Update summary schedules relating to bonding and debt service that appear for informational purposes.
[Act 9 Section: 171] [Bill Section: 171]
BUDGET AND COMPENSATION RESERVES
Budget Change Items
1. REQUIRED GENERAL FUND STATUTORY BALANCE [LFB Paper 240]
Governor: Modify the requirement that the state maintain a statutory reserve equal to 1% of gross general fund appropriations plus compensation reserves in each fiscal year of a biennium to increase that percentage amount, beginning in 2000-01, as follows to the following percentages:
Fiscal Year Percent
2000-01 1.1%
2001-02 1.2
2002-03 1.4
2003-04 1.6
2004-05 1.8
2005-06 (and thereafter) 2.0
Assembly: Delete the Governor and Joint Finance provision which would have increased the general fund statutory balance from the current 1% of gross general fund appropriations plus compensation reserves in each fiscal year of a biennium, beginning in 2000-01, to a maximum of 2.0% in fiscal year 2005-06 .
Senate/Legislature: Delete the Governor and Joint Finance provision which would have increased the general fund statutory balance from the current 1% of gross general fund appropriations plus compensation reserves in each fiscal year of a biennium, beginning in 2000-01, to a maximum of 2.0% in fiscal year 2005-06. Instead, provide that the general fund statutory balance requirement would increase from the current 1% reserve requirement according to the following schedule:
Fiscal Year Percent
2001-02 1.2%
2002-03 1.4
2003-04 1.6
2004-05 1.8
2005-06 (and thereafter) 2.0
2. COMPENSATION RESERVES
Veto by Governor [F-12]: Modify the schedule as passed by the Legislature to increase the statutory balance requirement for 2000-01 (the second year of the 1999-01 biennium) to 1.2%. However, also as a result of the partial veto, no statutory reserve percentage would be specified for the first fiscal year of the next biennium (2001-02). Under the bill as passed by the Legislature, the dollar amount of the 1% statutory reserve requirement for fiscal year 2000-01 was $112,784,100. Had the 1.2% statutory balance applied to the bill as passed by the Legislature, the dollar amount of the statutory reserve for 2000-01 would have been $135,340,900. However, as a result of partial vetoes, the required statutory balance for 2000-01 under Act 9 is $134,118,900.
[Act 9 Sections: 168 and 169]
[Act 9 Vetoed Section: 169]
[Bill Sections: 168 and 169]
Governor: Provide, in the 1999-01 general fund condition statement, total compensation reserves of $ 98,327,700 in 1999-01 and $211,259,800 for the increased costs of state employe salaries and fringe benefits. Total compensation reserve amounts by fund source are shown in the table below.
Fund Source 1999-00 2000-01
General Purpose Revenue $44,100,000 $94,750,000
Federal Revenue 12,536,800 26,935,600
Program Revenue 33,814,900 72,652,300
Segregated Revenue 7,876,000 16,921,900
Total $98,327,700 $211,259,800
Details on the components included by the Governor in these reserve amounts were not provided by the administration. However, typically included in compensation reserves are amounts to pay for: (a) the employer share of state employe health insurance premium increases in the next biennium; (b) the prior year's increase in the employer share of health insurance premium increases (because these were not included in agencies' adjusted base levels); (c) the costs of length of service payments for classified state employes; and (d) a reserve amount for the cost of pay plan and collective bargaining agreement pay increases in the next biennium which have yet to be determined. It is estimated that, after deducting amounts for potential costs increases other than across-the-board pay increases, there would be sufficient funds to provide a uniform across-the-board pay increase to all state employes of approximately 2% in 1999-00 and approximately 3% in 2000-01. However, actual employe pay plan and collective bargaining agreements for 1999-01 may not necessarily provide such uniform increases.
Conference Committee/Legislature: Modify the Governor and Joint Finance provision to provide additional funds for compensation reserves as follows:
Increases to Compensation Reserves
Fund Source 1999-00 2000-01 Biennial Total
General Purpose Revenue $12,000,000 $23,000,000 $35,000,000
Federal Revenue 3,411,400 6,538,500 9,949,900
Program Revenue 9,201,400 17,635,900 26,837,300
Segregated Revenue 2,143,100 4,107,700 6,250,800
Total $26,755,900 $51,282,100 $78,038,000
With these increases, the total level of compensation reserves approved by the Legislature is shown in the table below.
Total 1999-01 Compensation Reserves
Fund Source 1999-00 2000-01
General Purpose Revenue $56,100,000 $117,750,000
Federal Revenue 15,948,200 33,474,100
Program Revenue 43,016,300 90,288,200
Segregated Revenue 10,019,100 21,029,600
Total $125,083,600 $262,541,900
3. TRANSFER TO BUDGET STABILIZATION FUND
Joint Finance/Legislature: Require the Legislative Fiscal Bureau to certify the estimated general fund expenditures for general obligation debt service for 1999-00 and 2000-01 to the Joint Committee on Finance by January 31, 2000, for the Committee's approval under a 14-day passive review process. Specify that if the amount of the estimated general fund expenditures, as reported in the Chapter 20 schedule of the biennial budget bill, exceeds the estimated 1999-00 expenditures, as approved, an amount equal to the excess shall be transferred to the budget stabilization fund on or before June 30, 2000.
Specify that if the amount of the estimated general fund expenditures, as reported in the Chapter 20 schedule of the biennial budget bill, exceeds the estimated 2000-01 expenditures, as approved, an amount equal to the excess shall be transferred to the budget stabilization fund on or before June 30, 2001.
Require the Legislative Fiscal Bureau to certify the estimated general fund expenditures for general obligation debt service for 2000-01 to the Joint Committee on Finance by January 31, 2001, for the Committee's approval under a 14-day passive review process. Specify that if the amount of the estimated general fund expenditures, as reported in the Chapter 20 schedule approved under section 20.004(2) of the statutes, exceeds the estimated 2000-01 expenditures, as approved, an amount equal to the excess shall be transferred to the budget stabilization fund on or before June 30, 2001.
[Act 9 Section: 9258(1d)]
BUILDING COMMISSION
Budget Change Items
1. DEBT SERVICE REESTIMATE [LFB Paper 245]
Governor: Increase funding by $8,511,000 in 1999-00 and $17,600,400 in 2000-01 to reestimate debt service. Reestimates are associated with the following: (a) $9,728,900 in 1999-01 and $19,244,700 in 2000-01 for debt service on borrowing not initially allocated to specific programs; (b) -$1,176,800 in 1999-00 and -$1,603,200 in 2000-01 for debt service for capitol and executive residence projects; and (c) -$41,100 annually for debt service for the One West Wilson parking ramp project in Madison.
Joint Finance/Legislature: Decrease funding by $26,028,100 in 1999-00 and $10,684,300 in 2000-01 to reestimate debt service. Reestimates are associated with the following: (a) -$19,004,700 in 1999-01 and -$8,506,800 in 2000-01 for debt service on borrowing not initially allocated to specific programs; (b) -$7,073,300 in 1999-00 and -$2,177,500 in 2000-01 for debt service for capitol and executive residence projects; and (c) $49,900 in 1999-00 for debt service on financing of capital improvements.
2. REVENUE OBLIGATIONS [LFB Paper 246 ]
Governor: Expand the definition of revenue obligations to include one or both of two types of obligations: (a) an enterprise obligation, which includes all revenue obligations types authorized under current law, but modifies certain provisions associated with these types of obligations; and (b) a special fund obligation, which would be created under the bill. Authorize the Building Commission to issue both types of revenue obligations. Under current law the Building Commission may issue revenue obligations to purchase, acquire, lease, construct, improve, operate or manage a revenue-producing enterprise. The obligations are payable solely from, and are secured solely by, the property or income from the revenue-producing enterprise.
Enterprise Obligations. Under the bill, enterprise obligations would be similar to current law revenue obligations, except that: (a) the requirement that the obligations be payable solely from, and are secured solely by, the property or income from the revenue producing enterprise would be eliminated; (b) a provision related to defeasance of the obligations could be included in a resolution authorizing enterprise obligations if the Commission deems that the provisions are needed to increase the marketability of the obligations or to protect the security interests of the holders of the obligations; (c) the income and property of the revenue-producing enterprise or program, rather than the enterprise itself, would be specified as subject to a lien until provision for payment in full has been made as provided in the authorizing resolution; and (d) acquisitions, expansions or improvements would be added to the list of purposes for which any reserved funds could be used in the event that no deficiency exists in the redemption fund.
Special Fund Obligations. Create a new type of revenue obligation called a "special fund obligation" which would be defined as every undertaking by the state to repay a certain amount of borrowed money that is both payable from a special fund consisting of fees, penalties or excise taxes and is not considered public debt. A special fund and special fund obligations would not require a revenue-generating enterprise. Special fund obligations could be used to fund special fund programs. A special fund program would be any state program or purpose, for which the Legislature has determined that special obligation financing is appropriate and serves a public purpose. The special fund would be a separate and distinct fund established in the state treasury or in an account maintained by a trustee. The state department or agency head would have authority to set the funding requirements for a special fund program, not to exceed the amount specified by the Legislature to be paid from special fund obligations.
Establish the following requirements related to special fund obligations.
a. A security interest for the benefit of the owners of the obligations, would be established in amounts that arise in the special fund related to the obligations, after the special fund program is created. Specify that amounts in the special fund would be accounted for on a first-in, first-out basis. Provide that no physical delivery, recordation or other action would be required to perfect the security interest. The special fund would remain subject to the security interest until provision for full payment of principal and interest of the obligation have been made as provided in the authorizing resolution. An owner of a special fund obligation could either at law, or in equity, protect or enforce the security interest and compel performance of all duties and requirements related to special fund obligations.
b. The Commission, and the agency carrying out the special fund program responsibilities would be required to jointly determine the conditions under which the money in the special fund would be set aside and applied to payment of the principal and interest of the obligations or deposited in funds established under the authorizing resolution or made available for other purposes. The Commission would be required to include the conditions and uses of the special fund money in the authorizing resolution.
c. The special fund revenues that are set aside for the payment of the principal and interest of the special fund obligations would be paid into a separate fund in the treasury or in an account maintained by a trustee to be identified as "the . . . redemption fund." All moneys in the fund would be irrevocably appropriated and expended in sums sufficient only for the payment of principal and interest and premiums, if any, due upon redemption of the obligations under which the redemption fund was created. Moneys in the redemption funds could be commingled only for the purpose of investment with other public funds. The moneys could be invested only in direct obligations of the United States. All such investments would be the exclusive property of the fund and all earnings on or income from such investments would be credited to the fund.
d. If any surplus accumulates in any of the redemption funds, subject to contract rights vested in the owners of special fund obligations security, it would be required to be paid over to the treasury.
e. The Commission could provide in the authorizing resolution for special fund obligations, or by subsequent action, all things necessary to carry out the issuing of special obligations. Any authorizing resolution would constitute a contract with the owners of any special fund obligations issued pursuant to the resolution. An authorizing resolution could include provisions that the Commission deems are needed to increase the marketability of the obligations or to protect the security interests of the holders of the obligations. These provisions could be related to the employment of consultants, records and accounts, establishment of reserve or other funds, the issuance of additional obligations, the deposit of special obligation proceeds or revenues of the special fund in trust, including the appointment of depositories or trustees and the defeasance of obligations
Termination of Funds. If, after all outstanding related revenue obligations have been paid or payment provided for, any moneys that remain in an enterprise or special obligation fund, including those held by a trustee, would be paid over to the treasury and the fund would be closed.
Refunding Bonds. Specify that the provisions relating to enterprise obligations and special fund obligations would apply to refunding bonds, to the extent they are not inconsistent with current law governing refunding bonds.
Existing Obligations. Extend the provisions and requirements associated with enterprise obligations and special fund obligations to existing revenue obligations and their associated program purposes. Under current law, the clean water fund and the Departments of Transportation and Veterans Affairs use revenue obligations for program purposes.
Other Changes. Clarify that references to public debt under the revenue obligation statutes would refer to revenue obligations and that references to evidences of indebtedness would refer to evidences of revenue obligations. Modify current law references to bond holders, to instead refer to owners of bonds.
Joint Finance/Legislature: Include provision with the following minor adjustments: (a) modify the remaining statutory references to revenue bonds or revenue obligation bonds to refer instead to revenue obligations; (b) include references to the special fund obligations created under the bill in certain statutes relating to refunding obligations and the undertakings of the state with respect to the obligations; (c) delete the statutory enumeration of examples of provisions that are to be included in the authorizing resolution for enterprise and special fund obligations and adjust the cross-references to this enumeration to refer instead to the authorizing resolution itself
