Proposed Amendment to Section 2A, Article VIII Constitution of the State of Idaho

If adopted, the proposed amendment would:

• Authorize the Legislature to enact statutes creating a municipal bond bank authority to purchase municipal bonds and other obligations;
• Authorize the Legislature to make loans to municipalities secured by municipal bonds and other obligations;
• Authorize the Legislature to issue revenue bonds secured by municipal bonds and obligations; and
• Define a municipality as any county, city, municipal corporation, school district, irrigation district, sewer district, water district, highway district, special purpose district or political subdivision of the state established by law.

Effect of Adoption:

The Legislature would be permitted to enact legislation allowing municipalities to sell their bonds to the state bond bank authority or obtain loans from the authority secured by the municipality's bonds. The state could pool smaller bond issues, purchase municipal bonds or make loans to municipalities by issuing its own revenue bonds. The state could obtain better credit ratings, more attractive interest rates and lower underwriting costs than the municipalities could achieve individually. The bond bank authority would be able to pledge state funds or revenues as additional security for its bonds, further reducing interest costs. The bond bank authority would be relieved from state constitutional debt limitations and voter approval requirements, as well as constitutional restrictions upon the loan of the state's credit to a municipal corporation.