16A.641 STATE BONDS; APPROPRIATIONS.
Subdivision 1. Authority.
When authorized by a law enacted in accordance with the
Constitution, article XI, sections 5 and 7, the commissioner shall sell and issue general obligation
bonds of the state evidencing public debt incurred for any purpose stated in those sections. The
full faith, credit, and taxing powers of the state are irrevocably pledged for the prompt and full
payment of the bonds and interest. The decision of the commissioner on when to sell bonds must
be based on the funding needs of the capital projects, the timing of the bond issue to achieve
favorable interest rates, managing cash flow requirements for debt service, other state debt
management considerations, and legal factors.
Subd. 2. Report.
Before a sale of general obligation bonds, the commissioner shall report the
amount of bonds to be issued and a detailed list of the projects or a statement of the program to
be financed to the chairs of the house Ways and Means and Tax Committees and of the senate
Finance and Tax Committees, and the minority leaders of the house and senate, for their advisory
recommendation. The recommendation is positive if not received within ten days.
Subd. 3. Series of bonds.
Bonds authorized by a law may be issued in more than one series,
and bonds authorized by more than one law may be combined in a single series, as determined by
order of the commissioner. The order must state the principal amount of the bonds to be issued
under each law, and the aggregate principal amount and the maturity dates and amounts of the
bonds included in the series that are to be issued for the purpose of each special fund.
At any time during the 18 months following the issuance of any series of bonds, the
commissioner may, by amendment to the order authorizing their issuance, determine that any
portion of the bonds were issued, or shall be deemed to have been issued, pursuant to a law other
than the one specified in the original order and for a different purpose, and reallocate and transfer
their proceeds to the appropriate account in the bond proceeds fund or the appropriate special
fund, for expenditure pursuant to the law pursuant to which the amendment determines they were
issued. No such amendment shall be adopted unless:
(1) on the date of the original order, the bonds could have been issued and their proceeds
expended as determined in the amended order;
(2) all actions required for the issuance of the transferred bonds have been taken on or
before the date of the amendment; and
(3) the commissioner determines upon advice of counsel that the taxability of the interest on
the bonds for federal income tax purposes will not be affected by the amendment.
Subd. 4. Sale and issuance.
State bonds must be sold and issued upon competitive bids in
the manner and on the terms and conditions determined by the commissioner in accordance with
the laws authorizing them and subject to the approval of the attorney general, but not subject
to chapter 14, including section
. For each series, in addition to provisions required by
subdivision 3, the commissioner may determine:
(1) the time, place, and notice of sale and method of comparing bids;
(2) the price, not less than par for highway bonds;
(3) the principal amount and date of issue;
(4) the interest rates and payment dates;
(5) the maturity amounts and dates, not more than 20 years from the date of issue, subject to
(6) the terms, if any, on which the bonds may or must be redeemed before maturity, including
notice, times, and redemption prices; and
(7) the form of the bonds and the method of execution, delivery, payment, registration,
conversion, and exchange, in accordance with section
Subd. 5. Planning maturities.
In issuing each series of state bonds the commissioner shall
try to establish the maturities and other terms so that transfers to the state bond fund required in
each year of the then current biennium under subdivision 10 may be made with the least practical
effect on orderly spending plans for other appropriations from the general fund.
Subd. 6. Taxability; certification.
The commissioner shall ascertain from state records and
certify to the holders of each series of state bonds, subject to the approval of the attorney general,
that all conditions exist and all actions have been taken that are needed to make the bonds valid
and binding general obligations of the state in accordance with their terms.
The bonds may be issued with or without regard to whether the interest to be paid on them is
includable in gross income for federal tax purposes. If it is intended that the interest on the bonds
be exempt from federal income taxes, the commissioner shall certify for the state on the date of
issue the facts, estimates, and circumstances that lead the commissioner reasonably to expect
that the proceeds of the bonds and the projects financed by them will not be used in a way that
would cause the interest on the bonds to be subject to federal income taxes. The commissioner
may covenant with the holders of the bonds that the state will comply with the provisions of the
United States Internal Revenue Code then or later enacted that apply or may apply to the bonds
and that establish conditions under which the interest to be paid on the bonds will not be subject
to federal income taxes. The commissioner and all other state officers shall act or refrain from
acting as necessary to comply with the covenants. A sum sufficient to meet the cost of compliance
is annually appropriated to the commissioner from the general fund.
Subd. 7. Credit of proceeds.
(a) Proceeds of bonds issued under each law must be credited
by the commissioner to a special fund, as provided in this subdivision.
(b) Accrued interest and any premium received on sale of the bonds must be credited to the
state bond fund created by the Constitution, article XI, section 7.
(c) Except as otherwise provided by law, proceeds of state bonds issued under the
Constitution, article XI, section 5, clause (a), must be credited to the bond proceeds fund
established by section
(d) Proceeds of state highway bonds must be credited to the trunk highway fund under the
Constitution, article XIV, section 6.
(e) Proceeds of bonds issued for programs of grants or loans to political subdivisions must
be credited to special accounts in the bond proceeds fund or to special funds established by
laws stating the purposes of the grants or loans, and the standards and criteria under which an
executive agency is authorized to make them.
(f) Proceeds of refunding bonds must be credited to the state bond fund as provided in
16A.66, subdivision 1
(g) Proceeds of other bonds must be credited as provided in the law authorizing their issuance.
Subd. 8. Appropriation of proceeds.
(a) The proceeds of bonds issued under each law are
appropriated for the purposes described in the law and in this subdivision. This appropriation
may never be canceled.
(b) Before the proceeds are received in the proper special fund, the commissioner may
transfer to that fund from the general fund amounts not exceeding the expected proceeds from the
next bond sale. The commissioner shall return these amounts to the general fund by transferring
proceeds when received. The amounts of these transfers are appropriated from the general fund
and from the bond proceeds.
(c) Actual and necessary travel and subsistence expenses of employees and all other
nonsalary expenses incidental to the sale, printing, execution, and delivery of bonds must be paid
from the proceeds. The proceeds are appropriated for this purpose. Bond proceeds must not be
used to pay any part of the salary of a state employee involved in the sale, printing, execution, or
delivery of the bonds.
(d) Bond proceeds remaining in a special fund after the purposes for which the bonds were
issued are accomplished or abandoned, as certified by the head of the agency administering the
special fund, or as determined by the commissioner, unless devoted under the appropriation act to
another purpose designated in the act, must be transferred to the state bond fund.
(e) Before the proceeds of state highway bonds are received in the trunk highway fund, the
commissioner may either:
(1) transfer funds to the trunk highway fund from the general fund; or
(2) authorize the use of funds in the trunk highway fund, in an amount not exceeding the
expected proceeds from the next state highway bond sale.
These funds must be used in accordance with the legislative authorization to sell state highway
bonds. The commissioner shall return these funds to the general fund or replace the funds used
from the trunk highway fund by transferring proceeds when received. The amounts of these
transfers are appropriated from the general fund and from the state highway bond proceeds.
Subd. 9. Special accounts; appropriation.
(a) The commissioner shall establish separate
accounts in the state bond fund for:
(1) state building bonds, and for other state bonds issued for each program of grants to
political subdivisions for a particular class of capital expenditures, to record debt service payments
and receipts of amounts appropriated from the general fund under subdivision 10;
(2) state highway bonds, to record debt service payments, receipts of amounts appropriated
for debt service from the trunk highway fund pursuant to the Constitution, article XIV, section 6,
and additional receipts, if any, of amounts appropriated from the general fund under subdivision
(3) state bonds issued for each capital loan and for each program of capital loans to agencies
or political subdivisions, to record debt service payments, receipts of loan repayments appropriated
for debt service or reimbursement of debt service by the law authorizing the loan or program, and
any additional receipts of amounts appropriated from the general fund under subdivision 10; and
(4) refunding bonds, as provided in section
16A.66, subdivision 1
(b) All money credited, transferred, or appropriated to the state bond fund and all income
from the investment of that money is appropriated to the commissioner for the payment of
principal and interest on state bonds.
Subd. 10. Appropriation from general fund.
There is annually appropriated to the state
bond fund from the general fund the amount that, added to the amount in the state bond fund on
November 1 each year for state bonds issued by January 1, 1985, and the amount that added to
the amount in the state bond fund on December 1 each year for state bonds issued after January
1, 1985, is needed to pay the principal of and interest on all state bonds due and to become
due through July 1 in the second ensuing year. The money appropriated must be available in
the state bond fund each year before the tax otherwise required by the Constitution, article XI,
section 7, is levied.
Subd. 11. Constitutional tax levy.
Under the Constitution, article XI, section 7, the state
auditor must levy each year on all taxable property within the state a tax sufficient, with the
amount then on hand in the state bond fund, to pay all principal and interest on state bonds due
and to become due to and including July 1 in the second ensuing year. The tax is not subject to
limitation of rate or amount. However, the amount of money appropriated from other sources
as provided in subdivision 10, and actually received and on hand prior to the levy in any year,
reduces the amount of the tax otherwise required to be levied. The proceeds of the tax must
be credited to the state bond fund.
Subd. 12. Supplemental appropriation from general fund.
If the proceeds of the tax levied
under subdivision 11 are ever insufficient to make the principal and interest payments on state
bonds when due, the balance must be paid out of the general fund. The amount needed to pay the
balance is appropriated from the general fund to the commissioner.
Subd. 13. Application.
This section applies to all state bonds issued after January 1, 1985,
notwithstanding other laws relating to specific bonding programs.
History: 1984 c 597 s 34; 1Sp1985 c 13 s 111,112; 1Sp1985 c 14 art 4 s 2; 1986 c 444; 1989
c 271 s 5; 1990 c 610 art 1 s 35,36; 1991 c 345 art 1 s 54; 1994 c 643 s 34; 1996 c 463 s 31; 1997
c 187 art 4 s 1; 1998 c 404 s 32; 2000 c 492 art 1 s 28; 1Sp2001 c 8 art 2 s 8; 2004 c 284 art 2 s 6