The Debt Service line item contains appropriations necessary to pay off interest, principal, and arbitrage calculation and trustee fees due on the state's bonded indebtedness. The state uses long-term debt to finance large capital expenditures including new buildings, major remodeling, and highway projects. The state issues general obligation bonds backed by the full faith and credit of the state and lease revenue bonds secured by dedicated revenue streams such as enterprise fund revenue or dedicated lease payments. Both general obligation and revenue bond debt, issued by the state, are included in this line item. Bonds issued by entities besides the State of Utah, such as institutions of higher education or loan funds, are not included in this line item.
During the 2015 General Session, the Legislature appropriated for Fiscal Year 2016, $467,374,500 from all sources for Debt Service. This is a 2.6 percent increase from Fiscal Year 2015 revised estimated amounts from all sources. The total includes $85,896,600 from the General/Education Funds, a reduction of 0 percent from revised Fiscal Year 2015 estimates.
In addition to statewide compensation and internal service fund cost increases, the following appropriation adjustments were made during the 2015 General Session:
Article XIV, Section 1 of the State Constitution, the "Constitutional Debt Limit," limits the total general obligation indebtedness of the state to an amount equal to 1.5 percent of the value of the total taxable property of the state.
UCA 63J-3-402, the "Statutory Debt Limit," limits the maximum general obligation borrowing ability of the state at any given time to no more than forty five percent of the maximum allowable state budget appropriations limit set in UCA 63J-3-201 (a formula that reflects changes in population and inflation). Some highway bonds are exempt from this debt limitation.
UCA 63B-1-201 creates the State Bonding Commission composed of the governor, state treasurer, and a third person appointed by the governor.
UCA 63B-1-202 requires that all legislation authorizing the State Bonding Commission to issue bonds contain an estimate of the annual amount of funds necessary for operation and maintenance of each project.
UCA 63B-1-304 creates the State Building Ownership Authority composed of the governor, state treasurer, and the chair of the State Building Board. The authority may, among other things, borrow money and issue obligations (including refunding obligations); pledge revenues from any facility to secure the payment of obligations relating to that facility; cause to be executed mortgages, trust deeds, and other documents; own, lease, operate and encumber facilities; and rent or lease any facility to any state body. Any obligations issued by the authority may not constitute general obligation debt of the state and must be legislatively authorized.
UCA 63B-1-307 requires the State Building Ownership Authority to lease space back to the agency for which obligations were issued. Rent amounts must be sufficient to pay off the principal and interest as they come due.
UCA 63B-1a, known as the "Master General Obligation Bond Act," authorizes the State Bonding Commission to issue bonds only if the Legislature has affirmatively authorized the issuance of the bonds, the capital projects to be funded, and the maximum amount of the bonds.
Article XIII Section 5(3) of the State Constitution requires a tax levy to pay off general obligation bonds within 20 years while UCA 63B-1a-101(4) limits maturity dates to 15 years unless otherwise directed by the Legislature.
UCA 63B-1a-301 requires that a sinking fund be created to pay debt service on general obligation bonds. The State Treasurer administers the fund and deposits monies into the fund as necessary to pay debt service. Any bond monies remaining after a project is completed are to be deposited in the sinking fund.
UCA 63B-1a-303 levies a direct property tax each year after bonds are issued until they are paid off, sufficient to pay principal, interest, and premiums on each bond. However, subsection (5) abates the tax to the extent money is available from other sources.
UCA 63B-1a-601 allows the State Bonding Commission to issue bond anticipation notes that represent a general obligation of the state. Notes are payable from proceeds of the sale of bonds and/or other monies of the state.
The Legislature intends that in the event that sequestration or other federal action reduces the anticipated Build America Bond subsidy payments that are deposited into the Debt Service line item as federal funds, the Division of Finance, acting on behalf of the State Board of Bonding Commissioners, shall reduce the appropriated transfer from Nonlapsing Balances - Debt Service to the General Fund, One-time proportionally to the reduction in subsidy payment received, thus holding the Debt Service fund harmless.
The Legislature appropriates General Fund and Education Fund to pay general obligation debt service on buildings. The Legislature also appropriates Transportation Investment Fund and County of the First Class transportation restricted funds to pay general obligation debt service on highways.
Agencies occupying buildings constructed with lease revenue bonds make lease payments, recorded as dedicated credits, to the debt service line item.
COBI contains unaudited data as presented to the Legislature by state agencies at the time of publication. For audited financial data see the State of Utah's Comprehensive Annual Financial Reports.