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Commonwealth indebtedness - 12 Pa. Cons. Stat. § 3907

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     § 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.

Last modified: November 27, 2007