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Senate advances school-bond guarantee package and companion constitutional amendment
Summary
Senate Substitute Bill 65 (state guarantee to raise school bond ratings) and SJR 6 (constitutional amendment to authorize guarantees) moved forward on Feb. 2, 1996; sponsors said the program could reduce borrowing costs for local districts and must be approved by voters if SJR 6 clears both chambers.
The Utah Senate advanced a package intended to help school districts lower borrowing costs by allowing the state’s credit to guarantee district bonds, moving both Substitute Senate Bill 65 and the companion constitutional-resolution SJR 6 to the third-reading calendar.
Senator Lyle Hilliard told senators that the program allows school districts to opt into a state credit enhancement that could immediately improve a district’s bond rating toward AAA and therefore reduce interest costs. Hilliard said the measure is not a forgiveness of debt; rather, it is a statutory guarantee and monitoring mechanism that would let the state step in to make a payment if a district falters on timely payments to avoid default and protect the state’s bond rating.
Senators discussed criteria for district participation, the role of the state treasurer and state superintendent in reviewing applications, refinancing possibilities, and whether the state would charge participating districts for the benefit. Senator Hillier and others said the fiscal note was available and the amendment adjusts the effective date tied to the companion SJR 6. SJR 6 must obtain two-thirds approval from both chambers to place the constitutional amendment on the November ballot; the Senate reported SJR 6 to the third-reading calendar with 26 ayes and no nays.
Supporters said projected statewide savings (based on bond issuance estimates) could be meaningful for districts that currently face higher interest rates; senators stressed program safeguards and criteria for participation.
