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Committee reviews technical changes to bond payment language, underwriter fees and 'haircut' methodology
Summary
Members reviewed proposed Treasurer's updates to BAA language that would change a 'shall' to a 'may' and explicitly include underwriter fees in distributions; staff said the changes align statutory text with current practice of using debt-service funds.
The committee reviewed draft language on Jan. 29 containing technical updates requested by the Treasurer that would change a statutory phrasing from "shall" to "may" and include underwriter fees in distributions related to bond issuance costs.
Joint Fiscal Office staff explained the language aligns statute with current practice of distributing bond-insurance and underwriting costs across capital corporations using debt-service funds rather than withdrawing a portion of each bond issuance. Committee members asked about historical "haircut" methodology; staff said prior practice had withdrawn a small amount from each bond issuance to pay associated costs, while current practice uses debt-service funds.
Members confirmed the change does not relate to reserve creation; staff said it is intended to reflect actual current practice for paying associated bond costs.
Why it matters: the changes are technical but affect how bond issuance costs and underwriter fees are treated in statute and practice; clarifying language can prevent future accounting confusion.
Next steps: staff indicated the Treasurer requested the updates; committee members had no substantive objections during the session and staff will incorporate final wording.
