SENATE BILL NO. 191 "An Act relating to the authority to transfer money from the general fund to general obligation bond construction funds or accounts; and providing for an effective date." 6:25:48 PM SUZANNE ARMSTRONG, STAFF, SENATOR KEVIN MEYER, stated that SB 191 proposed an administrative fix and would establish parameters for transferring general funds to a geo-bond construction fund. She relayed that under current statute the commissioner of administration on recommendation of the State Bond Committee, and after approval of the Legislative Budget and Audit Committee (LB&A), may temporarily transfer funds from the general fund to geo-bond construction funds when the fund had been temporarily exhausted. She said that the legislation would allow for the transfer to occur without approval from LB&A as long as the transfer did not exceed 25 percent of the amount authorized for the geo- bonds. If the number was over 25 percent it would need to be approved by LB&A. Additionally, SB 191 stipulated that the loan from the general fund must be paid back within a 15 month time period, which fell in line with the Internal Revenue Service (IRS) code requirement that advanced fund bond issuance loans must be repaid by bod proceeds within 18 months. The changes proposed in the bill would allow for increased certainty in project schedule and cash-flow, provide greater ability for the State Bond Committee to respond to unforeseen increases in project expenditures from the construction funds and provide greater flexibility and potentially a more advantageous position for the State Bond Committee in executing state bond sales. She concluded that the change in law would eliminate the negative carry cost of borrowed funds sitting in construction funds for extended timeframes; the potential opportunity cost of investing funds held in the general fund is off-set by the cost of paying interest expense on the borrowed funds that are not yet needed. 6:28:56 PM LAURA PIERRE, STAFF, SENATOR ANNA FAIRCLOUGH, added that added that while the department would no longer have to seek approval from LB&A, the division would still need to be notified when a transfer occurred. 6:29:31 PM DEVON MITCHEL, STATE DEBT MANAGER, DEPARTMENT OF REVENUE, related that the state had not issued any general obligation bonds between 1984 and 2003. He said that during that time period there were significant changes to the IRS code relating to tax exempt bonds. The bill would allow for more administrative flexibility for the implementation of the bonds authorized by the legislature. 6:31:12 PM Co-Chair Meyer probed the potential savings to the state. Mr. Mitchell replied that the savings would be noticeable. 6:33:43 PM SB 191 was HEARD and HELD in committee for further consideration. Co-Chair Meyer discussed housekeeping.