SECTIONS 17300-17313 - California Statutes

GOVERNMENT CODE

SECTION 17300-17313

17300. Whenever the Controller determines that moneys in the
General Fund are, or are expected to be, insufficient for the payment
of all appropriations by the Legislature which are required to be
paid in the then current fiscal year out of the General Fund, the
Controller, based upon his or her estimate of the probable income to
the General Fund during the then current fiscal year and the probable
dates of receipt thereof, may draw a demand or demands against
appropriations made from the General Fund to be paid in the then
current fiscal year prior to the receipt of the income, and deliver
the demand or demands to the Treasurer. The Treasurer shall register
the demand or demands for nonpayment and may issue notes by
resolution pursuant to Section 17302.

17301. Notes authorized to be issued may be sold by the Treasurer
from time to time on a negotiated or a competitive bid basis as the
Treasurer shall deem advisable. The Treasurer shall pay the notes and
the interest thereon from moneys in the General Fund.

17302. Notes shall be issued pursuant to this part only to raise
funds in an amount sufficient to satisfy the Controller's registered
demand or demands. Proceeds of notes may also be used for the
payments described in Section 17311 to the extent that those payments
are not included within the appropriations comprising the demand or
demands. The principal amount of the issuance of notes shall equal
the amount of the demand or the portion of the demand that is
satisfied by the issuance. The issuance of any notes pursuant to this
part shall be authorized by a resolution adopted by the Treasurer
with the approval of the Controller and the Director of Finance.
(a) Any note (1) may be negotiable, (2) may be payable to order or
to bearer, (3) may be in any denomination, (4) shall be payable not
later than 120 days after the end of the fiscal year in which the
note has been issued and shall not be renewable beyond that date, (5)
may bear fixed or variable interest at a rate or rates to be
determined as provided by the resolution and payable as provided
therein, (6) may be payable on a fixed date or upon demand of the
holder of the note, (7) may be made subject to prepayment or
redemption at the option of the state or at the option of the holder,
and (8) may have a term not exceeding 12 months.
(b) In lieu of issuing notes pursuant to subdivision (a), the
resolution may provide for the issuance of notes in the form of
commercial paper. This commercial paper may be issued and renewed
from time to time, in amounts, subject to the requirements of this
subdivision, as the Treasurer shall determine, from the date of
initial issuance until the final maturity date, which shall not be
more than 12 months, and shall occur not more than 120 days after the
end of the fiscal year in which the commercial paper was first
issued, and shall not be renewed beyond that date. The maximum
principal amount of commercial paper outstanding at any one time
shall be stated in the resolution, and shall not be greater than the
amount of the Controller's demand. The resolution may also provide
that the commercial paper (1) may be negotiable, (2) may be payable
to order or to bearer, (3) may be in any denomination, (4) may bear
fixed or variable interest at a rate or rates to be determined as
provided in the resolution and payable as provided therein, (5) may
be payable on a fixed date or upon demand of the holder of the
commercial paper, (6) may be made subject to prepayment or redemption
at the option of the state or of the holder, and (7) may contain any
other provision necessary or appropriate to carry out the program of
commercial paper.

17303. Upon receipt of the purchase price of the notes, the
Treasurer shall notify the Controller that funds for the payment of
all or part of the registered demand or demands are in the State
Treasury and available for the payment of claims represented by the
registered demand or demands. The Controller may thereupon proceed to
draw warrants against appropriations lawfully made by the
Legislature to be paid in the fiscal year and represented by the
registered demand or demands. Upon the payment in full of the notes
representing the registered demand or demands, or the portion of the
demand or demands as set forth in Section 17302, the appropriate
portion of the registered demand or demands shall be canceled.

17304. Any revenues in the General Fund are available for the
payment of all notes and the interest thereon until the notes and the
interest thereon shall be fully paid and discharged. The notes,
together with the interest thereon, shall be payable exclusively from
moneys in the General Fund , but not excepting recourse to internal
borrowing from other funds in the event insufficient moneys are
available from the General Fund.

17306. All notes issued pursuant to this part by the state are
legal investments for any of the following:
(a) Trust funds.
(b) Funds of insurers.
(c) Funds of savings and loan associations.
(d) Funds of banks.
(e) Funds of state agencies, cities, counties, cities and counties
or other public agencies or corporations.

17307. Notes issued under this part are acceptable and may be used
as security for the faithful performance of any public or private
trust or obligation or for the performance of any act, including the
use of notes by banks as security for deposits of funds of the state
and its agencies, or of any city, county, city and county, or other
public agency or corporation.

17308. Any state or local agency that is authorized to invest funds
in its treasury in securities which are legal investments for
savings banks may invest the funds in notes of the state issued under
this part.

17309. Whenever the Treasurer deems that it will increase the
salability of the notes to obtain, prior to or after sale, a legal
opinion as to the validity of the notes from attorneys other than the
Attorney General, the Treasurer may obtain a legal opinion
elsewhere.

17310. (a) Notwithstanding Section 13340, there is hereby
appropriated from the General Fund any unapplied money, as defined in
subdivision (a) of Section 17220, in any amounts necessary to pay
the interest on, and the principal of, any notes issued pursuant to
this part, as the interest on and the principal of the notes become
due and payable.
(b) When any payment on a note or any payment to the provider of a
credit enhancement or liquidity facility for a note is due, that
payment shall be made subject only to prior payment of the following:
(1) Payments required by law to be paid before the note or
provider payment.
(2) Payments that by the terms of the note or credit enhancement
or liquidity agreement are permitted to be paid before the note or
provider payment.

17311. (a) There is hereby appropriated from the General Fund
without regard to fiscal years two hundred fifty thousand dollars
($250,000), which shall be set aside in a special account entitled
State Notes Expense Account, and shall be used to pay expenses
incurred by the Treasurer, Controller, or the Department of Finance
in providing for the preparation, sale, issuance, advertising, legal
services, or any other act which, in the discretion of the Treasurer
or the Department of Finance, is necessary to carry out the purposes
of this part. This account shall operate as a revolving fund and
whenever notes are sold, out of the first money realized from their
sale, any remaining expenses shall be paid and then there shall be
redeposited in the account any amounts that have been expended for
the above purposes, which amounts may be used for the same purposes
and repaid in the same manner whenever additional sales are made.
Without limiting Section 17300, a demand drawn under Section 17300
may include the expenses described in this subdivision. In the
alternative, all or a portion of the expenses described in this
subdivision may be paid by causing the notes to bear interest at a
rate that results in payment by the purchaser of the notes of a
premium sufficient to pay these expenses.
(b) Any premium received upon the sale of an issuance of notes
shall be applied to expenses described in subdivision (a) or shall be
credited to the General Fund and applied to the payment of interest
on notes.

17313. It is the intent of the Legislature that this part shall, in
all respects, fall within the procedures validated by, and meet the
requirements for constitutionality set forth in, the California
Supreme Court cases of Riley v. Johnson, (1933), 219 Cal. 513, Riley
v. Johnson, (1936), 6 Cal. 2d 529, and Flournoy v. Priest, (1971), 5
Cal. 3d 350.