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ENGROSSED HOUSE
BILL NO. 2629	By:	McDaniel (Randy) of the House

				and

		Brinkley of the Senate

An Act relating to public finance; making legislative findings regarding certain actions of the Governmental Accounting Standards Board; making legislative findings regarding requirements of Section 26 of Article X of the Oklahoma Constitution; providing statement for possible use in certain financial disclosure documents for use by political subdivisions of the State of Oklahoma; providing for codification; and providing an effective date.

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 600 of Title 62, unless there is created a duplication in numbering, reads as follows:
A.  The Legislature finds that recent actions by the Governmental Accounting Standards Board (GASB) have important consequences for political subdivisions in the State of Oklahoma.
B.  The proposed GASB Statement Nos. 67 and 68 regarding the accounting practices of the political subdivisions would require those units of local government to make disclosures related to certain pension benefit obligations which are already reflected in the liabilities of the Oklahoma Firefighters Pension and Retirement System, the Oklahoma Police Pension and Retirement System, the Teachers’ Retirement System and the Oklahoma Public Employees Retirement System.
C.  The Legislature finds that Section 26 of Article X of the Oklahoma Constitution limits the general obligation debt of its counties, cities, towns and school districts and that those political subdivisions cannot legally incur general obligation debt except through the methods provided by the Oklahoma Constitution.
D.  The Legislature finds that there are potentially inconsistent requirements if the political subdivisions follow the recommendations contained in GASB Statement Nos. 67 and 68 because the disclosures required in such GASB Statements could cause third parties, relying on the information in the required disclosures, to reach conclusions about the financial condition of the political subdivisions that would be inconsistent with the provisions of the Oklahoma Constitution which limit the total amount of general obligation debt such subdivisions may incur and the method by which such debt is undertaken.
E.  The Legislature finds that the following language might be of assistance to counties, cities, towns and school districts with regard to the issue of compliance with the provisions of GASB Statement Nos. 67 and 68 and the requirements imposed by Section 26 of Article X of the Oklahoma Constitution:
THE OKLAHOMA CONSTITUTION RESTRICTS THE TOTAL AMOUNT OF DEBT THAT A COUNTY, CITY, TOWN OR LOCAL SCHOOL DISTRICT MAY INCUR.  THIS RESTRICTION IS CONTAINED IN SECTION 26 OF ARTICLE X OF THE OKLAHOMA CONSTITUTION.
THE TOTAL AMOUNT OF GENERAL OBLIGATION DEBT IS LIMITED TO A MAXIMUM OF EITHER FIVE PERCENT (5%) (FOR COUNTIES) OR TEN PERCENT (10%) (FOR CITIES, TOWNS AND LOCAL SCHOOL DISTRICTS) OF THE NET ASSESSED VALUATION FOR ALL TAXABLE PROPERTY LOCATED WITHIN THE APPLICABLE POLITICAL SUBDIVISION.
THIS CONSTITUTIONAL LIMIT IS UPON THE TOTAL PRINCIPAL AMOUNT OF DEBT OUTSTANDING.
INDEBTEDNESS WHICH IS A LEGALLY ENFORCEABLE OBLIGATION OF THE APPLICABLE POLITICAL SUBDIVISION MUST BE APPROVED BY A THREE-FIFTHS (3/5) VOTE OF THE VOTERS OF THE JURISDICTION.
NO POLITICAL SUBDIVISION IS AUTHORIZED UNDER THE OKLAHOMA CONSTITUTION OR OKLAHOMA STATUTES TO INCUR ANY OTHER FORM OF GENERAL OBLIGATION DEBT OR ANY AMOUNT OF GENERAL OBLIGATION DEBT THAN THE METHOD PRESCRIBED BY LAW.
F.  The Legislature finds that the political subdivisions of the State of Oklahoma may need to include information in their periodic financial reports to clarify the effect of the Oklahoma Constitution as it relates to information which may be required in order for the financial reports of the political subdivisions to be in compliance with the standards of GASB Statement Nos. 67 and 68.
G.  The Legislature encourages the governing boards of each of its political subdivisions to take such steps as may be required to ensure that the citizens of those respective subdivisions, the professional advisors for the respective subdivisions and third parties are readily able to determine with accuracy the amount of debt for which the political subdivision is legally obligated under the laws of the State of Oklahoma and to clearly distinguish such obligations from any other information that may be contained in the financial reports of such political subdivision.
SECTION 2.  This act shall become effective November 1, 2014.
Passed the House of Representatives the 5th day of March, 2014.

	
	Presiding Officer of the House
	of Representatives

Passed the Senate the ___ day of __________, 2014.

	
	Presiding Officer of the Senate

ENGR. H. B. NO. 2629	Page