Senate approves constitutional amendment language to let state guarantee school district bonds

The Utah Senate approved SJR 6, a joint resolution proposing a constitutional amendment to authorize limited state guarantees of local school district general-obligation bonds.

Senator Hilliard explained that the amendment is intended to remove constitutional limitations that could impede the state from guaranteeing school district debt on a limited, voluntary basis. He said the mechanism would allow the state to provide its credit to school districts that voluntarily seek the guarantee to reduce their interest costs, while protecting the state's credit through a reimbursement or intercept mechanism.

As part of his motion, Hilliard read a multi-sentence intent statement prepared by bond counsel describing the principal intent: to remove limitations that might impede guarantees, to lay a foundation for guarantees without placing the state's credit at significant risk, and to authorize reimbursement to the state from monies that otherwise would support education where a payment under the state's guarantee is made. He added that the legislature intended that the intercept mechanism operate "free from judicial interference" and that remedies remain legislative in such an event.

Senator Steele and other senators participated in clarifying questions and light floor banter, and the Senate approved the motion and intent language. President Beatty reported SJR 6 passed with 26 ayes, no nays and three absent, and the resolution will be transmitted to the House for consideration.

Floor discussion centered on the scope of the amendment and assurance language to limit risk to state credit; senators stressed voluntary participation by school districts and strict compliance provisions to prevent defaults.