SENATE BILL REPORT

SHB 263

BYHouse Committee on Local Government (originally sponsored by Representatives Haugen, Prince, Hine, L. Smith and P. King; by request of  Department of Community Development)

Authorizing public loans to municipal corporations without the issuance of bonds.

House Committe on Local Government

Senate Committee on Governmental Operations

Senate Hearing Date(s):March 23, 1987

Majority Report:  Do pass.

      Signed by Senators Halsan, Chairman; Garrett, Vice Chairman; DeJarnatt, Talmadge, Zimmerman.

Senate Staff:Eugene Green (786-7405); Sam Thompson (786-7754)

                  March 23, 1987

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, MARCH 23, 1987

BACKGROUND:

The public works trust account was established in 1985 to make loans to local governments to construct, repair, rehabilitate and improve streets and roads, bridges, storm and sanitary sewers, and water systems.  School districts and port districts are not eligible to receive such loans.  This account consists of a portion of the receipts from the state utility tax on sewer facilities and water facilities, the state excise tax on real estate conveyances, and the state sales tax on solid waste collection.

The Constitution establishes limitations on the amount of general indebtedness that a local government may incur.  Statutes restrict local governments to a lesser amount of general indebtedness than the constitution.  Many local governments are authorized to incur general indebtedness with or without voter approval.

Statutes allow a bond to be issued that is in any form, or even in a non-physical form.

SUMMARY:

Local governments are authorized to evidence loan agreements with the federal government or state government without issuing a bond.  The loan agreements may specify that the loan constitutes a revenue type obligation or a general indebtedness type obligation.  Loan agreements entered into between a local government and the state or federal government, that are of the nature of a general indebtedness, do not constitute indebtedness under the statutory indebtedness limitations.

An emergency clause is included in the bill.

Fiscal Note:      none requested

Effective Date:The bill contains an emergency clause and takes effect immediately.

Senate Committee - Testified: Pete Butkus, Department of Community Development; Kent Swisher, Association of Washington Cities