FINAL BILL REPORT

HB 1032

                                  C 136 L 89

BYRepresentatives Holland, H. Sommers, Fuhrman, Sayan, Heavey and Betrozoff; by request of Legislative Budget Committee

Providing for general obligation bonds.

House Committe on Capital Facilities & Financing

Senate Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

The 1986 Legislature, in the supplemental budget, directed the Legislative Budget Committee to study the state's debt issuance practices.  The main objective of the study was to seek means of reducing the cost of capital projects by either (1)  reducing the bond issuance cost, or (2)  using "pay as you go" financing rather than debt financing.

The Legislative Budget Committee completed its study in September 1987, and forwarded its recommendations to the full Legislature.  One of the recommendations was to amend Referenda 26, 38, and 39 to allow the remaining authorized bonds to be sold at a discount.  The advantage of discounted bonds is that bonds may be sold to the public at face value rather than at a premium after the underwriters add their cost of marketing the bonds to the price of the bonds.  Discounted bonds will make state bonds more attractive in the bond market and, therefore, result in lower interest rates to the state.

SUMMARY:

The State Finance Committee is authorized to issue these bond authorizations at a discounted rate:

      a)Referendum 26 waste disposal facilities, 1972

      b)Referendum 38 water supply facilities, 1979

      c)Referendum 39 waste disposal and management facilities, 1980

      d)Salmon enhancement facilities, 1977.

The discounted rate will increase the size of the bond issue but will have no effect on the amount of money available for projects financed by the bond issues.  The January 1, 1990 expiration date for referendum 39 bonds is also removed.

VOTES ON FINAL PASSAGE:

      House 94   0

      Senate    44     0

EFFECTIVE:April 20, 1989