HOUSE BILL NO. 383
AS AMENDED BY
HOUSE AMENDMENT NO. 1
AN ACT AUTHORIZING THE STATE OF DELAWARE TO ISSUE GENERAL OBLIGATION BONDS TO FINANCE CUMULATIVE GENERAL FUND OBLIGATIONS OF THE STATE INCURRED OR TO BE INCURRED THROUGH JUNE 30, 1977, AND PROVIDING A MEANS OF SECURING REPAYMENT OF SUCH BONDS.
WHEREAS, the State of Delaware (the "State") anticipates that revenues of the State available in its General Fund to pay existing obligations and obligations to be incurred through June 30, 1977, and payable from the General Funds will be approximately $30 million less than such obligations incurred or to be incurred; and
WHEREAS, the State has determined that the only means of meeting such cumulative General Fund obligations and debts is through the issuance of its general obligation bonds; and
WHEREAS, legislation is pending in the 129th General Assembly which would increase certain existing taxes and fees to provide additional revenue to the State to meet the anticipated payments of the principal of and interest on such proposed general obligation bonds; and
WHEREAS, the State has determined that such increased taxes and fees will produce additional General Fund revenue sufficient to pay the principal of and interest on such general obligation bonds; and
WHEREAS, the State has determined to set aside such additional General Fund revenue in an amount equivalent to the debt service on such proposed issue of bonds in order to meet payments on the principal of and interest on such general obligation bonds; and
WHEREAS, the State now wishes to authorize the issuance of such general obligation bonds and to set aside such revenues to pay the principal of and interest on such general obligation bonds in order to alleviate the fiscal difficulties of the State, to permit the State to continue to meet its obligations, to restore the financial health of the State and investor confidence in the State, to provide balanced budgets for the State and to preserve the credit of the State.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-fourths of all the members elected to each House thereof concurring therein):
Section 1. The State is hereby authorized to issue its General Obligation Bonds (the "Bonds") in the•aggregate principal amount not exceeding $30 million for the purpose of providing funds to pay obligations of the State payable from its General Fund.
Section 2. The proceeds of such Bonds are hereby appropriated to the General Fund to meet General Fund obligations incurred or to be incurred and payable prior to June 30, 1977, including the expenses incurred by the State in connection with the issuance of the Bonds.
Section 3. The State hereby pledges its faith and credit
to the payment of the principal of and interest on the Bonds. The annual Budget Appropriation Act for each fiscal year during which the Bonds are outstanding and unpaid shall contain under the debt service item funds sufficient to pay payments on the principal of and interest on the Bonds when they become due and payable.
Section 4. The Issuing Officers, as defined in Title 29, Chapter 74, Delaware Code, as amended, are hereby authorized to issue the Bonds at any time and from time to time on or prior to June 30, 1977. Notwithstanding any other provision of law to the contrary, the Bonds shall have such maturities and shall be sold at public or private sale, in a manner to be determined by the Issuing Officers, shall bear interest at such rate or rates, be in such denominations, be in such form, either coupon or registered, carry such registration privileges, be executed in such manner, be payable in such medium of payment, at such place or places and be subject to such terms of redemption, all as the resolutions of the Issuing Officers shall provide, subject to this Act. The Issuing Officers may refund or reissue the Bonds from time to time, but any Bonds authorized pursuant to this Act shall be retired on or before December 30, 1979.
Section 5. The State shall set aside in a special account for the payment of the principal of and interest on the Bonds certain State revenues payable to the General Fund, in the amount
and manner hereinafter specified. The State hereby creates a special account in the General Fund to be entitled "The State of Delaware General Obligation Bonds (Special General Fund Issue) Account" (the "Account"). The monies in the Account shall be kept separate and apart from all other monies in the custody of the State and shall be deposited in a segregated bank account in Farmers Bank of the State of Delaware (the "Farmers Bank"). Money in the account shall be held for the benefit of the holders of Bonds and disbursed solely for the payment of the principal of
and interest on such Bonds, subject to this Act.
Section 6 (a). No later than the fifteenth day of each calendar month succeeding the calendar month in which the Bonds are first issued, the Secretary of Finance and the State Treasurer shall determine the amount of revenues deposited in the General Fund during the preceding calendar month which were attributable to the taxes imposed pursuant to Chapters 19 and 51, Title 30, Delaware Code, (Corporation Income Tax and Motor Fuel Tax) and Chapters 11 and 18, Title 5, Delaware Code, (Bank & Trust Company) Tax and Building & Loan Association Tax) and fees imposed pursuant to Section 391 (a) (10) of Title 8, Delaware Code, and shall transfer a portion of such revenues to the Account.
(b) The portion of such revenues to be transferred to the Account shall be that portion of such revenues which the Secretary of Finance and State Treasurer determine are attributable to:
(i) any increase in the rate of tax imposed by Chapter 19 of Title 30, Delaware Code, and Chapters 11 and 18, Title 5, Delaware Code, on and after January 1, 1977, over the rate of tax imposed by said Chapters prior to January 1, 1977;
(ii) any increase in the rate of tax imposed by Chapter 51, Title 30, Delaware Code, on and after July 1, 1977 over the rate of tax imposed by said Chapter prior to July 1, 1977; and
(iii) any increase in the fees imposed pursuant to Section 391 (a) (10), Title 8, Delaware Code, on and after July 1, 1977 over the fee imposed by said Section prior to July 1, 1977.
(c) After making provisions for the payment of the principal of and interest on other bonds or notes to which the State's faith and credit is pledged and that become due and payable before the principal of or interest on the Bonds next becomes payable, the State Treasurer shall set aside, in the
Account, such amounts as determined by the Secretary of Finance the State Treasurer after making provision for the payment.
Section 7. Ten days before any interest or principal payment date of the Bonds, the State Treasurer shall set aside in the Account, from any receipts on hand in the General Fund, money sufficient to pay the principal of and interest on the Bonds next due if money on hand in the Account is insufficient to pay the principal of and interest on the Bonds next due. If receipts on hand in the General Fund are insufficient to make the required payment to the Account, the State Treasurer shall transfer to the Account money thereafter received in the General Fund until the balance in the Account is sufficient to pay principal of and interest on the Bonds next due. Before transferring such money to the Account, the State Treasurer will make provision for the payment of the principal of or interest on other bonds or notes to which the State's faith and credit is pledged and that become due and payable within such ten day period.
Section 8. When the amount in the Account is sufficient to pay in full the principal of and interest on all the outstanding Bonds, the State Treasurer shall deliver a certificate to that effect to the Governor, the Speaker of the House of Representatives, and the President Pro-Tempore of the Senate. Thereafter, the
State Treasurer shall not set aside any state revenues in the Account. When such Certificate is delivered, any monies remaining in the Account in excess of those required to pay in full
the principal of and interest on the oustanding Bonds shall revert to the General Fund.
Section 9. The State hereby pledges the money on deposit in the Account to the payment of the principal of and interest on the Bonds. Such pledge shall be valid and binding from the time when such pledge takes effect and the revenues pledged and thereafter deposited by the State in the Account shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of such pledge shall be valid and binding against all parties having claims of any kind in tort, contract, or otherwise against the State irrespective
of whether such parties have notice thereof.
Section 10. Money in the Account shall be collateralized in the manner and subject to the conditions for securing State funds set forth in the Assistance Agreement, dated May 20, 1976,
as amended (the "Assistance Agreement") by and between the State, Farmers Bank and the Federal Deposit Insurance Corporation and in the Collateral Agreement between the State and the Farmers Bank, dated June 10, 1976 and in Section 2704, Chapter 27, Title
29, Delaware Code, as amended.
Section 11. Monies in the Account shall be included in monies to be held by the State in an account in the Farmers Bank under the Assistance Agreement and shall not be invested. by the State, unless required to be invested pursuant to the
provisions of Section 2704, Chapter 27, Title 29, Delaware Code, as amended.
Section 12. This act shall take effect upon adoption notwithstanding any act limiting the amount of general•obligation bonds to be authorized by the State in any fiscal year. The aggregate principal amount of bonds retired in any State fiscal year shall not be taken into consideration when determining the aggregate principal amount of general obligation bonds that may be authorized by the General Assembly in any State fiscal year.
Approved June 8, 1977.