For further information see the state fiscal estimate, which will be printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
SECTION 1. 16.527 (4) (e) of the statutes is amended to read:
16.527 (4) (e) At the time of, or in anticipation of, contracting for the appropriation obligations and at any time thereafter so long as the appropriation obligations are outstanding, the department may enter into agreements and ancillary arrangements relating to the appropriation obligations, including trust indentures, liquidity facilities, remarketing or dealer agreements, letter of credit agreements, insurance policies, guaranty agreements, reimbursement agreements, indexing agreements, or interest exchange agreements. Any payments made or received pursuant to any such agreement or ancillary arrangement shall be made from or deposited as provided in the agreement or ancillary arrangement. The determination of the department included in an interest exchange agreement that such agreement relates to an appropriation obligation shall be conclusive.
SECTION 2. 16.527 (4) (h) of the statutes is created to read:
16.527 (4) (h) 1. Subject to subd. 2., the terms and conditions of an interest exchange agreement under par. (e) shall not be structured so that, as of the trade date of the agreement, both of the following are reasonably expected to occur:
a. The aggregate expected debt service and net exchange payments relating to the agreement during the fiscal year in which the trade date occurs will be less than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable during that fiscal year if the agreement is not executed.
b. The aggregate expected debt service and net exchange payments relating to the agreement in subsequent fiscal years will be greater than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable in those fiscal years if the agreement is not executed.
2. Subd. 1. shall not apply if either of the follow occurs:
a. The department receives a determination by the independent financial consulting firm that the terms and conditions of the agreement reflect payments by the state that represent on-market rates as of the trade date for the particular type of agreement.
b. The department provides written notice to the joint committee on finance of its intention to enter into an agreement that is reasonably expected to satisfy subd. 1., and the joint committee on finance either approves or disapproves, in writing, the department's entering into the agreement within 14 days of receiving the written notice from the commission.
3. This paragraph shall not limit the liability of the state under an agreement if actual contracted net exchange payments in any fiscal year exceed original expectations.
SECTION 3. 16.53 (10) (a) of the statutes is amended to read:
16.53 (10) (a) If an emergency arises which requires the department to draw vouchers for payments which will be in excess of available moneys in any state fund, the secretary, after notifying the joint committee on finance under par. (b), may prorate and establish priority schedules for all payments within each fund, including those payments for which a specific payment date is provided by statute, except as otherwise provided in this paragraph. The secretary shall draw all vouchers according to the preference provided in this paragraph. All direct or indirect payments of principal or interest on state bonds and notes issued under subch. I of ch. 18 and payments due, if any, under an agreement or ancillary arrangement entered into under s. 18.06 (8) (a) relating to any public debt contracted under subchs. I and IV of ch. 18 have first priority. All direct or indirect payments of principal or interest on state notes issued under subch. III of ch. 18 have 2nd priority. No payment having a 1st or 2nd priority may be prorated or reduced under this subsection. All state employee payrolls have 3rd priority. The secretary shall draw all remaining vouchers according to a priority determined by the secretary. The secretary shall maintain records of all claims prorated under this subsection.
SECTION 4. 18.01 (1) of the statutes is renumbered 18.01 (1m).
SECTION 5. 18.01 (1e) of the statutes is created to read:
18.01 (1e) "Aggregate expected debt service and net exchange payments" means the sum of the following:
(a) The aggregate net payments expected to be made and received under a specified interest exchange agreement under s. 18.06 (8) (a).
(b) The aggregate debt service expected to be made on bonds related to that agreement.
(c) The aggregate net payments expected to be made and received under all other interest exchange agreements under s. 18.06 (8) (a) relating to those bonds that are in force at the time of executing the agreement.
SECTION 6. 18.01 (4) (intro.) of the statutes is amended to read:
18.01 (4) (intro.) "Public debt" or "debt" means every voluntary, unconditional undertaking by the state, other than an operating note or an interest exchange agreement, to repay a sum certain:
SECTION 7. 18.06 (8) (a) of the statutes is renumbered 18.06 (8) (a) (intro.) and amended to read:
18.06 (8) (a) (intro.) The Subject to pars. (am) and (ar), at the time of, or in anticipation of, contracting public debt and at any time thereafter while the public debt is outstanding, the commission may enter into agreements and ancillary arrangements for relating to the public debt, including liquidity facilities, remarketing or dealer agreements, letter of credit agreements, insurance policies, guaranty agreements, reimbursement agreements, indexing agreements, or interest exchange agreements. The commission shall determine all of the following, if applicable, with respect to any such agreement or ancillary arrangement:
SECTION 8. 18.06 (8) (a) 1. of the statutes is created to read:
18.06 (8) (a) 1. For any payment to be received with respect to the agreement or ancillary arrangement, whether the payment will be deposited into the bond security and redemption fund or the capital improvement fund.
SECTION 9. 18.06 (8) (a) 2. of the statutes is created to read:
18.06 (8) (a) 2. For any payment to be made with respect to the agreement or ancillary arrangement, whether the payment will be made from the bond security and redemption fund or the capital improvement fund and the timing of any transfer of funds.
SECTION 10. 18.06 (8) (am) of the statutes is created to read:
18.06 (8) (am) With respect to any interest exchange agreement or agreements specified in par. (a), all of the following shall apply:
1. The commission shall contract with an independent financial consulting firm to determine if the terms and conditions of the agreement reflect a fair market value, as of the proposed date of the execution of the agreement.
2. The interest exchange agreement must identify by maturity, bond issue, or bond purpose the debt or obligation to which the agreement is related. The determination of the commission included in an interest exchange agreement that such agreement relates to a debt or obligation shall be conclusive.
3. The resolution authorizing the commission to enter into any interest exchange agreement shall require that the terms and conditions of the agreement reflect a fair market value as of the date of execution of the agreement, as reflected by the determination of the independent financial consulting firm under subd. 1., and shall establish guidelines for any such agreement, including the following:
a. The conditions under which the commission may enter into the agreements.
b. The form and content of the agreements.
c. The aspects of risk exposure associated with the agreements.
d. The standards and procedures for counterparty selection.
e. The standards for the procurement of, and the setting aside of reserves, if any, in connection with, the agreements.
f. The provisions, if any, for collateralization or other requirements for securing any counterparty's obligations under the agreements.
g. A system for financial monitoring and periodic assessment of the agreements.
SECTION 11. 18.06 (8) (ar) of the statutes is created to read:
18.06 (8) (ar) 1. Subject to subd. 2., the terms and conditions of an interest exchange agreement under par. (a) shall not be structured so that, as of the trade date of the agreement, both of the following are reasonably expected to occur:
a. The aggregate expected debt service and net exchange payments relating to the agreement during the fiscal year in which the trade date occurs will be less than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable during that fiscal year if the agreement is not executed.
b. The aggregate expected debt service and net exchange payments relating to the agreement in subsequent fiscal years will be greater than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable in those fiscal years if the agreement is not executed.
2. Subd. 1. shall not apply if either of the follow occurs:
a. The commission receives a determination by the independent financial consulting firm under par. (am) 1. that the terms and conditions of the agreement reflect payments by the state that represent on-market rates as of the trade date for the particular type of agreement.
b. The commission provides written notice to the joint committee on finance of its intention to enter into an agreement that is reasonably expected to satisfy subd. 1., and the joint committee on finance either approves or disapproves, in writing, the commission's entering into the agreement within 14 days of receiving the written notice from the commission.
3. This paragraph shall not limit the liability of the state under an agreement if actual contracted net exchange payments in any fiscal year are less than or exceed original expectations.
SECTION 12. 18.06 (8) (b) of the statutes is amended to read:
18.06 (8) (b) The commission may delegate to other persons the authority and responsibility to take actions necessary and appropriate to implement agreements and ancillary arrangements under par. pars. (a) and (am).
SECTION 13. 18.06 (8) (d) of the statutes is created to read:
18.06 (8) (d) Semiannually, during any year in which the state is a party to an agreement entered into pursuant to par. (a) (intro.), the department of administration shall submit a report to the commission and to the cochairpersons of the joint committee on finance listing all such agreements. The report shall include all of the following:
1. A description of each agreement, including a summary of its terms and conditions, rates, maturity, and the estimated market value of each agreement.
2. An accounting of amounts that were required to be paid and received on each agreement.
3. Any credit enhancement, liquidity facility, or reserves, including an accounting of the costs and expenses incurred by the state.
4. A description of the counterparty to each agreement.
5. A description of the counterparty risk, the termination risk, and other risks associated with each agreement.
SECTION 14. 18.08 (1) (a) of the statutes is renumbered 18.08 (1) (a) (intro.) and amended to read:
18.08 (1) (a) (intro.) All moneys resulting from the contracting of public debt or any payment to be received with respect to any agreement or ancillary arrangement entered into under s. 18.06 (8) (a) with respect to any such public debt shall be credited to a separate and distinct fund, established in the state treasury, designated as the capital improvement fund, except that such:
1. Such moneys which represent premium and accrued interest on bonds or notes issued, or are for purposes of funding or refunding bonds pursuant to s. 18.06 (5), shall be credited to one or more of the sinking funds of the bond security and redemption fund or to the state building trust fund.
SECTION 15. 18.08 (1) (a) 2. of the statutes is created to read:
18.08 (1) (a) 2. Any such moneys that represent premium or any payments received pursuant to any agreement or ancillary arrangement entered into under s. 18.06 (8) (a) with respect to any such public debt may be credited to one or more of the sinking funds of the bond security and redemption fund or to the capital improvement fund, as determined by the commission.
SECTION 16. 18.08 (2) of the statutes is amended to read:
18.08 (2) The capital improvement fund may be expended, pursuant to appropriations, only for the purposes and in the amounts for which the public debts have been contracted, for the payment of principal and interest on loans or on notes, for the payment due, if any, under an agreement or ancillary arrangement entered into under s. 18.06 (8) (a) with respect to any such public debt, for the purposes identified under s. 20.867 (2) (v) and (4) (q), and for expenses incurred in contracting public debt.
SECTION 17. 18.08 (4) of the statutes is amended to read:
18.08 (4) If at any time it appears that there will not be on hand in the capital improvement fund sufficient moneys for the payment of principal and interest on loans or on notes or for the payment due, if any, under an agreement or ancillary arrangement that has been entered into under s. 18.06 (8) (a) with respect to any public debt and that has been determined to be payable from the capital improvement fund under s. 18.06 (8) (a) 2., the department of administration shall transfer to such fund, out of the appropriation made pursuant to s. 20.866, a sum sufficient which, together with any available money on hand in such fund, is sufficient to make such payment.
SECTION 18. 18.09 (2) of the statutes is amended to read:
18.09 (2) Each sinking fund shall be expended, and all moneys from time to time on hand therein are irrevocably appropriated, in sums sufficient, only for the payment of principal and interest on the bonds giving rise to it and, premium, if any, due upon refunding redemption of any such bonds, and payment due, if any, under an agreement or ancillary arrangement that has been entered into under s. 18.06 (8) (a) with respect to any such bonds and that has been determined to be payable from the bond security and redemption fund under s. 18.06 (8) (a) 2.
SECTION 19. 18.55 (6) (a) of the statutes is amended to read:
18.55 (6) (a) At the time of, or in anticipation of, contracting revenue obligations and at any time thereafter while the revenue obligations are outstanding, the commission may enter into agreements and ancillary arrangements relating to the revenue obligations, including trust indentures, liquidity facilities, remarketing or dealer agreements, letter of credit agreements, insurance policies, guaranty agreements, reimbursement agreements, indexing agreements, or interest exchange agreements. Any payment made or received pursuant to any such agreements or ancillary arrangements shall be made from or deposited into a fund relating to the relevant revenue obligation, as determined by the commission. The determination of the commission included in an interest exchange agreement that such an agreement relates to a revenue obligation shall be conclusive.
SECTION 20. 18.73 (5) of the statutes is created to read:
18.73 (5) AGREEMENTS AND ARRANGEMENTS; DELEGATION; USE OF OPERATING NOTES. (a) At the time of, or in anticipation of, contracting operating notes and at any time thereafter while the operating notes are outstanding, the commission may enter into agreements and ancillary arrangements relating to the operating notes, including liquidity facilities, remarketing or dealer agreements, letter of credit agreements, insurance policies, guaranty agreements, reimbursement agreements, indexing agreements, or interest exchange agreements. Any payment received pursuant to any such agreements or ancillary arrangements shall be deposited in, and any payments made pursuant to any such agreements or ancillary arrangements will be made from, the general fund or the operating note redemption fund, as determined by the commission. The determination of the commission included in an interest exchange agreement that such an agreement relates to an operating note shall be conclusive.
(b) The commission may delegate to other persons the authority and responsibility to take actions necessary and appropriate to implement agreements and ancillary arrangements under par. (a).
(c) Any operating notes may include operating notes contracted to fund interest, accrued or to accrue, on the operating notes.
SECTION 21. 18.74 of the statutes is amended to read:
18.74 Application of operating note proceeds. All moneys resulting from the contracting of operating notes or any payment to be received under an agreement or ancillary arrangement entered into under s. 18.73 (5) with respect to any such operating notes shall be credited to the general fund, except that moneys which represent premium and accrued interest on operating notes, or moneys for purposes of funding or refunding operating notes pursuant to s. 18.72 (1) shall be credited to the operating note redemption fund.
SECTION 22. 18.75 (2) of the statutes is amended to read:
18.75 (2) The operating note redemption fund shall be expended and all moneys from time to time on hand therein are irrevocably appropriated, in sums sufficient, only for the payment of principal and interest on operating notes giving rise to it and premium, if any, due upon refunding or early redemption of such operating notes, and for the payment due, if any, under an agreement or ancillary arrangement entered into under s. 18.73 (5) with respect to such operating notes.
SECTION 23. 18.75 (4) of the statutes is amended to read:
18.75 (4) There shall be transferred, under s. 20.855 (1) (a), a sum sufficient for the payment of the principal, interest and premium due, if any, on the and for the payment due, if any, under an agreement or ancillary arrangement entered into pursuant to s. 18.73 (5) with respect to operating notes giving rise to it as the same falls due. Such transfers shall be so timed that there is at all times on hand in the fund an amount not less than the amount to be paid out of it during the ensuing 30 days or such other period if so provided for in the authorizing resolution. The commission may pledge the deposit of additional amounts at periodic intervals and the secretary of the department may impound moneys of the general fund, including moneys temporarily reallocated from other funds under s. 20.002 (11), in accordance with the pledge of revenues in the authorizing resolution, and all such impoundments are deemed to be payments for purposes of s. 16.53 (10), but no such impoundment may be made until the amounts to be paid into the bond security and redemption fund under s. 18.09 during the ensuing 30 days have been deposited in the bond security and redemption fund.
SECTION 24. 20.115 (2) (d) of the statutes is amended to read:
20.115 (2) (d) Principal repayment and interest. A sum sufficient to reimburse s. 20.866 (1) (u) for the payment of principal and interest costs incurred in financing the acquisition, construction, development, enlargement or improvement of department facilities and, to make the payments determined by the building commission under s. 13.488 (1) (m) that are attributable to the proceeds of obligations incurred in financing this acquisition, construction, development, enlargement, or improvement, and to make payments under an agreement or ancillary arrangement entered into under s. 18.06 (8) (a).
SECTION 25. 20.115 (7) (b) of the statutes is amended to read:
20.115 (7) (b) Principal repayment and interest, conservation reserve enhancement. A sum sufficient to reimburse s. 20.866 (1) (u) for the principal and interest costs incurred in financing the conservation reserve enhancement program under s. 20.866 (2) (wf) and, to make the payments determined by the building commission under s. 13.488 (1) (m) that are attributable to the proceeds of obligations incurred in financing those projects, and to make payments under an agreement or ancillary arrangement entered into under s. 18.06 (8) (a).
SECTION 26. 20.115 (7) (f) of the statutes is amended to read:
20.115 (7) (f) Principal repayment and interest; soil and water. A sum sufficient to reimburse s. 20.866 (1) (u) for the payment of principal and interest costs incurred in providing funds for soil and water resource management projects under s. 92.14 and, to make the payments determined by the building commission under s. 13.488 (1) (m) that are attributable to the proceeds of obligations incurred in financing those projects, and to make payments under an agreement or ancillary arrangement entered into under s. 18.06 (8) (a).
SECTION 27. 20.115 (7) (s) of the statutes is amended to read:
20.115 (7) (s) Principal repayment and interest; soil and water, environmental fund. From the environmental fund, the amounts in the schedule for the payment of principal and interest costs incurred in providing funds for soil and water resource management projects under s. 92.14 and, to make the payments determined by the building commission under s. 13.488 (1) (m) that are attributable to the proceeds of obligations incurred in financing those projects, and to make payments under an agreement or ancillary arrangement entered into under s. 18.06 (8) (a).
SECTION 28. 20.143 (3) (t) of the statutes is amended to read:
