July 26, 2006, Introduced by Senator CASSIS and referred to the Committee on Finance.
A bill to amend 2001 PA 34, entitled
"Revised municipal finance act,"
by amending section 103 (MCL 141.2103) and by adding sections 518
and 519.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 103. As used in this act:
(a) "Assessed value", "assessed valuation", "valuation as
assessed", and "valuation as shown by the last preceding tax
assessment roll", or similar terms, used in this act, any statute,
or charter as a basis for computing limitations upon the taxing or
borrowing power of any municipality, mean the state equalized
valuation as determined under the general property tax act, 1893 PA
206, MCL 211.1 to 211.157.
(b) "Chief administrative officer" means that term as defined
in section 2b of the uniform budgeting and accounting act, 1968 PA
2, MCL 141.422b.
(c) "Debt" means all borrowed money, loans, and other
indebtedness, including principal and interest, evidenced by bonds,
obligations, refunding obligations, notes, contracts, securities,
refunding securities, municipal securities, or certificates of
indebtedness that are lawfully issued or assumed, in whole or in
part, by a municipality, or will be evidenced by a judgment or
decree against the municipality.
(d) "Debt retirement fund" means a segregated account or group
of accounts used to account for the payment of, interest on, or
principal and interest on a municipal security.
(e) "Deficit" means a situation for any fund of a municipality
in which, at the end of a fiscal year, total expenditures,
including an accrued deficit, exceeded total revenues for the
fiscal year, including any surplus carried forward.
(f) "Department" means the department of treasury.
(g) "Fiscal year" means a 12-month period fixed by statute,
charter, or ordinance, or if not so fixed, then as determined by
the department.
(h) "Governing body" means the county board of commissioners
of a county; the township board of a township; the council, common
council, or commission of a city; the council, commission, or board
of trustees of a village; the board of education or district board
of a school district; the board of an intermediate school district;
the board of trustees of a community college district; the county
drain commissioner or drainage board of a drainage district; the
board of the district library; the legislative body of a
metropolitan district; the port commission of a port district; and,
in the case of another governmental authority or agency, that
official or official body having general governing powers over the
authority or agency.
(i) "Health care trust fund" means the fund created by a
public employee retirement system and used to provide 1 or more of
the following:
(i) Postemployment health care benefits for public employee
retirees.
(ii) The costs of issuance of municipal securities.
(j) (i)
"Municipal security" means a security that
when
issued
was not exempt from this act or the municipal finance act,
former
1943 PA 202, MCL
131.1 to 139.3, by the provisions of this
act
or by the provisions of the municipal finance act, former
1943
PA 202, MCL 131.1 to 139.3, or by
the provisions of the law
authorizing its issuance and that is payable from or secured by any
of the following:
(i) Ad valorem real and personal property taxes.
(ii) Special assessments.
(iii) The limited or unlimited full faith and credit pledge of
the municipality.
(iv) Other sources of revenue described in this act for debt or
securities authorized by this act.
(k) (j)
"Municipality" means a county, township,
city,
village, school district, intermediate school district, community
college district, metropolitan district, port district, drainage
district, district library, or another governmental authority or
agency in this state that has the power to issue a security.
Municipality does not include this state or any authority, agency,
fund, commission, board, or department of this state.
(l) (k)
"Outstanding security" means a security
that has been
issued, but not defeased or repaid, including a security that when
issued
was exempt from this act or the municipal finance act,
former
1943 PA 202, MCL
131.1 to 139.3, by the provisions of this
act
or by the provisions of the municipal finance act, former
1943
PA 202, MCL 131.1 to 139.3, or by
the provisions of the law
authorizing its issuance.
(m) "Public employee retirement system" means a retirement
system created and established by a county, city, village, or
township.
(n) (l) "Qualified status" means a municipality
that has
filed a qualifying statement under section 303 and has been
determined by the department to be qualified to issue municipal
securities without further approval by the department.
(o) (m)
"Refunding security" means a municipal
security
issued to refund an outstanding security.
(p) (n)
"Security" means an evidence of debt such
as a bond,
note, contract, obligation, refunding obligation, certificate of
indebtedness, or other similar instrument issued by a municipality,
which pledges payment of the debt by the municipality from an
identified source of revenue.
(q) (o)
"Sinking fund" means a fund for the
payment of
principal only of a mandatory redemption security.
(r) (p)
"Taxable value" means the taxable value of
the
property as determined under section 27a of the general property
tax act, 1893 PA 206, MCL 211.27a.
(s) "Unfunded actuarial liability" means the amount by which a
health care trust fund is short of the amount that will be
necessary, without further payments into the health care trust
fund, to pay postemployment health care benefits already earned by
beneficiaries and participants of a public employee retirement
system.
Sec. 518. (1) A county, city, village, or township may by
resolution of its governing body, and without a vote of its
electors, issue a municipal security under this section to pay the
costs of the unfunded actuarial liability of a public employee
retirement system pension fund of the municipality which the
participants and beneficiaries of a public employee retirement
system of the municipality are entitled to receive under agreements
with the municipality; provided that the amount of taxes necessary
to pay the principal and interest on that municipal security,
together with the taxes levied for the same year, shall not exceed
the limit authorized by law.
(2) Before a county, city, village, or township issues a
municipal security under this section, the county, city, village,
or township shall prepare and make available to the public a
comprehensive financial plan that includes all of the following:
(a) Evidence that the municipal security proceeds and required
annual contributions will be adequate to meet the level of benefits
required.
(b) An amortization schedule and a description of actions
required to satisfy the amortization schedule.
(c) Actuarial assumptions and a certification that the
comprehensive financial plan is complete and accurate.
(d) Evidence that the issuance of municipal securities will
result in projected present value savings.
(e) A plan from the public employee retirement system to
reduce health care costs.
(3) Before a county, city, village, or township issues a
municipal security under this section, the county, city, village,
or township shall publish a notice of intent to issue the municipal
security. The notice of intent shall be directed to the electors of
the county, city, village, or township, shall be published in a
newspaper that has general circulation in the county, city,
village, or township, and shall state the maximum amount of
municipal securities to be issued; the purpose of the municipal
securities; the source of payment; the right of referendum on the
issuance of the municipal securities; and any other information the
county, city, village, or township determines necessary to
adequately inform the electors of the nature of the issue. The
notice of intent shall not be less than 1/8 page in size in the
newspaper. If, within 45 days of the publication of the notice of
intent, a petition, signed by not less than 10% or 10,000 of the
registered electors, whichever is less, residing within the county,
city, village, or township, is filed with the governing body of the
county, city, village, or township, requesting a referendum on the
question of the issuance of the municipal securities, then the
municipality shall not issue the municipal securities until
authorized by the vote of a majority of the electors of the county,
city, village, or township qualified to vote and voting on the
question at a general or special election. A special election
called for this purpose shall not be included in a statutory or
charter limitation as to the number of special elections to be
called within a period of time.
(4) Municipal securities issued under subsection (1) by a
county, city, village, or township shall have a maximum term of 30
years as determined by the county, city, village, or township.
(5) Municipal securities issued under subsection (1) by a
county, city, village, or township, and currently outstanding,
shall not exceed 5% of the state equalized valuation of the
property assessed in that county, city, village, or township.
(6) A municipal security issued under subsection (1) by a
county, city, village, or township may mature annually or be
subject to mandatory redemption requirements, with the first annual
maturity or mandatory redemption requirement to fall due 5 years or
less from the date of issuance. Annual maturity or redemption
requirements, or a combination of both, of a municipal security
issued under this section after 10 years from the date of issuance
shall not be less than 1/5 of the amount of any subsequent annual
maturity or redemption requirement, or combination of both.
(7) Municipal securities issued under subsection (1) by a
county, city, village, or township and the interest on and income
from the municipal securities are exempt from taxation by this
state or a political subdivision of this state.
(8) A county, city, village, or township issuing municipal
securities under subsection (1) may enter into indentures or other
agreements with trustees and escrow agents for the issuance,
administration, or payment of the municipal securities.
Sec. 519. Municipal securities issued under section 517 or 518
shall also be secured by the general fund of the county, city,
village, or township and shall include the phrase "general
obligation limited tax" in the resolution authorizing the issuance.
The county, city, village, or township issuing the municipal
securities is not authorized to levy any tax not authorized by law
at the time the municipal securities are issued to pay for the
municipal securities.