The Economic Recovery Bond ActBond Provisions

Section § 99065

Explanation

This law allows California to issue up to $15 billion in bonds to help fund certain state expenses. These bonds are a secure promise from the state to pay back both the borrowed amount and interest on time, supported by the state's credit and specific revenue sources. The amount of new bonds issued can be reduced based on other bonds already issued unless the new bonds will pay off the old ones.

The bonds must be sold by the Treasurer under conditions set by a committee, and if needed, they can be sold for less than their face value, but the discount can't be more than 3%.

(a)CA Government Code § 99065(a) Subject to subdivision (b), bonds in the total amount of fifteen billion dollars ($15,000,000,000), not including the amount of any refunding bonds issued in accordance with Section 99075, or so much thereof as is necessary, may be issued and sold to provide a fund to be used for carrying out the purposes expressed in this title and to reimburse the General Obligation Bond Expense Revolving Fund, pursuant to Section 16724.5. The bonds, when sold, shall be and constitute a valid and binding obligation of the State of California, and the full faith and credit of the State of California is hereby pledged for the punctual payment of both principal of, and interest on, the bonds as the principal and interest become due and payable. Additionally, the bonds, when sold, shall be secured by a pledge of revenues and any other amounts in the Fiscal Recovery Fund created pursuant to Section 99008. The bonds may be secured by different lien priorities on amounts in the Fiscal Recovery Fund.
(b)CA Government Code § 99065(b) The amount of bonds that may be issued and sold pursuant to subdivision (a) shall be reduced by the amount of bonds issued pursuant to Title 17 (commencing with Section 99000), and by the amount of bonds issued pursuant to the California Pension Obligation Financing Act (Chapter 7 (commencing with Section 16910) of Part 3 of Division 4 of Title 2), except to the extent those bonds will be retired, defeased, or redeemed with the proceeds of bonds authorized by this title.
(c)CA Government Code § 99065(c) Pursuant to this section, the Treasurer shall sell the bonds authorized by the committee. The bonds shall be sold upon the terms and conditions specified in a resolution to be adopted by the committee pursuant to Section 16731 and Section 99070. Whenever the committee deems it necessary for an effective sale of the bonds, the committee may authorize the Treasurer to sell any issue of bonds at less than their par value. Notwithstanding Section 16754.3, the discount with respect to any issue of the bonds shall not exceed 3 percent of the par value thereof, net of any premium.
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Section § 99066

Explanation

This law states that the process for handling bonds authorized under this title will follow the State General Obligation Bond Law, except for some specific parts that don't match this title's requirements. Essentially, existing laws about bond preparation, sale, payment, and redemption apply here unless they directly conflict with this title's terms.

The bonds authorized by this title shall be prepared, executed, issued, sold, paid, and redeemed as provided in the State General Obligation Bond Law (Chapter 4 (commencing with Section 16720) of Part 3 of Division 4 of Title 2), and all of the provisions of that law, except subdivisions (a) and (b) of Section 16727 or any other provision in that law that is inconsistent with the terms of this title, apply to the bonds and to this title and are hereby incorporated in this title as though set forth in full in this title.
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Section § 99067

Explanation

This section states that the Department of Finance is referred to as the "board" when it comes to the State General Obligation Bond Law.

For purposes of this title, the Department of Finance is designated the “board” as that term is used in the State General Obligation Bond Law.
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Section § 99069

Explanation

This law allows the State Treasurer to handle bond proceeds in a way that keeps their interest tax-free under federal law. If a bond includes a legal opinion stating that its interest is not taxable, the Treasurer can maintain separate accounts for the invested bond money and any earnings from it. The Treasurer can use this money to pay any required fees under federal law or take actions to ensure the bonds remain tax-exempt.

Notwithstanding any other provision of this title, or of the State General Obligation Bond Law, if the Treasurer sells bonds pursuant to this title that include a bond counsel opinion to the effect that the interest on the bonds is excluded from gross income for federal tax purposes subject to designated conditions, the Treasurer may maintain separate accounts for the bond proceeds invested and for the investment earnings on those proceeds, and may use or direct the use of those proceeds or earnings to pay any rebate, penalty, or other payment required under federal law or take any other action with respect to the investment and use of those bond proceeds that is required or desirable under federal law in order to maintain the tax-exempt status of those bonds and to obtain any other advantage under federal law on behalf of the funds of this state.
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Section § 99070

Explanation

This section outlines the responsibilities and powers of a committee involved in deciding the issuance of bonds. The committee assesses if it's necessary or beneficial to issue bonds, how much to issue, when to sell them, and other related conditions. It can approve related agreements and delegate tasks needed to manage the bonds, like designating the Treasurer to handle sales.

They ensure the amount of these bonds doesn't exceed $15 billion, combining with those from another specific bond issuance title. Bonds can be issued progressively rather than all at once, and the committee can do everything needed to achieve the purpose of issuing these bonds, staying within the set financial limits.

Ultimately, this allows for the strategic management and distribution of funds through bond sales to address budget deficits and other designated financial goals.

(a)Copy CA Government Code § 99070(a)
(1)Copy CA Government Code § 99070(a)(1) The committee shall determine whether or not it is necessary or desirable to issue bonds authorized pursuant to this title in order to carry out the purposes of this title and, if so, the amount of bonds to be issued and sold, the times at which the proceeds of the bonds authorized by this title shall be required to be available, and those other terms and conditions for the bonds authorized by this title as it shall determine necessary or desirable.
(2)CA Government Code § 99070(a)(2) In addition to all other powers specifically granted in this title and the State General Obligation Bond Law, the committee may do all things necessary or convenient to carry out the powers and purposes of this title, including the approval of any indenture and any ancillary obligation relating to those bonds, and the delegation of necessary duties to the chairperson, and to the Treasurer as agent for sale of the bonds.
(3)CA Government Code § 99070(a)(3) The committee shall determine the amount of the bonds to be issued so that the net proceeds of the bonds issued to fund the accumulated budget deficit, when added to the net proceeds of any bonds issued pursuant to Title 17 (commencing with Section 99000) for that purpose, exclusive of bonds issued pursuant to this title for the purpose of refunding bonds issued pursuant to this title or Title 17 (commencing with Section 99000), will not exceed fifteen billion dollars ($15,000,000,000) in the aggregate. Nothing in this section shall be construed to limit the ability of the committee to authorize the issuance of any amount of bonds that it shall determine necessary or appropriate to accomplish the purposes of this title, including the refunding or redemption of the bonds issued pursuant to Title 17 (commencing with Section 99000), subject to the limit on the total amount of bonds set forth in Section 99065.
(b)CA Government Code § 99070(b) Successive issues of bonds may be authorized and sold to carry out those actions progressively, and it is not necessary that all of the bonds authorized to be issued be sold at any one time. In addition to all other powers specifically granted in this title and the State General Obligation Bond Law, the committee may do all things necessary or convenient, including the delegation of necessary duties to the chairperson and to the Treasurer as agent for sale of the bonds, to carry out the powers and purposes of this title.
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Section § 99071

Explanation

This law says that the money needed to pay back certain bonds and related obligations will come from sales and use tax revenues collected by a special state fund. If that fund doesn't have enough money, extra funds will be collected along with regular state revenue to make sure these payments are made. State officials are responsible for ensuring these funds are collected.

The principal of and interest on the bonds and the payment of any ancillary obligations shall be payable from and secured by a pledge of all state sales and use tax revenues in the Fiscal Recovery Fund established pursuant to Section 99008 and any earnings thereon. To the extent that moneys in the Fiscal Recovery Fund are deemed insufficient to make these payments, pursuant to an estimate certified by the Director of Finance and approved by the committee, there shall be collected each year and in the same manner and at the same time as other state revenue is collected, in addition to the ordinary revenues of the state, a sum in an amount required to pay the principal of, and interest on, the bonds and the payment of any ancillary obligations for which payment is authorized by this title and for which the full faith and credit of the state has been pledged. It is the duty of all officers charged by law with any duty in regard to the collection of the revenue to do and perform each and every act that is necessary to collect that additional sum.
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Section § 99072

Explanation

This law section explains how funds will be allocated to pay for specific financial obligations related to bonds. It states that money from the Fiscal Recovery Fund is automatically set aside to cover the principal and interest on certain bonds, any related ancillary costs, administrative expenses, and any early repayment of these bonds. If the funds from the Fiscal Recovery Fund are not enough, the remaining amount needed will be provided from the General Fund. Additionally, sales tax revenues from certain sections of the Revenue and Taxation Code are permanently dedicated to these payments, and further legislative actions can add more funds if necessary.

(a)CA Government Code § 99072(a) Notwithstanding Section 13340, there is hereby continuously appropriated from the Fiscal Recovery Fund established pursuant to Section 99008 an amount that will equal the total of the following:
(1)CA Government Code § 99072(a)(1) The sum annually necessary to pay the principal of, and interest on, bonds issued and sold as described in Section 99070, as the principal and interest become due and payable, together with any amount necessary to satisfy any reserve and coverage requirements in the resolution.
(2)CA Government Code § 99072(a)(2) The sum necessary to pay any ancillary obligations entered into in connection with the bonds.
(3)CA Government Code § 99072(a)(3) Any trustee and other administrative costs incurred in connection with servicing the bonds and ancillary obligations.
(4)CA Government Code § 99072(a)(4) Redemption, retirement, defeasance or purchase of any bonds as authorized by the committee prior to their stated maturity dates.
(b)CA Government Code § 99072(b) Notwithstanding Section 13340, if the funds appropriated by subdivision (a) are estimated to be insufficient to meet the requirement specified in paragraphs (1) to (4), inclusive, of subdivision (a), as approved pursuant to Section 99071, there is hereby continuously appropriated from the General Fund, for the purposes of this chapter, an amount that will provide sufficient revenues to meet whatever requirements specified in paragraphs (1) to (4), inclusive, of subdivision (a) cannot be met from revenues appropriated from the Fiscal Recovery Fund.
(c)CA Government Code § 99072(c) The sales and use tax revenues received pursuant to Sections 6051.5 and 6201.5 of the Revenue and Taxation Code and deposited into the Fiscal Recovery Fund are hereby irrevocably pledged to the payment of principal and interest on the bonds issued pursuant to this title, to payment of any ancillary obligations, and to costs necessary for servicing and administering the bonds and ancillary obligations. The Legislature may elect to deposit additional revenues in the Fiscal Recovery Fund. The pledge of this subdivision shall vest automatically upon execution and delivery of any resolution or agreement relating to ancillary obligations, without the need for any notice or filing in any office or location.
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Section § 99074

Explanation

This law states that any interest earned from selling bonds, which is deposited in the Economic Recovery Fund, must stay in that fund. It can then be transferred to the Fiscal Recovery Fund to offset the cost of bond interest payments.

All money deposited in the Economic Recovery Fund that is derived from accrued interest on bonds sold shall be reserved in that fund and shall be available for transfer to the Fiscal Recovery Fund as a credit to expenditures for bond interest.
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Section § 99075

Explanation

This law states that certain state bonds can be refunded following specific legal procedures. Additionally, when voters approve the issuance of these bonds, it automatically includes their approval for any future bonds issued to refund the original or already refunded bonds.

The bonds may be refunded in accordance with Article 6 (commencing with Section 16780) of Chapter 4 of Part 3 of Division 4 of Title 2, which is a part of the State General Obligation Bond Law. Approval by the electors of the state for the issuance of the bonds described in this title shall include approval of the issuance of any bonds issued to refund any bonds originally issued under this title or any previously issued refunding bonds.
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Section § 99076

Explanation

This law states that money raised from selling certain bonds is not considered tax revenue. As a result, spending this money isn't limited by the rules that normally apply to tax revenue in the California Constitution.

The Legislature hereby finds and declares that, inasmuch as the proceeds from the sale of bonds authorized by this title are not “proceeds of taxes” as that term is used in Article XIII B of the California Constitution, the disbursement of these proceeds is not subject to the limitations imposed by that article.
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Section § 99077

Explanation

This law states that California promises bondholders that it won't lower the tax rates outlined in Sections 6051.5 and 6201.5 of the Revenue and Taxation Code. These taxes help fund the Fiscal Recovery Fund, which supports paying off bonds.

The state hereby pledges and agrees with the holders of any bonds issued pursuant to this title that it will not reduce the rate of imposition of either of the taxes imposed pursuant to Sections 6051.5 and 6201.5 of the Revenue and Taxation Code, which generate the revenue deposited in the Fiscal Recovery Fund.
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