Chapter 11 Oregon Laws 2003

AN ACT

SB 856

Relating to state finance; creating new provisions; amending ORS 293.537; repealing sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18 and 19, chapter 2, Oregon Laws 2002 (fifth special session); appropriating money; limiting expenditures; and declaring an emergency.

Be It Enacted by the People of the State of Oregon:

SECTION 1. As used in sections 1 to 5 of this 2003 Act, unless the context requires otherwise:

(1) “Appropriated moneys” means:

(a) Moneys that are specifically appropriated or otherwise made available by the Legislative Assembly or the Emergency Board to pay Oregon Appropriation Bonds or bond-related costs; and

(b) Other moneys appropriated to the Oregon Department of Administrative Services that may lawfully be applied to pay Oregon Appropriation Bonds or bond-related costs.

(2) “Bond-related costs” means:

(a) The costs and expenses of issuing, administering and maintaining Oregon Appropriation Bonds, including but not limited to paying or redeeming the bonds, paying amounts due in connection with credit enhancements or other instruments authorized by section 2 of this 2003 Act and paying the administrative costs and expenses of the State Treasurer and the department, including the cost of consultants or advisors retained by the State Treasurer or the department for the bonds;

(b) The cost of funding bond reserves;

(c) Capitalized interest for Oregon Appropriation Bonds;

(d) Rebates or penalties due to the United States in connection with Oregon Appropriation Bonds; and

(e) Other costs or expenses that the State Treasurer or the Director of the Oregon Department of Administrative Services determines are necessary or desirable in connection with issuing, administering and maintaining Oregon Appropriation Bonds.

(3) “Oregon Appropriation Bond Administrative Fund” means the fund created by section 4 of this 2003 Act.

(4) “Oregon Appropriation Bond Fund” means the fund created by section 3 of this 2003 Act.

(5) “Oregon Appropriation Bonds” means bonds authorized by section 2 (1) of this 2003 Act.

(6) “Refunding Oregon Appropriation Bonds” means bonds authorized by section 2 (2) of this 2003 Act and issued for the purpose of refunding Oregon Appropriation Bonds.

(7) “Tax-exempt obligations” means obligations that bear interest that is excludable from gross income under federal income tax laws.

SECTION 2. (1) In accordance with the applicable provisions of ORS chapters 286 and 288 and sections 1 to 5 of this 2003 Act, the State Treasurer, with the concurrence of the Director of the Oregon Department of Administrative Services, may issue during the 2001-2003 biennium, in one or more series, Oregon Appropriation Bonds in an aggregate principal amount that raises net proceeds of not more than $450 million to finance budget deficits that are expected to occur in the 2001-2003 biennium, plus an additional amount of proceeds determined by the State Treasurer to pay bond-related costs. Net proceeds in the amount of not more than $450 million from the sale of Oregon Appropriation Bonds must be credited to the General Fund for purposes for which moneys in the General Fund may be expended. The State Treasurer may issue Oregon Appropriation Bonds as tax-exempt obligations or as obligations that bear interest that is includable in gross income under federal income tax laws. The State Treasurer, with the concurrence of the director, shall structure Oregon Appropriation Bonds so that they mature or are redeemable as rapidly as the State Treasurer determines that projections of future revenues or other available moneys reasonably permit.

(2) The State Treasurer, at the request of the Oregon Department of Administrative Services, may issue, in one or more series, Refunding Oregon Appropriation Bonds in addition to the bonds authorized by subsection (1) of this section. Refunding Oregon Appropriation Bonds may be issued in amounts the State Treasurer determines are necessary or appropriate to pay or defease the bonds to be refunded and to pay bond-related costs.

(3) The State Treasurer or the director may:

(a) Enter into a trust agreement or execute a bond declaration that details the provisions of each series of Oregon Appropriation Bonds and contains covenants of the state that enhance the security for, and reduce the interest expense of, Oregon Appropriation Bonds;

(b) Appoint and enter into appropriate contracts with bond or disclosure counsel in accordance with ORS 288.523; and

(c) Retain the services of and enter into appropriate contracts for financial consultants, underwriters, paying agents and other professional service providers in connection with the issuance, administration and maintenance of Oregon Appropriation Bonds.

(4) By enacting this subsection, the Legislative Assembly acknowledges its current intention to apply the moneys available to the state under the Master Settlement Agreement, as defined in ORS 293.533, and moneys received in replacement for those moneys, to pay Oregon Appropriation Bonds and to provide any other appropriated moneys that are required to pay Oregon Appropriation Bonds when due. However:

(a) Oregon Appropriation Bonds issued under this section are special obligations of the State of Oregon that are payable solely from appropriated moneys and other moneys pledged pursuant to this section. The faith and credit of the State of Oregon and its taxing power are not pledged and may not be pledged or committed to the payment of Oregon Appropriation Bonds or the obligations authorized by this section. Oregon Appropriation Bonds and the obligations authorized by this section may not be secured by or payable from assets of this state other than appropriated moneys and other moneys pledged pursuant to this section.

(b) The State of Oregon and the Legislative Assembly are not under a legal compulsion to provide appropriated moneys or other moneys to pay Oregon Appropriation Bonds or obligations authorized by this section and are not liable for not providing appropriated moneys.

(c) All Oregon Appropriation Bonds and obligations authorized by this section must contain a statement that:

(A) The State of Oregon is not obligated to pay those obligations from any source except appropriated moneys and other moneys pledged pursuant to this section; and

(B) Neither the full faith and credit nor the taxing power of the State of Oregon are pledged to pay those obligations.

(5) The State Treasurer may pledge all or a portion of the moneys that are credited to the Oregon Appropriation Bond Fund and unexpended proceeds of Oregon Appropriation Bonds, if any, to pay Oregon Appropriation Bonds and obligations authorized by this section and to fund bond reserves authorized by this section. The pledge shall be perfected and otherwise have the effect that is stated in ORS 288.594.

(6) The State Treasurer may establish bond reserves for Oregon Appropriation Bonds. The bond reserves may be in the form of cash, investments, surety bonds, municipal bond insurance, lines of credit, letters of credit or other similar instruments. The State Treasurer, on behalf of the State of Oregon, may covenant to maintain the reserves at particular levels, but solely from appropriated moneys and other moneys that may be pledged pursuant to this section.

(7) The State Treasurer or the director may take actions that are required so that Oregon Appropriation Bonds are not “arbitrage bonds” under federal income tax laws, including but not limited to investing moneys of the state at a limited yield, investing moneys of the state in obligations that pay interest that is excludable from gross income under the federal income tax laws and redeeming Oregon Appropriation Bonds from any legally available source of moneys.

(8) The State Treasurer, or the director with the consent of the State Treasurer, may enter into covenants for the benefit of the owners of Oregon Appropriation Bonds and providers of credit enhancements or instruments authorized by this section, including but not limited to the following covenants:

(a) To include in the Governor's budget request to the Legislative Assembly for each fiscal period a request for appropriated moneys in amounts sufficient to permit the payment of all amounts required in the fiscal period to pay Oregon Appropriation Bonds, obligations authorized by this section and bond-related costs.

(b) If appropriated moneys and other moneys available in the Oregon Appropriation Bond Fund are not sufficient to pay Oregon Appropriation Bonds or obligations authorized by this section or to maintain bond reserves for Oregon Appropriation Bonds at required levels, to notify the Governor and either the Legislative Assembly or the Emergency Board of the amount of additional appropriated moneys required to permit timely payment of Oregon Appropriation Bonds and the obligations authorized by this section and to maintain bond reserves at required levels.

(c) To maintain a minimum balance in reserve accounts established for Oregon Appropriation Bonds, but solely from appropriated moneys and other moneys pledged pursuant to this section.

(d) To pay Oregon Appropriation Bonds and amounts due under obligations authorized by this section, but solely from appropriated moneys and other moneys pledged pursuant to this section.

(e) To apply all appropriated moneys and other moneys pledged pursuant to this section to the extent required to pay Oregon Appropriation Bonds and obligations authorized by this section when due.

(f) To take actions required so that Oregon Appropriation Bonds that are issued as tax-exempt obligations continue to bear interest that is excludable from gross income under federal income tax laws.

(g) To comply with sections 1 to 5 of this 2003 Act and to take actions authorized by sections 1 to 5 of this 2003 Act.

(9) Covenants made under this section for the benefit of owners of Oregon Appropriation Bonds constitute contracts between the State of Oregon and the owners of Oregon Appropriation Bonds.

(10) If the State Treasurer determines that the acquisition is cost-effective, the State Treasurer may acquire municipal bond insurance policies, letters of credit, lines of credit, surety bonds or other credit enhancement devices for Oregon Appropriation Bonds and may enter into related agreements.

(11) The State Treasurer may:

(a) Provide that all or a portion of the Oregon Appropriation Bond Fund, the Oregon Appropriation Bond Administrative Fund or accounts in either fund shall be held by one or more trustees;

(b) Enter into agreements with those trustees regarding the use and application of the moneys held in those funds and accounts; and

(c) Transfer amounts credited to those funds and accounts to those trustees.

SECTION 3. (1) The Oregon Appropriation Bond Fund is established in the State Treasury separate and distinct from the General Fund. Earnings on moneys in the Oregon Appropriation Bond Fund shall be credited to the Oregon Appropriation Bond Fund. In addition, each fiscal year, the Oregon Department of Administrative Services shall credit the first available appropriated moneys to the Oregon Appropriation Bond Fund until the fund contains an amount sufficient to pay the principal and interest on Oregon Appropriation Bonds that are scheduled to be paid in the fiscal year and the amounts that are due under obligations authorized by section 2 of this 2003 Act.

(2) The bond reserves established by the State Treasurer under section 2 of this 2003 Act for Oregon Appropriation Bonds must be credited to an account in the Oregon Appropriation Bond Fund designated by the State Treasurer.

(3) The moneys credited to the Oregon Appropriation Bond Fund are continuously appropriated to the department for the purpose of paying Oregon Appropriation Bonds and obligations authorized by section 2 of this 2003 Act and funding bond reserves established under section 2 of this 2003 Act. Except as provided in section 4 of this 2003 Act, once appropriated moneys or other moneys are credited to the Oregon Appropriation Bond Fund, those moneys may not be used for another purpose.

(4) The State Treasurer may establish accounts and subaccounts within the Oregon Appropriation Bond Fund that the State Treasurer determines are necessary or appropriate. In addition, the State Treasurer or the Director of the Oregon Department of Administrative Services may, on behalf of this state, enter into agreements that the State Treasurer determines are necessary or appropriate to issue, administer and maintain Oregon Appropriation Bonds and carry out sections 1 to 5 of this 2003 Act.

SECTION 4. The Oregon Appropriation Bond Administrative Fund is established in the State Treasury separate and distinct from the General Fund. The Oregon Department of Administrative Services may credit to the Oregon Appropriation Bond Administrative Fund appropriated moneys that remain in a fiscal year after the credits described in section 3 of this 2003 Act have been made. The proceeds of Oregon Appropriation Bonds issued to pay bond-related costs and the earnings on moneys in the Oregon Appropriation Bond Administrative Fund shall be credited to the Oregon Appropriation Bond Administrative Fund. Moneys credited to the Oregon Appropriation Bond Administrative Fund are continuously appropriated to the department for the purpose of paying bond-related costs.

SECTION 5. (1) Jurisdiction is conferred on the Supreme Court to determine in the manner provided by this section the validity of any provision of sections 1 to 5 of this 2003 Act and amendments to sections 1 to 5 of this 2003 Act.

(2) Under the jurisdiction conferred in subsection (1) of this section, a person aggrieved by a provision of sections 1 to 5 of this 2003 Act or an amendment to sections 1 to 5 of this 2003 Act may petition the Supreme Court for review. The petition must state the facts showing how the petitioner is aggrieved and the grounds upon which the petition is based. The petition must be filed within 30 days of the effective date of this 2003 Act, or within 30 days of the effective date of an amendment to sections 1 to 5 of this 2003 Act.

(3) A person petitioning for review under this section is not required to exhaust administrative remedies or file in another court prior to filing a petition for review under this section.

(4) A petition for review under this section must present a justiciable controversy. The petitioner must serve a copy of the petition on the Attorney General at the time of filing.

(5) The Supreme Court shall give priority on its docket to a petition for review filed under this section over other civil matters, except matters related to an election, and shall expedite a decision on the petition. The Supreme Court may consolidate on its own motion one or more petitions filed under this section alleging a similar basis or bases of challenge.

(6) The petition for review provided for in this section is in addition to any other remedy or procedure that may be available to a person aggrieved by a provision of sections 1 to 5 of this 2003 Act or an amendment to sections 1 to 5 of this 2003 Act.

SECTION 6. Notwithstanding any other law limiting expenditures, the amount of $6,643,773 is established for the biennium beginning July 1, 2001, as the maximum limit for payment of expenses by the Oregon Department of Administrative Services from the Oregon Appropriation Bond Administrative Fund for the purpose of paying bond-related costs authorized by section 2 of this 2003 Act.

SECTION 7. Sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18 and 19, chapter 2, Oregon Laws 2002 (fifth special session), are repealed.

SECTION 8. ORS 293.537, as amended by section 17, chapter 2, Oregon Laws 2002 (fifth special session), is amended to read:

293.537. (1) The Tobacco Settlement Funds Account is established as an account in the General Fund. Except as provided in [sections 1 to 16 of this 2002 fifth special session Act] section 2 of this 2003 Act, the account shall consist of all moneys paid to this state [by United States tobacco products manufacturers] under the Master Settlement Agreement of 1998.

(2) All moneys in the Tobacco Settlement Funds Account are continuously appropriated to the Oregon Department of Administrative Services to be expended as directed by the Legislative Assembly.

(3) All moneys in the Tobacco Settlement Funds Account shall be invested as provided in ORS 293.701 to 293.790.

SECTION 9. This 2003 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 2003 Act takes effect on its passage.

Approved by the Governor March 4, 2003

Filed in the office of Secretary of State March 4, 2003

Effective date March 4, 2003

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