Chapter 18

18.05 18.05 Limitations on aggregate public debt.

18.05(1) (1) The aggregate public debt contracted in any calendar year for purposes specified by the legislature pursuant to s. 18.04 (2) shall not exceed an amount equal to the lesser of:

18.05(1)(a) (a) Three-fourths of one percent of the aggregate value of all taxable property in the state; or

18.05(1)(b) (b) Five percent of the aggregate value of all taxable property in the state less the sum of:

18.05(1)(b)1. 1. The aggregate public debt contracted pursuant to this subchapter which was outstanding as of January 1 of such calendar year after subtracting therefrom the amount on hand in the bond security and redemption fund and the amounts maintained pursuant to s. 18.09 (3) on January 1 of such calendar year which is applicable exclusively to repayment of such outstanding public debt; and

18.05(1)(b)2. 2. The aggregate net indebtedness outstanding as of January 1 of such calendar year of the Wisconsin State Agencies Building Corporation, Wisconsin State Colleges Building Corporation, Wisconsin State Public Building Corporation and Wisconsin University Building Corporation.

18.05(2) (2) The last determination made by the department of revenue of the full market value of all general property of the state liable to taxes pursuant to s. 70.575 shall be the aggregate value of all taxable property in the state. The department of revenue shall certify such value when requested for use in connection with the contracting of state debt.

18.05(3) (3) The legislative audit bureau shall annually determine the amounts under sub. (1) (b) 1. and 2. and shall certify such amounts when requested for use in connection with the contracting of state debt. It shall use in making such determination the fair market value of all property on hand in the sinking funds of the bond security and redemption fund. It shall take into account any anticipatory contracts under s. 18.10 (1).

18.05 History History: 1977 c. 29 s. 1652; 2009 a. 177.

18.06 18.06 Procedures.

18.06(1) (1) Authorizing resolution. No public debt may be contracted nor evidence of indebtedness issued by the state except pursuant to an authorizing resolution. Each authorizing resolution shall state each purpose of the debt it authorizes, which need not be more specific but shall not be more general than those purposes in or pursuant to law, and the maximum principal amount of debt authorized for each such purpose. The commission may amend at any time any purpose authorized by a resolution if the amendment does not cause the total amount of debt for that purpose to exceed the statutory limit on the issuance of debt for that purpose.

18.06(2) (2) Loan. An authorizing resolution may authorize the negotiation of a loan or loan agreement of any type, upon any terms, with any bank, savings and loan association, savings bank or credit union, or with any agency of the United States.

18.06(3) (3) Notes. An authorizing resolution may authorize the issuance and sale of notes. Such a sale may be public or private as provided in the authorizing resolution.

18.06(4) (4) Bonds. An authorizing resolution may authorize the issuance and sale of bonds. Except as provided in subs. (5), (7) and (9) and except for any bond authorized and issued under this subchapter and designated by the commission under s. 18.82 as a higher education bond, the sale of bonds shall be public and noticed as provided in the authorizing resolution. Any or all bids received may be rejected and the sale canceled, or the sale of all or any part of the bonds negotiated, after bids at public sale have been rejected.

18.06(5) (5) Funding and refunding. An authorizing resolution may authorize, for any one or more of the purposes described in s. 18.04 (1), the issuance and sale of notes as provided in sub. (3) or the issuance and sale of bonds as provided in sub. (4). That sale may be public or private as provided in the authorizing resolution, and public debt may be exchanged in payment of or for the acquisition of other public debt.

18.06(6) (6) Exercise of authority. Public debt may be contracted and evidence of indebtedness issued therefor under one or more authorizing resolutions, unless otherwise provided in the resolution, at any time and from time to time, for any combination of purposes, in any specific amounts, at any rates of interest, at any price or percentage of par value, for any term, payable at any intervals, at any place, in any manner and having any other terms or conditions deemed necessary or useful. A resolution authorizing the contracting of public debt may provide that the public debt bear interest at variable or fixed rates, bear no interest, bear interest payable at any time or bear interest payable only at maturity or upon redemption prior to maturity. Unless sooner exercised and unless a shorter period is provided in such resolution, every authorizing resolution shall expire one year after the date of its adoption.

18.06(7) (7) Special procedures. Notwithstanding subs. (2) to (5), the following procedures apply to public debt contracted for any of the purposes under s. 18.04 (5) or contracted for the purpose of making funds available for veterans housing loans:

18.06(7)(a) (a) The public debt may be sold at public or private sale.

18.06(7)(b) (b) The public debt may be exchanged publicly or privately in payment of or for the acquisition of other public debt.

18.06(7)(c) (c) The public debt may be sold for par value or at a premium or discount from par value.

18.06(7)(d) (d) The public debt may bear interest at variable or fixed rates as provided in or pursuant to the resolution authorizing the contracting of the public debt or, if the resolution so provides, may bear no interest, bear interest payable at any time or bear interest payable only at maturity or upon redemption prior to maturity.

18.06(8) (8) Public debt, agreements.

18.06(8)(a) (a) Subject to pars. (am) and (ar), at the time of, or in anticipation of, contracting public debt and at any time thereafter while the public debt is outstanding, the commission may enter into agreements and ancillary arrangements relating to the public debt, including liquidity facilities, remarketing or dealer agreements, letter of credit agreements, insurance policies, guaranty agreements, reimbursement agreements, indexing agreements, or interest exchange agreements. The commission shall determine all of the following, if applicable, with respect to any such agreement or ancillary arrangement:

18.06(8)(a)1. 1. For any payment to be received with respect to the agreement or ancillary arrangement, whether the payment will be deposited into the bond security and redemption fund or the capital improvement fund.

18.06(8)(a)2. 2. For any payment to be made with respect to the agreement or ancillary arrangement, whether the payment will be made from the bond security and redemption fund or the capital improvement fund and the timing of any transfer of funds.

18.06(8)(am) (am) With respect to any interest exchange agreement or agreements specified in par. (a), all of the following shall apply:

18.06(8)(am)1. 1. The commission shall contract with an independent financial consulting firm to determine if the terms and conditions of the agreement reflect a fair market value, as of the proposed date of the execution of the agreement.

18.06(8)(am)2. 2. The interest exchange agreement must identify by maturity, bond issue, or bond purpose the debt or obligation to which the agreement is related. The determination of the commission included in an interest exchange agreement that such agreement relates to a debt or obligation shall be conclusive.

18.06(8)(am)3. 3. The resolution authorizing the commission to enter into any interest exchange agreement shall require that the terms and conditions of the agreement reflect a fair market value as of the date of execution of the agreement, as reflected by the determination of the independent financial consulting firm under subd. 1., and shall establish guidelines for any such agreement, including the following:

18.06(8)(am)3.a. a. The conditions under which the commission may enter into the agreements.

18.06(8)(am)3.b. b. The form and content of the agreements.

18.06(8)(am)3.c. c. The aspects of risk exposure associated with the agreements.

18.06(8)(am)3.d. d. The standards and procedures for counterparty selection.

18.06(8)(am)3.e. e. The standards for the procurement of, and the setting aside of reserves, if any, in connection with, the agreements.

18.06(8)(am)3.f. f. The provisions, if any, for collateralization or other requirements for securing any counterparty’s obligations under the agreements.

18.06(8)(am)3.g. g. A system for financial monitoring and periodic assessment of the agreements.

18.06(8)(ar) (ar)

18.06(8)(ar)1. 1. Subject to subd. 2., the terms and conditions of an interest exchange agreement under par. (a) shall not be structured so that, as of the trade date of the agreement, both of the following are reasonably expected to occur:

18.06(8)(ar)1.a. a. The aggregate expected debt service and net exchange payments relating to the agreement during the fiscal year in which the trade date occurs will be less than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable during that fiscal year if the agreement is not executed.

18.06(8)(ar)1.b. b. The aggregate expected debt service and net exchange payments relating to the agreement in subsequent fiscal years will be greater than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable in those fiscal years if the agreement is not executed.

18.06(8)(ar)2. 2. Subdivision 1. shall not apply if either of the following occurs:

18.06(8)(ar)2.a. a. The commission receives a determination by the independent financial consulting firm under par. (am) 1. that the terms and conditions of the agreement reflect payments by the state that represent on-market rates as of the trade date for the particular type of agreement.

18.06(8)(ar)2.b. b. The commission provides written notice to the joint committee on finance of its intention to enter into an agreement that is reasonably expected to satisfy subd. 1., and the joint committee on finance either approves or disapproves, in writing, the commission’s entering into the agreement within 14 days of receiving the written notice from the commission.

18.06(8)(ar)3. 3. This paragraph shall not limit the liability of the state under an agreement if actual contracted net exchange payments in any fiscal year are less than or exceed original expectations.

18.06(8)(b) (b) The commission may delegate to other persons the authority and responsibility to take actions necessary and appropriate to implement agreements and ancillary arrangements under pars. (a) and (am).

18.06(8)(c) (c) Any public debt may include public debt contracted to fund interest, accrued or to accrue, on the public debt.

18.06(8)(d) (d) Semiannually, during any year in which the state is a party to an agreement entered into pursuant to par. (a) (intro.), the department of administration shall submit a report to the commission and to the cochairpersons of the joint committee on finance listing all such agreements. The report shall include all of the following:

18.06(8)(d)1. 1. A description of each agreement, including a summary of its terms and conditions, rates, maturity, and the estimated market value of each agreement.

18.06(8)(d)2. 2. An accounting of amounts that were required to be paid and received on each agreement.

18.06(8)(d)3. 3. Any credit enhancement, liquidity facility, or reserves, including an accounting of the costs and expenses incurred by the state.

18.06(8)(d)4. 4. A description of the counterparty to each agreement.

18.06(8)(d)5. 5. A description of the counterparty risk, the termination risk, and other risks associated with each agreement.

18.06(9) (9) Clean water fund program and safe drinking water loan program bonds. Notwithstanding sub. (4), the sale of bonds under this subchapter to provide revenue for the clean water fund program or the safe drinking water loan program may be a private sale to the environmental improvement fund under s. 25.43, if the bonds sold are held or owned by the environmental improvement fund, or a public sale, as provided in the authorizing resolution.

18.06 History History: 1977 c. 317; 1979 c. 107; 1981 c. 336; 1983 a. 368; 1985 a. 6; 1987 a. 27; 1989 a. 31, 46, 68, 366; 1991 a. 39, 221; 1993 a. 16; 1995 a. 27; 1997 a. 27; 2005 a. 22; 2007 a. 20; 2009 a. 180; 2019 a. 9.

18.07 18.07 Form and content of evidence of indebtedness.

18.07(1) (1) Any provision of s. 403.104 to the contrary notwithstanding, every evidence of indebtedness and every interest coupon appurtenant thereto is declared to be a negotiable instrument.

18.07(2) (2) Every loan agreement entered into pursuant to s. 18.06 (2) and every evidence of indebtedness given under such a loan agreement shall be executed in the name of and for the state by the secretary of the commission. Every other evidence of indebtedness shall be executed in the name of and for the state by the governor and by the secretary of administration and shall be sealed with the great seal of the state or a facsimile thereof of any size. The facsimile signature of either the governor or secretary of administration or both may be imprinted in lieu of the manual signature of such officer, as the commission directs, if approved by such officer. Evidence of indebtedness bearing the manual or facsimile signature of a person in office at the time such signature was signed or imprinted shall be fully valid notwithstanding that before or after the delivery thereof such person ceased to hold such office.

18.07(3) (3) Every evidence of indebtedness shall be dated not later than the date issued, shall contain a reference by date to the appropriate authorizing resolution or resolutions and shall be in accordance therewith and, if issued for any one or more of the purposes described in s. 18.04 (1), shall so state.

18.07(4) (4) An evidence of indebtedness and any interest coupon appurtenant thereto shall be in such form and contain such statements or terms, not in conflict with law or with the appropriate authorizing resolution or resolutions, as the commission directs.

18.07 History History: 1973 c. 90 s. 555m (2); 1981 c. 20; 2003 a. 33.

18.08 18.08 Capital improvement fund.

18.08(1) (1) 

18.08(1)(a) (a) All moneys resulting from the contracting of public debt or any payment to be received with respect to any agreement or ancillary arrangement entered into under s. 18.06 (8) (a) with respect to any such public debt and any moneys transferred under s. 20.370 (5) (hq) or (hr) shall be credited to a separate and distinct fund, established in the state treasury, designated as the capital improvement fund, except that:

18.08(1)(a)1. 1. Such moneys which represent accrued interest on bonds issued, or are for purposes of funding or refunding bonds pursuant to s. 18.06 (5), shall be credited to one or more of the sinking funds of the bond security and redemption fund or to the state building trust fund.

18.08(1)(a)2. 2. Any such moneys that represent any payments received pursuant to any agreement or ancillary arrangement entered into under s. 18.06 (8) (a) with respect to any such public debt may be credited to one or more of the sinking funds of the bond security and redemption fund or to the capital improvement fund, as determined by the commission.

18.08(1)(a)3. 3. Premiums required for deposit in reserve funds or those necessary to make cost of issuance and other ancillary payments may be credited to one or more of the sinking funds of the bond security and redemption fund or to the capital improvement fund, as determined by the commission.

18.08(1)(b) (b) Moneys within the capital improvement fund shall be segregated into separate and distinct accounts according to the program purposes defined under ch. 20 for which public debt has been authorized by the legislature.

18.08(1m) (1m) With respect to premium proceeds deposited in the capital improvement fund, all of the following shall apply:

18.08(1m)(a) (a) Premium proceeds shall first be used for the purposes for which the bonds were issued in proportion to the par value of the bond issue. If the premiums are used for the purposes, the authorized bonding authorization for those purposes is reduced by the amount of premiums that are used.

18.08(1m)(b) (b) Any premiums not used for the purposes for which bonding was authorized may be used for other purposes, as determined by the commission. If the premiums are used for any other purposes, the authorized bonding authorization for those purposes is reduced by the amount of premiums that are used.

18.08(2) (2) The capital improvement fund may be expended, pursuant to appropriations, only for the purposes and in the amounts for which the public debts have been contracted, for the payment of principal and interest on loans or on notes, for the payment due, if any, under an agreement or ancillary arrangement entered into under s. 18.06 (8) (a) with respect to any such public debt, for the purposes identified under s. 20.867 (2) (v) and (4) (q), and for expenses incurred in contracting public debt.

18.08(3) (3) Moneys of the capital improvement fund may be commingled only for the purpose of investment with other public funds, but they shall be invested only as provided in s. 18.04 (6) or 25.17 (3) (b). All such investments shall be the exclusive property of the fund and all earnings on or income from such investments shall be credited to the fund and shall, subject to subs. (5) and (6), become available for any of the purposes under sub. (2). Before October 1, 1983, earnings from that portion created by self-amortizing projects may be transferred by resolution of the commission to the bond security and redemption fund to be used as provided in s. 18.09 (4).

18.08(4) (4) If at any time it appears that there will not be on hand in the capital improvement fund sufficient moneys for the payment of principal and interest on loans or on notes or for the payment due, if any, under an agreement or ancillary arrangement that has been entered into under s. 18.06 (8) (a) with respect to any public debt and that has been determined to be payable from the capital improvement fund under s. 18.06 (8) (a) 2., the department of administration shall transfer to such fund, out of the appropriation made pursuant to s. 20.866, a sum sufficient which, together with any available money on hand in such fund, is sufficient to make such payment.

18.08(5) (5) Before October 31, 1983, there shall be transferred to the bond security and redemption fund the interest earnings accrued to the capital improvement fund before October 1, 1983 due to the investment of moneys from the contracting of public debt under s. 20.866 (2) (u) to (uv). These funds shall be used for meeting periodic principal, interest and premiums due, if any, on principal repayment and interest payments required from the transportation fund on this public debt.

18.08(6) (6) Before October 31, 1983, there shall be transferred to the bond security and redemption fund the interest earnings accrued to the capital improvement fund before October 1, 1983, due to the investment of moneys from the contracting of public debt under s. 20.866 (2) (tm) to (to). These funds shall be used for meeting periodic principal, interest and premiums due, if any, on principal repayment and interest payments required from the general fund on this public debt.

18.08(7) (7) Notwithstanding sub. (3), moneys transferred under 2023 Wisconsin Act 19, section 9251 (1), cannot be commingled with other moneys in the capital improvement fund and all earnings on or income from investments of the moneys transferred under 2023 Wisconsin Act 19, section 9251 (1), and all excess moneys so transferred that are not used to fund building projects authorized in the 2023-25 Authorized State Building Program, shall be deposited into or transferred to the general fund.

18.08 History History: 1971 c. 125; 1973 c. 90 ss. 32c, 555m (2); 1973 c. 243; 1975 c. 39; 1977 c. 29 ss. 1652, 1654 (1); 1977 c. 317, 418; 1979 c. 34; 1983 a. 27 ss. 111n, 2202 (5); 1987 a. 27; 2007 a. 20; 2013 a. 20; 2021 a. 58; 2023 a. 19.

18.09 18.09 Bond security and redemption fund.

18.09(1) (1) When bonds are authorized, there shall be established in the state treasury a bond security and redemption fund separate and distinct from every other fund, which shall contain separate and distinct sinking funds for each particular bond issue.

18.09(2) (2) Each sinking fund shall be expended, and all moneys from time to time on hand therein are irrevocably appropriated, in sums sufficient, only for the payment of principal and interest on the bonds giving rise to it, premium, if any, due upon redemption of any such bonds, and payment due, if any, under an agreement or ancillary arrangement that has been entered into under s. 18.06 (8) (a) with respect to any such bonds and that has been determined to be payable from the bond security and redemption fund under s. 18.06 (8) (a) 2.

18.09(3) (3) One year after interest has ceased to accrue on all of the bonds giving rise to a sinking fund, all moneys on hand in such sinking fund shall be paid over and transferred to the state building trust fund and the sinking fund shall be closed. An amount equal to the aggregate face value of all outstanding bonds and the accrued interest thereon for which no sinking fund exists shall be maintained in the state building trust fund applicable exclusively to the payment of such bonds and interest.

18.09(4) (4) Moneys of the bond security and redemption fund may be commingled only for the purpose of investment with other public funds, and they may be invested only as provided in s. 18.04 (6) or 25.17 (3) (dr). All such investments shall be the exclusive property of such fund and all earnings on or income from such investments plus any transfers from the capital improvement fund under s. 18.08 (3), (5) or (6) shall be distributed to the respective sinking funds by the department of administration for use in meeting periodic principal and interest payments on bonds issued.

18.09(5) (5) There shall be transferred to each sinking fund a sum sufficient for the payment of the principal, interest and premium due, if any, on the bonds giving rise to it as the same falls due. Such transfers shall be so timed that there is at all times on hand in the sinking fund an amount not less than the aggregate amount of principal, interest and premium, if any, to be paid out of it during the ensuing 15 days. The amount of any transfer scheduled to be made to the sinking fund from an escrow account established under a refunding escrow agreement on or before the due date of any payment of principal, interest or premium shall be treated as an amount on hand in the sinking fund as of the 16th day before the due date or as of the 46th day before the due date if operating notes are outstanding. Notwithstanding the foregoing, no further such transfer need be made after there are on hand in the sinking fund from any source assets sufficient to pay the aggregate face value of all of the bonds giving rise to it outstanding, the amount of any premium payable on such payment and the amount of interest to accrue on such bonds until payment.

18.09 History History: 1971 c. 125; 1983 a. 27 s. 2202 (5); 1985 a. 6; 1987 a. 27; 2007 a. 20.

18.09 Annotation The terms of a statute in effect at the time of a bond issue providing for specific transfers of funds to a sinking fund are a part of the bond obligation that cannot be changed by retroactive application of an amendment to that statute. 61 Atty. Gen. 93.

18.10 18.10 Other fiscal and administrative regulations.

18.10(1) (1) Anticipatory contracts. After adoption of an authorizing resolution for a purpose which is to be accomplished wholly or in part through performance of an executory contract by some other contracting party, such contract may be entered into prior to the contracting of the debt authorized by such resolution with like effect as if the funds necessary for payments on the contract were already available. In such cases the debt authorized by such resolution shall be deemed to have been contracted pursuant to such resolution in the amount necessary to make such payments on the date such contract is entered into and the authority of such resolution shall promptly thereafter be exercised.

18.10(2) (2) Lawful money. All money borrowed by the state shall be lawful money of the United States and all public debt shall be payable in such money.

18.10(3) (3) Management of funds and records. The capital improvement fund and the bond security and redemption fund shall be managed as provided by law for other state funds. The department of administration shall maintain full and correct records of each fund. The legislative audit bureau shall audit each such fund as of January 1 of each year reconciling all transactions and showing the fair market value of all property on hand.