the application in the same manner that it considers state highway bonds, mutatis mutandis.
(E) Funds placed in the Highway Maintenance Fund and the State Construction Program Fund may not be transferred to other funds or used for other purposes except by means of separate legislation enacted solely for that purpose and approved by at least a two-thirds vote of the House of Representatives and at least a two-thirds vote of the Senate.
Section 12-28-430. (A) The Highway Maintenance Fund must be used on state-maintained highways only for the purposes provided in Section 12-28-420. The Department of Transportation shall allocate funds for these purposes on an annual basis and the funds so allocated carry forward and unexpended funds accrue according to the purposes provided in items (1) and (2) of this subsection, based on the allocation formulas provided in this section.
(1) Eighty percent of the annual revenue placed into the Highway Maintenance Fund must be allocated on the basis of the formula contained in subsection (B) and used within the designated counties at the discretion of the department;
(2) Twenty percent of the annual revenue placed into the Highway Maintenance Fund must be used for statewide needs at the discretion of the department.
(B) The county-by-county allocation of funds for the purposes provided in subsection (A) of this section must be based on a formula that equally weighs each county's proportionate share of population and its proportionate share of state-maintained highway miles. This formula must be updated annually by the Department of Transportation based on the most current highway data available and based on Census Bureau reports from the most recent United States Census.
(C) Nothing in this section limits the ability of the Department of Transportation to use other state and federal funds, in addition to the Highway Maintenance Fund, for the purposes provided in subsection (B) of this section.
Section 12-28-440. The State Highway Construction Program Fund must be used on state-maintained highways only for the purposes provided in Section 12-28-420(B). The Department of Transportation shall allocate funding from this fund equally among the state's congressional districts."
SECTION 2. Chapter 11, Title 57 of the 1976 Code is amended by adding:
Section 57-11-510. (A) To finance qualified projects and to refund bonds then outstanding, the department may issue highway revenue bonds as provided in this article. The review and approval of the Joint Bond Review Committee must be obtained before the issuance of the highway revenue bonds.
(B) For purposes of this article, 'highway revenue bonds' means any bonds, notes, debentures, interim certificates, grant or revenue anticipation notes, or any other evidence of indebtedness of the department incurred pursuant to this article.
Section 57-11-520. Highway revenue bonds may be secured by a pledge of any money, income, or revenue of the department proceeding from the petroleum franchise fee as imposed pursuant to Article 4, Chapter 28 of Title 12.
Section 57-11-530. Highway revenue bonds issued by the department do not constitute a debt or a pledge of the full faith and credit of this State, or any of its political subdivisions other than the department, but are payable solely from the revenue collected pursuant to Article 4, Chapter 28 of Title 12. The highway revenue bonds issued do not constitute an indebtedness of the State within the meaning of any constitutional or statutory limitation. No member of the commission or the department or any person executing bonds of the department is liable personally on the bonds by reason of their issuance or execution. Each highway revenue bond issued under this article must contain on its face a statement to the effect that:
(1) neither the State, nor any of its political subdivisions, nor the department is obligated to pay the principal of or interest on the bond or other costs incident to the bond except from the revenue, money, or property of the department derived from the Petroleum Franchise Fee as established pursuant to Article 4, Chapter 28 of Title 12;
(2) neither the full faith and credit nor the taxing power of the State, or any of its political subdivisions, is pledged to the payment of the principal of or interest on the bond;
(3) the department does not have taxing power.
Section 57-11-540. The highway revenue bonds of the department must be authorized by a resolution of the commission. Highway revenue bonds must bear the date and mature at the time, which the resolution provides, except that no highway revenue bond may mature more than forty years from its date of issue. Highway revenue bonds may be in the denominations, be executed in the manner, be payable in the medium of payment, be payable at the place and at the time, and be subject to redemption or repurchase and contain other provisions determined by the department before their issuance. Highway revenue bonds may bear interest payable at a time and at a rate as determined by the department, including the determination by agents designated by the department under guidelines established by it. Highway revenue bonds may be sold by the department at public or private sale at the price it determines and approves. The State Treasurer shall issue the bonds of the department not later than sixty days after the resolution of the commission authorizing the issuance of the bonds.
Section 57-11-550. (A) Highway revenue bonds may be secured by a trust indenture between the department and a corporate trustee, which may be the State Treasurer or a bank having trust powers or a trust company, designated by the State Treasurer and doing business in South Carolina. A trust indenture may contain provisions for protecting and enforcing the rights and remedies of the bondholders which are reasonable and proper, including covenants setting forth the duties of the department in relation to the exercise of its powers and the custody, safekeeping, and application of its money. The department may provide by the trust indenture for the payment of the proceeds of the highway revenue bonds and the proceeds from the Petroleum Franchise Fee imposed pursuant to Article 4, Chapter 28 of Title 12 to the trustee under the trust indenture or to some other depository, and for the method of its disbursement with safeguards and restrictions prescribed by it. All expenses incurred in performing the obligations of the department under the trust indenture may be treated as part of its operating expenses.
(B) A resolution or trust indenture pursuant to which highway revenue bonds are issued may contain provisions that are part of the contract with the holders of the bonds as to:
(1) pledging all or part of the revenue of the department derived from the Petroleum Franchise Fee to secure the payment of the bonds;
(2) the use and disposition of the gross income from, and payment of the principal of, and interest on loan obligations owned by the department;
(3) the establishment of reserves, sinking funds, and other funds and accounts, and their regulation and disposition;
(4) limitations on the purposes to which the proceeds from the sale of the bonds may be applied, and limitations on pledging the proceeds to secure the payment of the bonds;
(5) limitations on the issuance of additional bonds, the terms upon which additional bonds may be issued and secured, and the refunding of outstanding or other bonds;
(6) the procedure, if any, by which the terms of a contract with bondholders may be amended or abrogated, the amount of bonds, if any, the holders of which must consent to, and the manner in which a consent may be given;
(7) limitations on the amount of money to be expended by the department for its operating expenses;
(8) vesting in a trustee property, rights, powers, and duties as the department may determine, limiting or abrogating the right of bondholders to appoint a trustee, and limiting the rights, powers, and duties of the trustee;
(9) defining the acts or omissions that constitute a default, the obligations or duties of the department to the holders of the bonds, and the rights and remedies of the holders of the bonds in the event of default, including as a matter of right the appointment of a receiver, and all other rights generally available to creditors;
(10) requiring the department or the trustee under the trust indenture to take action to obtain payment of all sums required to eliminate a default as to any principal of and interest on loan obligations owned by the department or held by a trustee in connection with the issuance of highway revenue bonds, which may be authorized by the laws of this State; and
(11) any other matter relating to the terms of the bonds or the security or protection of the holders of the bonds that may be considered appropriate.
Section 57-11-560. A pledge made by the department is valid and binding from the time the pledge is made. The Petroleum Franchise Fee revenue pledged and thereafter received by the department is immediately subject to the lien of the pledge without a physical delivery or further act. The lien of a pledge is valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the department, irrespective of whether the parties have notice of the pledge. No recording or filing of the resolution authorizing the issuance of highway revenue bonds, the trust indenture securing the bonds, or any other instrument including filings under the Uniform Commercial Code is necessary to create or perfect a pledge or security interest granted by the department to secure a bond, but the record of the proceedings relative to the issuance of a bond must be filed as prescribed by Section 11-15-20.
Section 57-11-570. The department, subject to agreements with bondholders as may then exist, may purchase outstanding highway revenue bonds of the department with available funds as permitted by law, at a reasonable price. If the bonds are then redeemable, the price must not exceed the redemption price then applicable plus accrued interest to the next interest payment date.
Section 57-11-580. Highway revenue bonds of the department must be in a form and must be executed in a manner prescribed by the department.
Section 57-11-590. If any of the members or officers of the department cease to be members before the delivery of bonds signed by them, their signatures or authorized facsimile signatures are nevertheless valid and sufficient for all purposes as if they had remained in office until the delivery of the bonds.
Section 57-11-600. Subsequent amendments to this article may not limit the rights vested in the department with respect to agreements made with, or remedies available to, the holders of highway revenue bonds issued under this article before the enactment of the amendments until the bonds, with all premiums and interest on them, and all costs and expenses in connection with any proceeding by or on behalf of the holders, are fully met and discharged.
Section 57-11-610. Any highway revenue bonds issued by the department, the transfer of bonds, and the income from them, are free from taxation and assessment of every kind by the State and by the local governments and other political subdivisions of this State.
Section 57-11-620. Highway revenue bonds issued by the department are legal investments in which all public officers or public bodies of the State, its political subdivisions, all municipalities and political subdivisions, all insurance companies and associations and other persons carrying on insurance business, all banks, bankers, banking associations, trust companies, savings banks, savings associations, including savings and loan association investment companies, and other persons carrying on a banking business, all administrators, guardians, executors, trustees, and other fiduciaries, and all other persons who are now or may be authorized in the future to invest in bonds or other obligations of the State, may invest funds in their control or belonging to them. The highway revenue bonds of the department are also securities that may be deposited with and received by all public officers and bodies of the State or any agency or political subdivision of the State and all municipalities and public corporations for any purpose for which the deposit of bonds or other obligations of the State is now or may later be required by law."
SECTION 3. This act takes effect July 1 2005.
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