2015 -- H 5566

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LC001127

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO PUBLIC FINANCE -- PUBLIC CORPORATION DEBT MANAGEMENT

     Introduced By: Representatives Morgan, Chippendale, Filippi, Giarrusso, and Roberts

     Date Introduced: February 25, 2015

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 35-18-3 of the General Laws in Chapter 35-18 entitled "Public

Corporation Debt Management" is hereby amended to read as follows:

     35-18-3. Approval by the general assembly. -- (a) No elected or appointed state official

may enter into any financing lease or into any guarantee with any person without the prior

approval of the general assembly unless : (1) The the governor certifies that federal funds will be

available to make all of the payments which the state is or could be obligated to make under the

financing lease or guarantee; or

      (2) The general assembly has adjourned for the year with the expectation that it will not

meet again until the following year and the governor certifies that action is necessary, because of

events occurring after the general assembly has adjourned, to protect the physical integrity of an

essential public facility, to ensure the continued delivery of essential public services, or to

maintain the credit worthiness of the state in the financial markets.

      (b) No bonds may be issued or other obligation incurred by any public corporation to

finance, in whole or in part, the construction, acquisition, or improvement of any essential public

facility without the prior approval of the general assembly, unless: (1) The the governor certifies

that federal funds will be available to make all of the payments required to be made by the public

corporation in connection with the bond or obligation. The certification shall be transmitted to the

speaker of the house and the president of the senate with copies to the chairpersons of the

respective finance committees and fiscal advisors; or

      (2) The general assembly has adjourned for the year with the expectation that it will not

meet again until the following year and the governor certifies that action is necessary, because of

events occurring after the general assembly has adjourned, to protect the physical integrity of an

essential public facility, to ensure the continued delivery of essential public services, or to

maintain the credit worthiness of the state in the financial markets. The certification shall be

transmitted to the speaker of the house and the president of the senate, with copies to the

chairpersons of the respective finance committees and fiscal advisors.

      (c) In addition to, and not by way of limitation on, the exemptions provided in

subsections (a) and (b), prior approval by the general assembly shall not be required under this

chapter for bonds or other obligations issued by, or financing leases or guarantee agreements

entered into by:

      (1) The Rhode Island Industrial Facilities Corporation; provided financing leases, bonds

or other obligations are being issued for an economic development project;

      (2) The Rhode Island clean water finance agency;

      (3) The Rhode Island housing and mortgage finance corporation;

      (4) The Rhode Island student loan authority;

      (5) Any public corporation to refund any bond or other obligation issued by the public

corporation to finance the acquisition, construction, or improvement of an essential public facility

provided that the governor certifies to the speaker of the house and the president of the senate,

with copies to the chairpersons of the respective finance committees and fiscal advisors that the

refunding shall provide a net benefit to the issuer; provided, however, obligations of the Rhode

Island resource recovery corporation outstanding on July 31, 1999, may be refunded by the

issuance of obligations on or before August 1, 1999;

      (6) The Narragansett Bay water quality management district commission;

      (7) The Rhode Island health and educational building corporation, except bonds or other

obligations issued in connection with the acquisition, construction, or improvement of any facility

used by any state agency, department, board, or commission, including the board of governors for

higher education, to provide services to the public pursuant to the requirements of state or federal

law, and all fixtures for any of those facilities; and

      (8) The state to refund any financing leases entered into with the authorization of the

general assembly, provided that the governor certifies to the speaker of the house and the

president of the senate, with copies to the chairpersons of the respective finance committees and

fiscal advisors, that the refunding shall provide a net benefit to the state. Except as provided in

subsections (a) and (b) of this section, neither the general assembly nor any governmental or

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quasi-governmental entity created by it shall issue any bonds, commonly called "moral

obligation" bonds, not secured by the full faith and credit of the state as set forth in section 16 of

Article VI of the Constitution of the state, or secured by revenues as authorized by section 17

thereof.

      (d) Nothing contained in this section applies to any loan authorized to be borrowed under

Article VI, § 16 or 17 of the Rhode Island Constitution.

      (e) Nothing in this section is intended to expand in any way the borrowing authority of

any public corporation under its charter.

      (f) (1) Any certification made by the governor under subsection (a), (b), or (c) of this

section may be relied upon by any person, including without limitation, bond counsel.

      (2) The certifications shall be transmitted to the speaker of the house and the president of

the senate with copies to the chairpersons of the respective finance committees and fiscal

advisors.

      (g) Except as provided for in this chapter, the requirements of this chapter supersede any

other special or general provision of law, including any provision which purports to exempt sales

or leases between the state and a public corporation from the operation of any law.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC FINANCE -- PUBLIC CORPORATION DEBT MANAGEMENT

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     This act would eliminate the option of issuing bonds when the general assembly has

adjourned, and further provide that neither the general assembly nor any governmental or quasi-

governmental entity created by it shall issue any bonds, commonly called "moral obligation"

bonds, not secured by the full faith and credit of the state as set forth in section 16 of Article VI of

the Constitution of the state, or secured by revenues as authorized by section 17 thereof.

     This act would take effect upon passage.

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