SENATE BILL REPORT

ESB 5218

BYSenators Saling, Bauer, Bailey and Bluechel

Modifying bonds and bond issuance authority of the state finance committee.

Senate Committee on Higher Education

Senate Hearing Date(s):February 8, 1989; February 16, 1989

Majority Report:  Do pass and be referred to Committee on Ways & Means.

      Signed by Senators Saling, Chairman; Patterson, Vice Chairman; Bauer, Cantu, Smitherman, Stratton.

Senate Staff:Shawn Newman (786-7784)

                  February 16, 1989

Senate Committee on Ways & Means

Senate Hearing Date(s):March 2, 1989

Majority Report:  Do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Cantu, Fleming, Gaspard, Hayner, Johnson, Lee, Moore, Newhouse, Niemi, Owen, Saling, Smith, Talmadge, Warnke, Williams, Wojahn.

Senate Staff:Bill Freund (786-7441)

                  March 14, 1989

AS PASSED SENATE, MARCH 13, 1989

BACKGROUND:

In order to continue certain bond programs, the Legislature frequently needs to increase the authority of the State Finance Committee.  For example, current law authorizes the committee to issue general obligation college savings bonds (zero coupon bonds) in the sum of $50 million to finance various capital improvement projects for the state institutions of higher education.  The committee authorized the sale of these bonds on August 4, 1988.  The entire authorization sold out by October of 1988.  It is necessary to increase the State Finance Committee's original bond authorization in order to continue the college savings bond program.

This increased authority and reauthorization does not affect the state's debt ceiling or obligate the state to spend any money since the bonds cannot be offered for sale without prior legislative appropriation of the net proceeds of the bond sales.  This is intended to avoid the need for legislative action to adjust bond authorization limits.

SUMMARY:

The State Finance Committee is given increased authority over the terms and conditions governing the sale of all bonds, notes or other evidences of indebtedness.  The committee is authorized to determine whether interest on the bonds is payable periodically or only at maturity.  The committee is also authorized to determine the sale price of all bonds and the amount of bonds which pay interest only at maturity.  By so doing, the committee determines the amount of bonds they are authorized to issue under state bond programs.  The committee may issue refunding bonds and obtain bond insurance.  It is the express intent of the Legislature to authorize the issuance of bonds under the 1989 omnibus bond authorization act in order to implement the 1989-91 capital budget.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: HIGHER EDUCATION AND WAYS & MEANS:  Tim Kerr, State Treasurer's Office (for)