3907 - Commonwealth indebtedness.
§ 3907. Commonwealth indebtedness. (a) Borrowing authorized.-- (1) Pursuant to section 7(a)(3) of Article VIII of the Constitution of Pennsylvania and the approval by the electorate on April 27, 2004, of the referendum authorized by the act of February 12, 2004 (P.L.72, No.10), known as the Water and Wastewater Treatment Project Bond Act, the issuing officials are authorized and directed to borrow, on the credit of the Commonwealth, money not exceeding in the aggregate the sum of $250,000,000, not including money borrowed to refund outstanding bonds, notes or replacement notes, as may be found necessary to carry out the purposes of this chapter. (2) All bonds and notes issued under this chapter shall be: (i) exempt from taxation for State and local purposes; and (ii) eligible for tax-exempt status under existing Federal law. (3) Borrowing authorized under paragraph (1) shall be made in accordance with the provisions of sections 307 and 308 of the act of February 9, 1999 (P.L.1, No.1), known as the Capital Facilities Debt Enabling Act. (b) Sale of bonds.-- (1) If bonds are issued, all sales of the bonds shall be made in accordance with the provisions of section 309 of the Capital Facilities Debt Enabling Act. (2) The proceeds realized from the sale of bonds and notes, except refunding bonds and replacement notes, under this chapter shall be paid into the fund and are specifically dedicated to the purposes of this chapter. The proceeds shall be paid by the State Treasurer periodically to the department at times and in amounts as necessary to satisfy the funding needs of the department under this chapter. The proceeds of the sale of refunding bonds and replacement notes shall be paid to the State Treasurer and applied to the payment of principal, any accrued interest and premium and cost of redemption of the bonds and notes for which the obligations have been issued. (3) Pending their application for the purposes authorized, money held or deposited by the State Treasurer may be invested or reinvested as are other funds in the custody of the State Treasurer in the manner provided by law. All earnings received from the investment or deposit of the funds shall be paid into the State Treasury to the credit of the fund. (4) The Auditor General shall prepare the necessary registry book to be kept in the office of the authorized loan and transfer agent of the Commonwealth for the registration of bonds, at the request of owners of the bonds, according to the terms and conditions of issue directed by the issuing officials. (5) There is hereby appropriated to the State Treasurer from the fund as much money as may be necessary for all costs and expenses in connection with the issue of and sale and registration of the bonds and notes in connection with this chapter and the payment of interest arbitrage rebates. (c) Temporary financing authorization.-- (1) Pending the issuance of bonds of the Commonwealth as authorized, the issuing officials are authorized, in accordance with this chapter and on the credit of the Commonwealth, to make temporary borrowings not to exceed one year in anticipation of the issue of bonds in order to provide funds in amounts as deemed advisable prior to the issue of bonds. In order to provide for and in connection with any temporary borrowing, the issuing officials are authorized in the name and on behalf of the Commonwealth to enter into purchase, loan or credit agreement or other agreement with any bank or trust company, other lending institution, investment banking firm or person in the United States having power to enter into the agreement. The agreement may contain provisions not inconsistent with this chapter as authorized by the issuing officials. (2) Temporary borrowings made under this subsection shall be made in accordance with the provisions of section 306(b), (c) and (d) of the Capital Facilities Debt Enabling Act. (3) Outstanding notes evidencing the borrowings may be funded and retired by the issuance and sale of the bonds of the Commonwealth as authorized in this paragraph. The refunding bonds shall be issued and sold not later than a date one year after the date of issuance of the first notes evidencing the borrowing to the extent that payment of the notes has not otherwise been made or provided for by sources other than proceeds of replacement notes. (4) The proceeds of all temporary borrowing shall be paid to the State Treasurer to be held and disposed of in accordance with this chapter. (d) Debt retirement.-- (1) All bonds issued under the authority of this chapter shall be redeemed at maturity, together with all interest due. Principal and interest payments shall be paid from the sinking fund. For the specific purpose of redeeming the bonds at maturity and paying all interest on the bonds in accordance with the information received from the Governor, the General Assembly shall appropriate money for the payment of interest on the bonds and notes and the principal of the bonds and notes at maturity. All money paid into the sinking fund and all of the money not necessary to pay accruing interest shall be invested by the State Treasurer in securities as are provided by law for the investment of the sinking funds of the Commonwealth. (2) The State Treasurer shall determine and report to the Secretary of the Budget by November 1 of each year the amount of money necessary for the payment of any interest on outstanding obligations and the principal of the obligations for the following fiscal year and the times and amounts of the payments. The Governor shall include in every budget submitted to the General Assembly full information relating to the issuance of bonds and notes under this chapter and the status of the fund and the sinking fund for the payment of interest on the bonds and notes and the principal of the bonds and notes at maturity. (3) The General Assembly shall appropriate for deposit into the sinking fund an amount equal to the sum necessary to meet repayment obligations for principal and interest. (e) Definition.--As used in this section, the term "issuing officials" means the Governor, the Auditor General and the State Treasurer. Cross References. Section 3907 is referred to in section 3906 of this title.