S.B. 237

1

EXCISE TAX BOND PROCESS
2 2001 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: John L. Valentine
5 This act modifies the Municipal Bond Act provisions governing revenue bonds payable from
6 excise tax revenues. This act establishes a process for notice and a public hearing on the
7 issuance of revenue bonds payable from excise tax revenues and requires the question of
8 whether or not to issue the bonds to be submitted to a vote of the people upon receipt of a
9 petition signed by 20% of the registered voters. This act makes technical corrections.
10 This act affects sections of Utah Code Annotated 1953 as follows:
11 AMENDS:
12 11-14-17.5, as last amended by Chapter 270, Laws of Utah 1998
13 Be it enacted by the Legislature of the state of Utah:
14 Section 1. Section 11-14-17.5 is amended to read:
15 11-14-17.5. Revenue bonds payable out of excise tax revenues.
16 (1) To the extent constitutionally permissible, cities, towns, or counties may issue bonds
17 payable solely from a special fund into which are to be deposited excise taxes levied and collected
18 by the city, town, or county, or excise taxes levied by the state and rebated pursuant to law to the
19 city, town, or county, or any combination of those excise taxes, or may pledge all or any part
20 thereof as an additional source of payment for their general obligation bonds. [For purposes of this
21 section, excise tax revenues include class B and class C road funds apportioned to counties, cities,
22 and towns under Section 72-2-108 .]
23 (2) (a) Any resolution authorizing the issuance of bonds payable in whole or in part from
24 the proceeds of excise tax revenues may contain covenants with the holder or holders of the bonds
25 as to the excise tax revenues, the disposition of the excise tax revenues, the issuance of future
26 bonds, and other pertinent matters [as may be deemed] that are considered necessary by the
27 governing body to assure the marketability of those bonds, provided the covenants are not

28 inconsistent with the provisions of this chapter. [Such]
29 (b) The resolution may also include provisions to insure the enforcement, collection, and
30 proper application of excise tax revenues as the governing body may think proper.
31 (c) The proceeds of bonds payable in whole or in part from pledged class B or C road
32 funds shall be used to construct, repair, and maintain streets and roads in accordance with Sections
33 72-6-108 and 72-6-110 and to fund any reserves and costs incidental to the issuance of the bonds.
34 (d) When any bonds payable from excise tax revenues have been issued, the resolution or
35 other enactment of the governing body imposing the excise tax and pursuant to which the tax is
36 being collected, the obligation of the governing body to continue to levy, collect, and allocate the
37 excise tax, and to apply the revenues derived therefrom in accordance with the provisions of the
38 authorizing resolution or other enactment, shall be irrevocable until the bonds have been paid in
39 full as to both principal and interest, and is not subject to amendment in any manner which would
40 impair the rights of the holders of those bonds or which would in any way jeopardize the timely
41 payment of principal or interest when due.
42 (3) (a) The state pledges to and agrees with the holders of any bonds issued by a city, town,
43 or county to which the proceeds of excise taxes collected by the state and rebated to the city, town,
44 or county are devoted or pledged as authorized in this section, that the state will not alter, impair,
45 or limit the excise taxes in a manner that reduces the amounts to be rebated to the city, town, or
46 county which are devoted or pledged as authorized in this section until the bonds or other
47 securities, together with applicable interest, are fully met and discharged.
48 (b) Nothing in this [section may preclude such] Subsection (3) precludes alteration,
49 impairment, or limitation of excise taxes if adequate provision is made by law for the protection
50 of the holders of the bonds.
51 (c) Each city, town, or county may include this pledge and undertaking for the state in
52 those bonds.
53 (4) The outstanding bonds to which excise tax revenues have been pledged as the sole
54 source of payment may not at any one time exceed an amount for which the average annual
55 installments of principal and interest will exceed 80% of the total excise tax revenues received
56 by the issuing entity from the collection or rebate of the excise tax revenues during the fiscal year
57 of the issuing entity immediately preceding the fiscal year in which the resolution authorizing the
58 issuance of bonds is adopted.

59 (5) Bonds issued solely from a special fund into which are to be deposited excise tax
60 revenues constitutes a borrowing solely upon the credit of the excise tax revenues received or to
61 be received by the city, town, or county and does not constitute an indebtedness or pledge of the
62 general credit of the city, town, or county. [To the extent constitutionally permissible, such bonds
63 are not subject to the limitations of Article XIV, Utah Constitution nor to any statutory provisions
64 implementing that article.]
65 (6) (a) Before issuing any bonds under this section, a city, town, or county shall:
66 (i) give public notice of its intent to issue the bonds; and
67 (ii) hold a public hearing to receive input from the public with respect to the issuance of
68 the bonds.
69 (b) The city, county, or town shall:
70 (i) publish the notice once each week for two consecutive weeks in the official newspaper
71 as designated under Section 11-14-21 , with the first publication being not less than 14 days before
72 the public hearing; and
73 (ii) ensure that the notice identifies:
74 (A) the purpose for the issuance of the bonds;
75 (B) the maximum principal amount of the bonds to be issued;
76 (C) the excise taxes proposed to be pledged for repayment of the bonds; and
77 (D) the time, place, and location of the public hearing.
78 (7) A city, town, or county shall submit the question of whether or not to issue any bonds
79 under this section to voters for their approval or rejection if, within 30 calendar days after the
80 notice required by Subsection (6), a written petition requesting an election and signed by at least
81 20% of the registered voters in the city, town, or county is filed with the city, town, or county.




Legislative Review Note
as of 2-9-01 9:39 AM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel