Question

What restrictions are placed on state and local government debt in Montana? What methods are used to avoid those limits? Is there a state bond bank? Does Montana have any program for credit enhancement for local debt?

Answer 1

There are basically three main types of restrictions on state and local government debt:

1- A limit on indebtedness, expressed as a percentage of the local government's property tax base.

2- A limit on tax rates imposed on debt service.

3- The requirement of a local referendum to authorize the issuance of bonds, often calling for some kind of "special" majority.

Credit Enhancement Implementation –

According to MFFA (Montana Health Facility Finance Authority Act, the Board is authorized to loan money to the MFFA for deposit in its capital reserve account and to purchase its bonds and notes. Pursuant to resolutions of the Board relating to each series of MFFA Bonds for which credit enhancement is provided, the Board is authorized to enter into an agreement with the MFFA whereby the Board agrees to make an interest bearing loan to the Capital Reserve Account to restore any deficiency

Only the INTERCAP and Irrigation Bondsare credit enhanced by the Boardunder MCFA.