Fiscal Note
BILL # SB 1091 TITLE: appropriation; debt; repayment; defeasance
SPONSOR: Livingston STATUS: As Amended by Senate APPROP
PREPARED BY: Morgan Dorcheus
Description
The bill would make appropriations for the retirement or defeasance of 2 sets of state financing agreements: 1) ADOA
Series 2015/Series 2017, which funded Arizona Department of Corrections (ADC) prison beds and water supply projects,
and the Arizona State Hospital (ASH)'s Forensic Unit; and 2) University research infrastructure financing, which funded
projects at all 3 state universities.
Estimated Impact
In total, the bill appropriates $367.0 million from the General Fund in FY 2022 for the one-time cost of retiring state
financing agreements. After accounting for the debt payoff appropriation of $367.0 million (which includes transaction
costs) and multi-year debt service savings of $379.3 million from eliminating the remaining payments, the state would
realize a cumulative net General Fund savings of $12.3 million through FY 2031.
In terms of annual debt service payments, the FY 2023 Baseline includes $52.0 million of General Fund spending for debt
service payments on these issuances. Under SB 1091, the state's ongoing spending would be reduced by $(52.0) million in
FY 2023 as the bill would eliminate those General Fund payments.
Analysis
Laws 2007, Chapter 261 authorized a lease-purchase agreement for 4,000 new prison beds and Laws 2007, Chapter 257
authorized lease-purchases agreements for a new forensic unit at the Arizona State Hospital (ASH) and water supply
projects at 4 state prison complexes. ADC and ASH pay debt service for the financing using General Fund monies that are
appropriated as part of the agencies' operating budgets. The bill would appropriate $93.5 million from the General Fund
in FY 2022 for the retirement or defeasance of the agreements. After accounting for the debt payoff appropriation of
$93.5 million (which includes transaction costs) and multi-year debt service savings of $94.8 million from eliminating the
remaining payments, the state would realize a cumulative net General Fund savings of $1.3 million through FY 2028.
A.R.S. ยง 15-1670 makes annual General Fund appropriations to the state university system through FY 2031 to finance
lease-purchase agreements for research infrastructure projects. The bill would appropriate $273.5 million from the
General Fund in FY 2022 for the retirement or defeasance of the financing agreements. After accounting for the debt
payoff appropriation of $273.5 million (which includes transaction costs) and multi-year debt service savings of $284.5
million from eliminating the remaining payments, the state would realize a cumulative net General Fund savings of $11.0
million through FY 2031.
Local Government Impact
None
1/26/22