Chapter 277
2011 -- S 0614 SUBSTITUTE A
Enacted 07/12/11
A N A C T
RELATING TO
TOWNS AND CITIES - INDEBTEDNESS OF TOWNS AND CITIES
Introduced By: Senator Daniel DaPonte
Date Introduced: March 10, 2011
It is enacted by the General
Assembly as follows:
SECTION 1. Sections 45-12-1 and 45-12-22.4 of the General
Laws in Chapter 45-12
entitled "Indebtedness of Towns and Cities" are
hereby amended to read as follows:
45-12-1.
Payment of indebtedness. – (a) The outstanding notes, bonds, and contracts of
cities and towns shall be paid and fulfilled according to
their tenor, and all public works now
authorized to be prosecuted shall be prosecuted, and all
indebtedness now authorized to be
incurred on account thereof may be incurred, according to the
tenor of the authority therefor. The
power and obligation of each city and town to pay its
general obligation bonds and notes, whether
or not issued pursuant to this chapter, shall be
unlimited, and each city and town shall levy ad
valorem taxes upon all the taxable property within the city
or town for the payment of the general
obligation bonds or notes and interest on these bonds or notes,
without limitation of rate or
amount, except as otherwise provided by or pursuant to law.
The faith and credit ad valorem
taxes, and general fund revenues of each city, and town and district
shall be pledged for the
payment of the principal of, premium and the interest on, all
general obligation bonds and notes
of the city or town whether or not the pledge is stated
in the bonds or notes, or in the proceedings
authorizing their issue and shall constitute a first lien on
such ad valorem taxes and general fund
revenues. Each city, and town and district
shall annually appropriate a sum sufficient to pay the
principal, premium and interest coming due within the year on
all its general obligation bonds and
notes to the extent that moneys for the general obligation
bonds and notes are not otherwise
provided. If that sum is not appropriated, it shall
nevertheless be added to the annual tax levy.
Annual appropriations for payment of financing leases
and obligations securing bonds, notes or
certificates ("other financing obligations"), shall also
have a first lien on ad valorem taxes and
general fund revenues commencing on the date of each annual
appropriation. Amounts
appropriated or added to the tax levy to pay principal of, premium
and interest on, general
obligation bonds or notes and payments of other financing
obligations shall be applied to the
payment of such obligations. Any municipal or district
employee or official who intentionally
violates the provisions of this section shall be personally
liable to the city, town or district for any
amounts not expended in accordance with such appropriations.
The superior court shall have
jurisdiction to adjudicate claims brought by any city, town or
district hereunder and to order such
relief as the court may find appropriate to prevent further
violations of this section. Any
municipal or district employee or official who violates the
provisions of this section shall be
subject to removal.
(b) Notwithstanding
any provision of any other law, including the uniform commercial
code, title 6A of the
(1) The pledge of ad
valorem taxes and general fund revenues to the payment of the
principal, premium and interest on general obligation bonds and
notes and payment of other
financing obligations, whether or not issued pursuant to this
chapter, is valid and binding, and
deemed continuously perfected from the time the bonds or
notes or other financing obligations
are issued;
(2) No filing need be
made under the uniform commercial code or otherwise to perfect
the first lien on ad valorem taxes or general fund
revenues;
(3) The pledge of ad
valorem taxes and general fund revenues is subject to the lien of the
pledge without delivery or segregation, and the first lien
on ad valorem taxes and general fund
revenues is valid and binding against all parties having
claims of contract or tort or otherwise
against the city or town, whether or not the parties have
notice thereof.
(4) The pledge shall be
a statutory lien effective by operation of law and shall apply to all
general obligation bonds and notes and other financing
obligations of cities, towns and districts
heretofore or hereafter issued and shall not require a security
agreement to be effective. Such
pledge shall not constitute a security agreement under
(c) The pledge of ad
valorem taxes and general fund revenues to the payment of
principal, premium and interest on general obligation bonds and
notes, under this section
constitutes a sufficient appropriation for the purposes of any
provision for appropriation, and the
ad valorem taxes and general fund revenues may be
applied as required by the pledge without
further appropriation; provided, however, that this subsection
(c) shall not apply to other
financing obligations which are subject to annual
appropriation.
(d) As used in this
section, the following words shall have the following meanings:
(1) "Ad valorem
taxes" shall mean all ad valorem taxes levied by cities, towns and
districts on property, including motor vehicle excise taxes,
except for "project revenues" as
defined in subdivision 45-33.2-3(5) of the general laws.
(2)
"Pledge" shall mean a first lien on, and a grant of a security
interest in, ad valorem
taxes and general fund revenues.
(3) "General
fund revenues" shall mean all taxes, fees, assessments, charges, receipts
and
other monies (including unrestricted fund balance) derived
from any source, to the extent that
such monies are deposited or required to be deposited to
the general fund of the city, town, or
district, and all accounts and rights to receive the ad
valorem taxes and general fund revenues and
the proceeds thereof.
(e) If any provision
of this section or the application thereof shall for any reason be
judged invalid, that judgment shall not affect, impair or
invalidate the remainder of the law, but
shall be confined in its effect to the provisions or
application directly involved in the controversy
giving rise to the judgment.
45-12-22.4. Deficit
financing -- Approval required Deficit, pension and other post-
employment benefit financing – Approval required. – (a) Except as provided in
chapter 45-9
of the general laws, No no municipality shall sell a long-term bond in order
to fund a deficit or to
fund pension obligations or other post-employment benefits without prior approval by the state
auditor general and director of the state department of
revenue.
(b) If any provision
of this section or the application thereof shall for any reason be
judged invalid, that judgment shall not affect, impair or
invalidate the remainder of the law, but
shall be confined in its effect to the provisions or
application directly involved in the controversy
giving rise to the judgment.
SECTION 2. This act shall take effect upon passage and shall
apply to general obligation
bonds and notes and other financing obligations (as herein
defined) issued by cities, towns and
districts including those issued prior to the date of
enactment.
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LC02072/SUB A
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