SENATE BILL No. 841

November 29, 2001, Introduced by Senator BULLARD and referred to the Committee on

Finance.

A bill to amend 1981 PA 80, entitled

"Fiscal stabilization act,"

by amending section 4 (MCL 141.1004), as amended by 1987 PA 279;

and to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 4. (1) Before a city may make application to the board

2 for approval to issue bonds or obligations under this act, the

3 legislative body of the city shall determine by resolution that

4 all of the following conditions exist:

5 (a) The city had an accumulated operating deficit as of the

6 end of the last completed fiscal year or is projected to have an

7 accumulated operating deficit at the end of the current fiscal

8 year. The determination of the existence of an accumulated

9 operating deficit or a projected accumulated operating deficit

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1 shall be made in accordance with generally accepted accounting

2 principles.

3 (b) The amount of the deficit exceeds the amount that the

4 city may borrow from the emergency municipal loan fund pursuant

5 to the emergency municipal loan act, Act No. 243 of the Public

6 Acts of 1980, as amended, being sections 141.931 to 141.942 of

7 the Michigan Compiled Laws 1980 PA 243, MCL 141.931 TO 141.942.

8 (c) The amount of the deficit is more than the city can fund

9 by issuing tax anticipation notes pursuant to section 2 of chap-

10 ter IV of the municipal finance act, Act No. 202 of the Public

11 Acts of 1943, as amended, being section 134.2 of the Michigan

12 Compiled Laws UNDER THE REVISED MUNICIPAL FINANCE ACT, 2001

13 PA 34, MCL 141.2101 TO 141.2821.

14 (2) Before a county may make application to the board for

15 approval to issue bonds or obligations under this act, the legis-

16 lative body of the county shall determine by resolution that the

17 county had an accumulated operating deficit as of the end of the

18 last completed fiscal year or is projected to have an accumulated

19 operating deficit at the end of the current fiscal year. The

20 determination of the existence of an accumulated operating defi-

21 cit or a projected accumulated operating deficit shall be made in

22 accordance with generally accepted accounting principles.

23 (3) If the legislative body of a city or county determines

24 that all of the conditions described in subsection (1) or (2)

25 exist, respectively, it shall also in the same resolution make

26 the following determinations:

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1 (a) The amount of the accumulated operating deficit that was

2 incurred or is projected to exist at the end of the current

3 fiscal year.

4 (b) The maximum amount of bonds or obligations necessary to

5 fund the deficit and provide funds for the purposes described in

6 section 5.

7 (4) Before adopting a resolution authorizing the issuance of

8 the bonds or obligations, the city or county shall apply to the

9 secretary of the board for an order approving issuance of the

10 bonds or obligations by the city or county and shall attach to

11 the application a copy of the resolution described in this

12 section.

13 (5) The board shall require that the city or county provide

14 the board with a statement signed by the chief executive officer

15 of the city or county, if a charter county, or the chairperson of

16 the board of county commissioners, which statement indicates how

17 the city or county intends to avoid future deficits. The state-

18 ment is a condition that shall be met as part of the application

19 by the city or county to the board for issuance of bonds or obli-

20 gations under this act.

21 (6) Within 7 days after receipt of a full and complete

22 application as determined by the board, the board shall issue an

23 order approving issuance of bonds or obligations by the city or

24 county in an amount not exceeding the amount determined to be

25 necessary by the legislative body of the city or county under

26 subsection (3) or denying the application.

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1 (7) After approval of the board, the determinations and

2 findings made by the legislative body of the city or county

3 pursuant to this section are conclusive.

4 (8) The maximum amount of bonds or obligations that are

5 unlimited or limited tax bonds or obligations that may be issued

6 by a city or county under this act shall not exceed 3% of the

7 state equalized valuation TAXABLE VALUE of real and personal

8 property located within the territorial boundaries of the city or

9 county, respectively, or the maximum principal amount of all

10 bonds or obligations that may be issued by a city or county under

11 this act shall not exceed $125,000,000.00. The limitations pro-

12 vided by this subsection do not include bonds or obligations or

13 portions of bonds or obligations used to pay for any of the

14 following:

15 (a) Amounts set aside for a reserve for payment of princi-

16 pal, interest, and redemption premiums.

17 (b) Expected costs of issuance of the bonds or obligations.

18 (c) The amount of any discount.

19 (d) Bonds or obligations issued to refund outstanding bonds

20 or obligations.

21 (9) Except as provided in section 7, THE issuance of bonds

22 or obligations pursuant to UNDER this act are not IS subject

23 to the municipal finance act, Act No. 202 of the Public Acts of

24 1943, as amended, being sections 131.1 to 139.3 of the Michigan

25 Compiled Laws REVISED MUNICIPAL FINANCE ACT, 2001 PA 34,

26 MCL 141.2101 TO 141.2821.

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1 Enacting section 1. Sections 6 and 7 of the fiscal

2 stabilization act, 1981 PA 80, MCL 141.1006 and 141.1007, are

3 repealed.

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