Bill Text: MI HB4075 | 2009-2010 | 95th Legislature | Engrossed
Bill Title: State financing and management; bonds; bonding authority for prefunded retiree health care; provide for. Amends 2001 PA 34 (MCL 141.2101 - 141.2821) by adding sec. 518. TIE BAR WITH: HB 4074'09, HB 4077'09
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2009-03-05 - Referred To Committee On Appropriations [HB4075 Detail]
Download: Michigan-2009-HB4075-Engrossed.html
HB-4075, As Passed House, March 4, 2009
SUBSTITUTE FOR
HOUSE BILL NO. 4075
A bill to amend 2001 PA 34, entitled
"Revised municipal finance act,"
(MCL 141.2101 to 141.2821) by adding section 518.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 518. (1) Through September 30, 2012, a county, city,
village, or township may by ordinance or resolution of its
governing body, and without a vote of its electors, issue a
municipal security under this section to pay the costs of the
unfunded accrued liability provided that the amount of taxes
necessary to pay the principal and interest on that municipal
security, together with the taxes levied for the same year, shall
not exceed the limit authorized by law. Postemployment health care
benefits may be funded by the county, city, village, or township.
The funding of postemployment health care benefits by a county,
city, village, or township as provided in this act shall constitute
a contract to pay the postemployment health care benefits.
(2) Before a county, city, village, or township issues a
municipal security under this section, the county, city, village,
or township shall publish a notice of intent to issue the municipal
security. The notice of intent and the rights of referendum shall
meet the requirements of section 517(2) except that petitioners
shall have 60 days after the publication of the notice of intent to
file a petition and the registered elector requirement shall be not
less than 5% or 10,000 registered electors, whichever is less.
(3) A county, city, village, or township by resolution and
with a vote of its electors may issue a municipal security pledging
its unlimited taxes to pay the costs of an unfunded accrued
liability.
(4) The proceeds of a municipal security issued under this
section may be used to pay the costs of issuance of the municipal
security. The proceeds of a municipal security issued under this
section shall be deposited in a health care trust fund; a trust
created by the issuer which has as its beneficiary a health care
trust fund; or for a county, city, village, or township, a
restricted fund within a trust that would only be used to retire
the municipal securities issued under subsection (1) or (3). A
county, city, village, or township shall have the power to create a
trust to carry out the purposes of this subsection. The trust
created under this subsection shall invest its funds in the same
manner as funds invested by a health care trust fund. The trust
created under this subsection shall comply with all of the
following:
(a) Report its financial condition according to generally
accepted accounting principles.
(b) Be tax exempt under the internal revenue code.
(5) Before a county, city, village, or township issues a
municipal security under this section, the county, city, village,
or township shall prepare and make available to the public a
comprehensive financial plan that includes all of the following:
(a) Evidence that the issuance of the municipal security
together with other funds lawfully available will be sufficient to
eliminate the unfunded accrued liability.
(b) A debt service amortization schedule and a description of
actions required to satisfy the debt service amortization schedule.
(c) A certification by the person preparing the plan that the
comprehensive financial plan is complete and accurate.
(d) Documentation that the issuance of municipal securities
will result in projected present value savings regarding the
unfunded accrued liability.
(e) Subject to any collective bargaining agreement, a plan in
place from the county, city, village, or township to mitigate the
increase in health care costs and may include a wellness program
that promotes the maintenance or improvement of healthy behaviors.
(6) Municipal securities issued under subsection (1) or (3) by
a county, city, village, or township, and currently outstanding,
shall not exceed 5% of the state equalized valuation of the
property assessed in that county, city, village, or township.
(7) Municipal securities issued under subsection (1) or (3) by
a county, city, village, or township and the interest on and income
from the municipal securities are exempt from taxation by this
state or a political subdivision of this state.
(8) A county, city, village, or township issuing municipal
securities under subsection (1) or (3) may enter into indentures or
other agreements with trustees and escrow agents for the issuance,
administration, or payment of the municipal securities.
(9) Municipal securities issued under subsection (1) or (3) by
a county, city, village, or township shall not on a cumulative
basis exceed 75% of current unfunded accrued liabilities on
postemployment health care benefits owed to employees of the
county, city, village, or township that exist on the date of the
amendatory act that added this subsection.
(10) A county, city, village, or township shall not issue a
municipal security under subsection (1) or (3) unless the county,
city, village, or township has been assigned a credit rating within
the category of A or higher by at least 1 nationally recognized
rating agency.
(11) A county, city, village, or township shall not issue a
municipal security under subsection (1) or (3) unless the projected
difference between the assumed rate of return on the health care
trust fund investments and the projected actual interest rate paid
on the municipal securities issued under subsection (1) or (3) is
not less than 100 basis points.
(12) Before a county, city, village, or township issues a
municipal security under this section, the county, city, village,
or township shall obtain the approval of the department of
treasury. The department of treasury shall review the proposed
issuance of municipal securities and if it verifies that the
county, city, village, or township meets the requirements of this
section, the department of treasury shall approve the issuance of
municipal securities under this section.
Enacting section 1. This amendatory act does not take effect
unless all of the following bills of the 95th Legislature are
enacted into law:
(a) House Bill No. 4074.
(b) House Bill No. 4077.
