This morning the House Financial Liabilities Reform Committee heard testimony on House Bill 5650, legislation that would amend the Revised Municipal Finance Act to provide for a statutory first lien on all taxes subject to an unlimited tax pledge for a municipal security authorized or issued before December 23, 1978, or approved by the electors of a municipality. This would apply to an unlimited tax pledge made prior to or after the date of enactment of the bill.
Current law requires that the taxes be set aside as collected for the payment of the principal and interest on the municipal securities divided pro rata among the various sinking funds and debt retirement funds in accordance with the amount levied. Upon collection and prior to dividing the funds pro rata, House Bill 5650 would require the funds set aside to be held in trust for the owners of the municipal security.
The committee did not vote on the legislation.
Samantha Harkins is the Director of State Affairs for the Michigan Municipal League. She can be reached at 517-908-0306 or email at [email protected]