Signed by Governor Jennifer Granholm

Vote Smart's Synopsis:

Vote to concur with Senate amendments and pass a bill that increase the amount of bonds or ordinances a city may issue from $125 million to $250 million.

Highlights:

-Authorizes a city or county that meets the below conditions to borrow money and issue its bonds or obligations either for funding an operating deficit for past fiscal years or for funding a projected operating deficit in the current fiscal year, or for funding both (Sec. 3). -Requires the legislative body of the city to determine by resolution that all of the following conditions exist before a city makes an application for approval to issue bonds or obligations (Sec. 4):

-The city had an accumulated operating deficit as of the end of the last completed fiscal year or is projected to have an accumulated operating deficit at the end of the current fiscal year; -The amount of the deficit exceeds the amount that the city may borrow from the emergency municipal loan fund pursuant to the Emergency Municipal Loan Act; and -The amount of the deficit is more than the city can fund by issuing tax anticipation notes under the Revised Municipal Finance Act.

-Requires that the city or county provide the State Administrative Board with a statement signed by the CEO of the city or county, if a charter county, or the chairperson of the board of county commissioners, which indicates how the city or county intends to avoid future deficits (Sec. 4). -Requires the maximum amount of bonds that may be issued by a city or county to not exceed 3 percent of the state valuation of real and personal property located within the boundaries of the city or county (Sec. 4). -Requires the maximum principal amount of all bonds or obligations that may be issued by a city or county not to exceed $125 million, or for bonds or obligations issued by a city between January 1, 2010 and September 1, 2010 not exceed $250 million (Sec. 4). -Prohibits the limitation on the use of bonds to pay for the following (Sec. 4):

-Amounts set aside for a reserve for payment of principal, interest, and redemption premiums; -Expected costs of issuance of the bonds or obligations; -The amount of any discount; or -Bonds or obligations issued to refund outstanding bonds or obligations.

-Exempts the issuance of bonds or obligations under this act from the Revised Municipal Finance Act (Sec. 4). -Authorizes bonds or obligations to be issued as limited tax bonds or obligations by resolution of the legislative body of the city or county without vote of the electors and without publication of a notice of intent (Sec. 8). -Authorizes the city or county and the state treasurer to enter into an agreement providing for the direct payment of distributable aid to a paying agent, trustee, escrow agent, or other person to be used for the sole purpose of paying principal or interest on bonds or obligations issued, and for the city or county to pledge money for the payment of bonds or obligations issued (Sec. 9). -Exempts distributable aid held or to be held by a paying agent, trustee, escrow agent, or other person held in trust from being levied upon, taken, sequestered, or applied toward paying the debts or liabilities of the city or county other than for payment of debt service on the bonds or obligations to which the lien applies (Sec. 9).

Full Bill Text