H-1002.1  _______________________________________________

                          HOUSE BILL 1499

          _______________________________________________

State of Washington      54th Legislature     1995 Regular Session

By Representatives Hargrove, Pelesky, Casada, Cairnes, Goldsmith, Hymes, D. Schmidt, Silver, Clements, Brumsickle, Horn, McMorris, Delvin, Mulliken, Padden, Huff, Elliot, Romero, Thompson and Quall

Read first time 01/27/95.  Referred to Committee on Capital Budget.

Limiting the debt service on state debt.

    AN ACT Relating to limiting the debt service on outstanding state debt; amending RCW 39.42.060; making an appropriation; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

    Sec. 1.  RCW 39.42.060 and 1993 c 52 s 1 are each amended to read as follows:

    No bonds, notes, or other evidences of indebtedness for borrowed money shall be issued by the state which will cause the aggregate debt contracted by the state to exceed that amount for which payments of principal and interest in any fiscal year would require the state to expend more than ((seven percent of the arithmetic mean of its general state revenues, as defined in)) the amount expended in the previous fiscal year plus an increase not to exceed the fiscal growth factor under RCW 43.135.025, subject to the limit under section 1(c) of Article VIII of the Washington state Constitution ((for the three immediately preceding fiscal years as certified by the treasurer in accordance with RCW 39.42.070)).  It shall be the duty of the state finance committee to compute annually the amount required to pay principal of and interest on outstanding debt.  In making such computation, the state finance committee shall include all borrowed money represented by bonds, notes, or other evidences of indebtedness which are secured by the full faith and credit of the state or are required to be paid, directly or indirectly, from general state revenues and which are incurred by the state, any department, authority, public corporation or quasi public corporation of the state, any state university or college, or any other public agency created by the state but not by counties, cities, towns, school districts, or other municipal corporations, and shall include debt incurred pursuant to section 3 of Article VIII of the Washington state Constitution, but shall exclude the following:

    (1) Obligations for the payment of current expenses of state government;

    (2) Indebtedness incurred pursuant to RCW 39.42.080 or 39.42.090;

    (3) Principal of and interest on bond anticipation notes;

    (4) Any indebtedness which has been refunded;

    (5) Financing contracts entered into under chapter 39.94 RCW;

    (6) Indebtedness authorized or incurred before July 1, 1993, pursuant to statute which requires that the state treasury be reimbursed, in the amount of the principal of and the interest on such indebtedness, from money other than general state revenues or from the special excise tax imposed pursuant to chapter 67.40 RCW;

    (7) Indebtedness authorized and incurred after July 1, 1993, pursuant to statute that requires that the state treasury be reimbursed, in the amount of the principal of and the interest on such indebtedness, from (a) moneys outside the state treasury, except higher education operating fees, (b) higher education building fees, (c) indirect costs recovered from federal grants and contracts, and (d) fees and charges associated with hospitals operated or managed by institutions of higher education; and

    (8) Any agreement, promissory note, or other instrument entered into by the state finance committee under RCW 39.42.030 in connection with its acquisition of bond insurance, letters of credit, or other credit support instruments for the purpose of guaranteeing the payment or enhancing the marketability, or both, of any state bonds, notes, or other evidence of indebtedness.

    To the extent necessary because of the constitutional or statutory debt limitation, priorities with respect to the issuance or guaranteeing of bonds, notes, or other evidences of indebtedness by the state shall be determined by the state finance committee.

NEW SECTION. Sec. 2.  The sum of five hundred million dollars is appropriated for the biennium ending June 30, 1995, from the general fund to the custody of the state treasurer for the purpose of reducing debt service by purchasing on the open market outstanding state general obligation bonds selected by the state treasurer, including administrative expenses associated with this transaction.

NEW SECTION. Sec. 3.  (1) Section 1 of this act shall take effect July 1, 1997.

    (2) Section 2 of this act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.

                            --- END ---