MISSISSIPPI LEGISLATURE

2006 1st Extraordinary Session

To: Ways and Means; Appropriations

By: Representative Watson, Compretta, Dedeaux, Upshaw, Fredericks, Guice, Ishee, Janus, Patterson, Peranich, Simpson, Broomfield, Hamilton (109th), Parker, Read, Wells-Smith, Zuber, Formby

House Bill 5

(As Passed the House)

AN ACT TO AMEND SECTION 27-107-321, MISSISSIPPI CODE OF 1972, TO AUTHORIZE THE DEPARTMENT OF FINANCE AND ADMINISTRATION TO MAKE GRANTS TO LOCAL GOVERNMENTS FROM THE EMERGENCY AID TO LOCAL GOVERNMENTS FUND; TO PROVIDE THAT INTEREST EARNED OR INVESTMENT EARNINGS ON AMOUNTS IN THE FUND SHALL BE DEPOSITED TO THE CREDIT OF THE FUND AND TO PROVIDE THAT GRANTS FROM THE FUND MAY NOT EXCEED $3,000,000.00 AND THAT THE TOTAL AGGREGATE AMOUNT OF ALL GRANTS SHALL NOT EXCEED $25,000,000.00; TO REQUIRE NOTICE TO BE GIVEN TO CERTAIN MEMBERS OF THE LEGISLATURE BEFORE A PUBLIC CEREMONY TO ANNOUNCE THE AWARD OF A GRANT UNDER THIS ACT; TO REQUIRE THAT CERTAIN DOCUMENTS PREPARED IN CONNECTION WITH A GRANT MADE UNDER THIS ACT CONTAIN LANGUAGE THAT THE GRANT FUNDS WERE MADE AVAILABLE BY THE LEGISLATURE; AND FOR RELATED PURPOSES.

     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

     SECTION 1.  Section 27-107-321, Mississippi Code of 1972, is amended as follows:

     27-107-321.  (1)  (a)  There is established an emergency aid to local governments loan and grant program to be administered by the Department of Finance and Administration, referred to in this section as "department," for the purpose of assisting counties, incorporated municipalities and public school districts that suffer revenue losses as a result of a natural disaster for which a state of emergency has been duly proclaimed.  Loan and grant proceeds distributed to counties, incorporated municipalities and public school districts shall be considered to be, and shall be utilized by recipient in the same manner as, governmental, enterprise or internal service fund type revenues, specifically for essential government services, including the payment of debt service.

          (b)  The department may contract for facilities and staff needed to administer this section, including routine management, as it deems necessary.  The department may advertise for or solicit proposals from public or private sources, or both, for administration of this section or any services required for administration of this section or any portion thereof.  It is the intent of the Legislature that the department endeavor to ensure that the costs of administration of this section are as low as possible.

     (2)  (a)  There is created a special fund in the State Treasury to be designated as the "Emergency Aid to Local Governments Fund," referred to in this section as "fund," which fund shall consist of money transferred from the Disaster Recovery Fund created in Section 31-17-123 and money designated for deposit therein from any other source, public or private, including, but not limited to, appropriations, bond proceeds, grants, gifts or donations.  The fund shall be credited with all repayments of principal and interest derived from loans made from the fund.  Unexpended amounts remaining in the fund at the end of a fiscal year shall not lapse into the State General Fund, and any interest earned or investment earnings on amounts in the fund shall be deposited to the credit of the Emergency Aid to Local Governments Fund.  Monies in the fund may not be used or expended for any purpose except as authorized under this section.

          (b)  The department shall establish a loan and grant program by which loans and grants may be made available to counties, incorporated municipalities and public school districts, to assist those counties, incorporated municipalities and public school districts.  Any governmental entity in the current fiscal year that demonstrates a projected revenue loss equal to or exceeding twenty-five percent (25%) of its governmental fund type revenues in the fiscal year prior to the occurrence of the natural disaster eligible under this section may qualify for a loan and/or grant.  The interest rate on loans made under this section may vary from time to time and from loan to loan, and shall be at or below market interest rates as determined by the department.  The department shall act as quickly as is practicable and prudent in deciding on any loan or grant request that it receives.  No loan or grant shall be approved under this section unless the county, municipality or public school district requesting the loan or grant has exhausted all other available public or private programs to obtain funds for the revenue loss that it is projected to suffer.  Such public or private programs shall include, but not be limited to, loans, grants and donations.

          (c)  The aggregate amount of any loans or grants received under this section by a county, incorporated municipality or public school district shall not exceed one hundred percent (100%) of the difference between the revenue received by a county, incorporated municipality or public school district from governmental fund type revenues that are used to fund essential services in the fiscal year prior to the occurrence of the natural disaster and the estimated revenue from such sources after the occurrence of the natural disaster plus available cash reserves or fund balances at the fiscal year end, as determined by the department.  The State Bond Commission shall set the maximum amount of any loan or grant made under this section at an amount that will ensure the equitable distribution of the amounts available for loans and grants to the eligible governmental entities affected by the natural disaster, but in no event shall a grant exceed Three Million Dollars ($3,000,000.00) or the total aggregate amount of all grants exceed Twenty-five Million Dollars ($25,000,000.00).

          (d)  A county or public school district that receives a loan from the fund shall pledge for repayment of the loan any part of the homestead exemption annual tax loss reimbursement to which it may be entitled under Section 27-33-77, as may be required by the department.  An incorporated municipality that receives a loan from the fund or the emergency fund shall pledge for repayment of the loan any part of the sales tax revenue distribution to which it may be entitled under Section 27-65-75 or any part of the homestead exemption annual tax loss reimbursement to which it may be entitled under Section 27-33-77, as may be required by the department.  All recipients of such loans shall establish a dedicated source of revenue for repayment of the loan.  Before any county, incorporated municipality or public school district shall receive any loan, it shall have executed with the department a loan agreement evidencing that loan, a copy of which shall be filed by the department with the State Tax Commission.  The loan agreement shall not be construed to prohibit any recipient from prepaying any part or all of the funds received.  The repayment schedule in each loan agreement shall provide for (i) monthly payments, (ii) semiannual payments or (iii) other periodic payments.  The loan agreement shall provide for the repayment of all funds received from the fund within not more than three (3) years.  The State Tax Commission shall, at the direction of the department, withhold semiannually from counties, incorporated municipalities and public school districts and monthly from incorporated municipalities, from the amount to be remitted to the county, municipality or public school district, the sum necessary to pay all or a portion of the periodic payments for the loan.

          (e)  Any county, incorporated municipality or public school district which receives a loan from the state for that purpose but which is not eligible to pledge for repayment under the provisions of paragraph (d) of this subsection, shall repay that loan by making payments each month to the State Treasurer through the Department of Finance and Administration for and on behalf of the department according to Section 7-7-15, to be credited to the fund in lieu of pledging homestead exemption annual tax loss reimbursement or sales tax revenue distribution.

     Loan repayments shall be according to a repayment schedule contained in each loan agreement as provided in paragraph (d) of this subsection.

          (f)  Evidences of indebtedness which are issued pursuant to this section shall not be deemed indebtedness within the meaning specified in Section 21-33-303 with regard to cities and incorporated towns, in Section 19-9-5 with regard to counties and in Section 37-59-5 with regard to public school districts.

          (g)  The State Auditor, upon request of the department, shall audit the receipts and expenditures of acounty, an incorporated municipality or a public school district if loan repayments appear to be in arrears, and if the Auditor finds that the county, incorporated municipality or public school district is in arrears in those repayments, the Auditor shall immediately notify the executive director of the department who may take any action as may be necessary to enforce the terms of the loan agreement, including liquidation and enforcement of the security given for repayment of the loan, and the executive director of the department may, in his discretion, notify the State Tax Commission to withhold all future payments to the county, incorporated municipality or school district of homestead exemption annual tax loss reimbursements under Section 27-33-77 and/or all sums allocated to the incorporated municipality under Section 27-65-75, until such time as the county, incorporated municipality or public school district is again current in its loan repayments as certified by the department.

          (h)  All monies deposited in the fund shall be used only for providing the loans and grants authorized under this section.  In addition, any amounts in the fund may be used to defray the reasonable costs of administering the fund; however, no monies in the fund which are to be used for grant purposes may be used to defray any costs of administering the fund or program.  The department is authorized to use amounts available to it from the fund to contract for those facilities and staff needed to administer and provide routine management for the funds and loan program.

     (3)  In administering this section the department shall have the following powers and duties:

          (a)  To supervise the use of all funds made available under this section;

          (b)  To promulgate rules and regulations, to make variances and exceptions thereto, and to establish procedures in accordance with this section for the implementation of the loan and grant program;

          (c)  To requisition monies in the fund and distribute those monies in accordance with this section;

          (d)  To maintain, in accordance with generally accepted government accounting standards, an accurate record of all monies in the fund made available to counties, incorporated municipalities and public school districts under this section;

          (e)  To file annually with the Legislature a report detailing how monies in the fund were distributed during the preceding fiscal year to each county, incorporated municipality and public school district.

     (4)  The State Bond Commission, at one time, or from time to time, may declare the necessity for funds for the purposes provided in this section, including the costs incident to the administration of the loan and grant program.  Upon approval by the State Bond Commission, the department is authorized to transfer any necessary amount from the Disaster Recovery Fund created in Section 31-17-123 to the fund in ample time to discharge such loans, grants and incidental costs.

     (5)  The department is authorized, without further process of law, to certify the necessity for warrants and is authorized and directed to issue such warrants, in such amounts as may be necessary to make loans and grants under the program authorized by this section.

     (6)  After any state funds in the fund are no longer needed for the particular purpose for which they were appropriated, deposited or transferred into the fund, the department shall transfer those state funds back to the particular fund or funds in the State Treasury from which they were appropriated or transferred into the fund, upon certification of the State Fiscal Officer that the state funds are not currently needed.

     (7)  At least five (5) days before any public ceremony to announce the award of a grant to a county, municipality or public school district under this section, the department shall notify all of the members of the Mississippi House of Representatives and Mississippi Senate whose districts include any portion of the county, municipality or school district to which the grant is being made.

     (8)  The department shall include the following language at a prominent location on any documents prepared by the department in connection with a grant made under this section that are to be provided to the county, municipality or school district to which the grant is made or to the public:  "The funds for this grant were made available by the Mississippi Legislature."

     SECTION 2.  This act shall take effect and be in force from and after its passage.