NEW ISSUE
PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 6, 1999In the opinion of Bond Counsel, assuming the State's continued compliance with certain covenants, interest on the Series 1999MB Bonds is excludable from gross income of the Registered Holder for federal income tax purposes under existing statutes, regulations, and court decisions.The Series 1999MB Bonds and the interest thereon will also be exempt from all State, county, municipal, school district and other taxes and assessments imposed thereon within the State of South Carolina, except inheritance, estate, transfer and certain franchise fees or taxes. Interest
on the Series 1999MB Bonds is not an item of preference for purposes of an individual’s or corporation’s alternative minimum tax.PRELIMINARY OFFICIAL STATEMENT
Relating To The Issuance Of
NOT EXCEEDING
$25,000,000
GENERAL OBLIGATION STATE CAPITAL IMPROVEMENT BONDS
SERIES 1999MB
OF THE
STATE OF SOUTH CAROLINA
Secured by a pledge of the full faith, credit, and
taxing power of the State of South Carolina
Dated: November 15, 1999
The General Obligation State Capital Improvement Bonds, Series 1999MB (the "Series 1999MB Bonds") will be issued as Current Interest Bearing
Bonds and Capital Appreciation Bonds in the principal amounts subscribed for (not exceeding $25,000,000 in the aggregate), bearing interest at, or yielding the equivalent of, the rates, and maturing on the dates, as set forth below.Current Interest Bearing Bonds Due December 1, 2004 bearing interest, payable
semiannually, at 4.48% per annum.
Capital Appreciation Bonds Due December 1, 2004 yielding the equivalent of
4.48% per annum, payable at maturity.
Current Interest Bearing Bonds Due December 1, 2009 bearing interest, payable
semiannually, at 4.98% per annum.
Capital Appreciation Bonds Due December 1, 2009 yielding the equivalent of
4.98% per annum, payable at maturity.
The Series 1999MB Bonds are being issued to provide funds which will be used to pay costs of projects authorized by Act 1377 and to pay the costs of issuance of the Series 1999MB Bonds.
The Series 1999MB Bonds are secured by a pledge of the full faith, credit, and taxing power of the State of South Carolina.
Current Interest Bearing Bonds
The Current Interest Bearing Bonds will be issued in registered form without coupons in denominations of $500 or integral multiples thereof.
Interest on the Current Interest Bearing Bonds will be payable June 1, 2000 and each June 1 and December 1 thereafter until maturity, and will
be payable by check or draft mailed to the registered owners thereof by First Union National Bank (the "Registrar" and the "Paying Agent").
The principal of the Current Interest Bearing Bonds will be payable only at
maturity upon presentation and surrender thereof at the Corporate Trust
Office of the Paying Agent.
Capital Appreciation Bonds
The Capital Appreciation Bonds will be issued in registered form without
coupons in denominations of $200 original principal amount or integral
The accretion of value on the Capital Appreciation Bonds will be compounded
semiannually commencing on June 1, 2000 and each June 1 and
December 1 thereafter and will be payable only at maturity.
The original principal amounts of the Capital Appreciation Bonds and accreted
value thereon (together, the final maturing "Accreted Value")
This Preliminary Official Statement prepared under the supervision of The Series 1999MB Bonds are offered when, as and if issued and are subject to
the approval of legality by Nexsen Pruet Jacobs & Pollard, LLP, PRELIMINARY OFFICIAL STATEMENT
Relating to the Issuance of
NOT EXCEEDING $25,000,000
GENERAL OBLIGATION STATE CAPITAL IMPROVEMENT BONDS
SERIES 1999MB
OF THE STATE OF SOUTH CAROLINA
INTRODUCTION
This Preliminary Official Statement, including the cover page, is intended to
furnish information in connection with the offer The Series 1999MB Bonds are issued pursuant to the provisions of Article X of
the Constitution of the State of South Carolina DESCRIPTION OF THE SERIES 1999MB BONDS
General
The Series 1999MB Bonds will be issued as Current Interest Bearing Bonds and
Capital Appreciation Bonds, will be dated The Series 1999MB Bonds may be transferred only on the books of the State at
the Corporate Trust Office of First Union The Series 1999MB Bonds are not subject to redemption prior to maturity.
Description of Current Interest Bearing Bonds
Current Interest Bearing Bonds will be issued as registered bonds without
coupons in denominations of five hundred dollars
Description of Capital Appreciation Bonds
Capital Appreciation Bonds will be issued as registered bonds without coupons
in denominations of two hundred dollars ($200)
Capital Appreciation Bonds are payable in an amount (the "final maturing
Accreted Value") equal to the original principal amount
Accreted Value
The Accreted Value amount due at maturity of each $200 original principal
amount of Capital Appreciation Bonds maturing
The Accreted Value amount due at maturity of each $200 original principal
amount of Capital Appreciation Bonds maturing
For purposes of valuation only, the Accreted Value of each $200 original
principal amount of any Capital Appreciation Bond
30-day months each year.
Redemption
The Series 1999MB Bonds are not subject to redemption prior to maturity.
Security
The Series 1999MB Bonds are general obligations of the State and are secured
as to principal and interest by a pledge of the full Article X, Section 13, Paragraph 4 of the South Carolina Constitution
requires that the General Assembly allocate on an annual Form and Authentication of Series 1999MB Bonds
The Series 1999MB Bonds will be issued in the form of fully-registered
typewritten or printed Bonds without coupons. All Series 1999MB Bonds will be registered on the registration books of the State which
are to be kept for that purpose at the Corporate Trust Office
The Current Interest Bearing Bonds will be issued in denominations of $500
and any integral multiple thereof. The Capital Appreciation Bonds will be issued in denominations of $200 and any integral
multiple thereof.
The Series 1999MB Bonds will be authenticated on the date they are delivered.
Each Current Interest Bearing Bond will bear interest from November 15, 1999, if no interest has yet been paid; otherwise
from the last Bond Payment Date to which interest has been paid and which Bond Payment Date is on or prior to the authentication date
thereof. Interest on the Current Interest Bearing Bonds will be payable June 1, 2000, and semiannually each June 1 and December 1 of each
year thereafter until the payment of the principal thereof at maturity. The interest to be paid on any June 1 or December 1 shall be
paid to the Registered Holder in whose name such Current Interest Bearing Bond is registered at the close of business 15 days next
preceding such Bond Payment Date (the "Record Date"). Each Capital Appreciation Bond shall accrete value from November 15, 1999, at the
yield shown on the cover hereof to maturity; and the final maturing Accreted Value thereof is payable only on the maturity date to the
Registered Holder of the Capital Appreciation Bond at the close of business on the Record Date next preceding such maturity date.
Exchange and Transfer of Series 1999MB Bonds
All Series 1999MB Bonds are transferrable at the Corporate Trust Office of
the Registrar, upon presentation and surrender thereof together with a written transfer satisfactory to the Registrar, duly executed
by the Registered Holder or his or her duly authorized attorney. Upon surrender for transfer of any such Series 1999MB Bonds, the Registrar
will authenticate and deliver in the name of the transferee, one or more Series 1999MB Bonds in the same aggregate principal amount,
maturity, and rate of interest.
All Series 1999MB Bonds surrendered in any exchange or transfer shall be
immediately cancelled by the Registrar, and the State shall execute and the Registrar shall authenticate and deliver, in the name
of the Person who is the transferee, one or more new Bonds of the same aggregate principal amount, maturity, and rate of interest as the
surrendered bond. For each such exchange or transfer of Series 1999MB Bonds, the Registrar may make a charge sufficient to reimburse it for
any tax, fee, or other governmental charge required to be paid with respect to such exchange or transfer, which sum or sums shall be
paid by the Registered Holder requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making
such exchange or transfer. The State is not obligated to issue, exchange, or transfer any Current Interest Bearing Bond during the fifteen
(15) days next preceding any Bond Payment Date, and is not obligated to issue, exchange, or transfer any Capital Appreciation Bond
during the fifteen (15) days next preceding the applicable maturity date.
Constitutional and Statutory Debt Limitation
The aggregate of General Obligation State Capital Improvements Bonds which
may be issued pursuant to the Enabling Act and Act 1377 is fixed at $2,445,465,475.10; exclusive of such General Obligation
State Capital Improvement Bonds issued on behalf of the Mental Health Commission as provided in Acts 1276 and 1272 of 1970, bonds
issued on behalf of the Commission of Disabilities and Special Needs (formerly known as the Commission of Mental Retardation) as
provided in Act 1087 of 1970 and General Obligation State Capital Improvement Bonds issued on behalf of the South Carolina Fire Academy
as provided in Act 523 of 1992. However, of the General Obligation State Capital Improvement Bonds authorized, projects
aggregating $6,016,648.87 were paid from the General Fund and $12,741,076.00 were paid from the Capital Reserve Fund, thus, in effect,
reducing the authorization set forth in the preceding sentence by the amount of $18,757,724.87 to $2,426,707,750.23. In addition to the provisions set forth in the Enabling Act and Act 1377,
which limits the principal amount which may be issued, General Obligation State Capital Improvement Bonds must be issued in
compliance with the applicable constitutional and statutory provisions relating to maximum annual debt service. Subparagraph (c) of
Paragraph 6 of Section 13 of Article X of the Constitution of South Carolina, as amended, provides that the maximum annual debt service on
all general obligation debt of the State (excluding State Highway Bonds, State Institution Bonds, tax anticipation notes, and bond
anticipation notes) must not exceed five percent (5%) of the general revenues of the State for the fiscal year next preceding the fiscal
year in which the debt is incurred (excluding revenues which are authorized to be pledged for State Highway Bonds and State Institution
Bonds). Act 1377 also contains the limit of five percent (5%).
Heretofore, $2,003,979,400 General Obligation State Capital Improvement Bonds
have been issued for the construction of capital improvements authorized by Act 1377 and the State has sold and will issue an
additional series of General Obligation State Capital Improvement Bonds in the principal amount of $75,000,000 (the "Series
1999A Capital Improvement Bonds") prior to the issuance of the Series 1999MB Bonds; but from the proceeds of those General Obligation
State Capital Improvement Bonds which have been issued, $54,313,717.05 were expended on behalf of the Mental Health Commission and
the Commission of Disabilities and Special Needs as provided in the Acts of 1970 above recited and on behalf of the South
Carolina Fire Academy as provided in Act 523 of 1992. Thus, the remaining authorization under the Enabling Act and Act 1377 to issue General
Obligation State Capital Improvement Bonds, exclusive of such General Obligation State Capital Improvement Bonds issued on behalf
of the Mental Health Commission, the Commission of Disabilities and Special Needs and the South Carolina Fire Academy is now
$402,042,067.28 and thus, the sum of $25,000,000 may be issued within the dollar limitation of the Enabling Act and the Act 1377.
Insofar as the constitutional and statutory limitation on the issuance of General Obligation State Capital Improvement Bonds is concerned
during the fiscal year to end June 30, 2000, the five percent (5%) limitation referred to above is applied to General Fund Revenues for the
fiscal year ended June 30, 1999 (excluding revenues authorized to be pledged to State Highway Bonds and State Institution Bonds).
The State Auditor, prior to the issuance of the Series 1999B Bonds, will certify pursuant to Section 11-27-70 of the South Carolina
Code, that 5% of the General Fund Revenues of the State for the fiscal year ended June 30, 1999 (excluding revenues authorized to be
pledged to State Highway Bonds and State Institution Bonds) exceeds the maximum annual debt service on all outstanding General Obligation
State Capital Improvement Bonds, including the Series 1999MB Bonds. DEBT OF THE STATE OF SOUTH CAROLINA
Constitutional Provisions
The following is a summary of the provisions of Article X, Section 13 of the
South Carolina Constitution as they relate to the general obligation debt of the State:
1. "General obligation debt" shall mean any indebtedness of the
State which shall be secured in whole or in part by a pledge of the full faith, credit and taxing power of the State.
2. General obligation debt may not be incurred except for a public purpose
and all general obligation debt shall mature not later than thirty (30) years from the time such indebtedness shall be incurred.
3. In each act authorizing the incurring of general obligation debt, the
General Assembly shall allocate on an annual basis sufficient tax revenues to provide for the punctual payment of the principal
of and interest on such general obligation debt.
4. If at any time any payment due as the principal of or interest on any
general obligation debt shall not be paid as and when the 5. General obligation debt authorized by (a) two-thirds of the members of
each House of the General Assembly, or (b) a majority vote of the qualified electors of the State voting in a referendum called by
the General Assembly, is subject to no restrictions or limitations other than those imposed in the authorization to incur such indebtedness and
as set forth in paragraph 2, above.
6. General obligation debt may also be incurred on such terms and conditions
as the General Assembly may by law prescribe subject to the following limitations:
(a) General obligation debt may be incurred for highway purposes ("State
Highway Bonds") if such bonds shall be (b) General obligation debt may be incurred for any State institution of
higher learning designated by the General Assembly ("State Institution Bonds") if such bonds shall be
additionally secured by a pledge of the revenues derived from the tuition fees received by the particular institution of higher learning for
which such State Institution Bonds are issued; provided, that the maximum annual debt service on issues of State Institution Bonds for
such State institution of higher learning to be outstanding shall not exceed ninety percent (90%) of the sums received by
such State institution of higher learning from tuition fees for the Fiscal Year next preceding.
(c) General obligation debt may be incurred for any public purpose including
those purposes set forth in (a) and (b); provided, that the maximum annual debt service on all general obligation
bonds of the State henceforth to be outstanding (excluding State Highway Bonds, State Institution Bonds, tax anticipation
notes and bond anticipation notes) shall not exceed five percent (5%) of the general revenues of the State for the Fiscal Year
next preceding (excluding revenues which are authorized to be pledged for State Highway Bonds and State Institution
Bonds). The rate of five percent (5%) may be reduced to four percent (4%) or increased to seven percent (7%) by legislative
enactment passed by a vote of two-thirds of the total membership of the Senate and a two-thirds vote of the total membership of the
House of Representatives.
7. General obligation debt may also be incurred or issued in anticipation of
State tax collections and in anticipation of the The constitutional restrictions on general obligation debt may not be relaxed
except by amendment to the South Carolina Constitution approved by a majority of the qualified electors voting at a
general election for State representatives; such restrictions, however, do not preclude more stringent statutory limitations. Categories of General Obligation Debt; Amounts Outstanding
The South Carolina General Assembly has, by statute, authorized six
categories of State general obligation bonds, as follows:
1. 2. 3. 4. 5. 6. TABLES RELATING TO GENERAL OBLIGATION DEBT
Debt Service Requirements for
Grady L. Patterson, Jr., State Treasurer of the State of South Carolina
additionally secured by so much of the revenues as may be made applicable by
the General Assembly for State highway purposes
from any and all taxes or licenses imposed upon individuals or vehicles for
the privilege of using the public highways of the State; provided, that the maximum annual debt service on all State Highway Bonds so
additionally secured which shall be outstanding shall not exceed fifteen percent (15%) of the proceeds received from such
sources of revenue for the Fiscal Year next preceding.
State School Bonds: Sections
59-71-410 et seq. of the South Carolina Code, as continued and amended by
Section 11-27-30 thereof (the "State School Bond Act"), authorizes the issuance of
general obligation State School Bonds for capital improvements, school bus equipment and other purposes. Section 11-27-30 provides that the debt
limit for State School Bonds is the lesser of (a) the dollar limitation contained in the State School Bond Act (presently $137,500,000 for
capital improvements and $9,000,000 for school buses) or (b) the amount resulting from the limit described under
"Constitutional Provisions", paragraph 6(c), above. There are no State
School Bonds outstanding at this time.
Outstanding General Obligation Debt
After Issuance of the Series 1999MB Bonds
State Capital Improvement Bonds
$ 885,199,400
State Institution Bonds
78,190,000
State Highway Bonds
330,960,000
Total
$1,294,349,400.
All State Capital Improvement Bonds
After Issuance of the Series 1999MB Bonds
Fiscal Year
Ending
Total
Total
Total Principal
June 30
Principal
Interest
and Interest
2000
$ 70,720,000.00
$21,509,615.01
$ 92,229,615.01
2001
105,302,500.00
39,249,965.55
144,552,465.55
2002
86,385,000.00
32,086,231.52
118,471,231.52
2003
101,813,500.00
28,833,724.15
130,647,224.15
2004
80,085,000.00
23,055,593.03
103,140,593.03
2005
101,660,000.00
25,621,802.61
127,281,802.61
2006
72,785,000.00
15,083,075.53
87,868,075.53
2007
62,675,000.00
11,476,991.78
74,151,991.78
2008
59,749,700.00
9,884,984.03
69,634,684.03
2009
55,528,000.00
10,239,974.52
65,767,974.52
2010
26,400,000.00
3,324,087.52
29,724,087.52
2011
20,285,700.00
4,691,347.31
24,977,047.31
2012
15,040,000.00
1,473,365.00
16,513,365.00
2013
13,265,000.00
838,127.50
14,103,127.50
2014
6,580,000.00
410,245.00
6,990,245.00
2015
6,925,000.00
138,500.00
7,063,500.00
TOTAL
$885,199,400.00
$227,917,630.06
$1,113,117,030.06
(1) Includes a pro forma debt
service schedule for the Series 1999MB Bonds assuming an interest rate of 5.25%
per annum and the debt service schedule for the Series 1999A Capital Improvement Bonds. (2)
Under the limitation imposed by subparagraph (c) of paragraph 6 of Section 13
of Article X of the South Carolina Constitution and the 2
Debt Service Requirements for |
|||
Fiscal Year | |||
Ending | Total | Total | Total Principal |
June 30 | Principal | Interest | and Interest |
2000 | $ 6,245,000.00 | $2,541,713.14 | $ 8,786,713.14 |
2001 | 6,755,000.00 | 3,769,185.02 | 10,524,185.02 |
2002 | 6,565,000.00 | 3,420,920.02 | 9,985,920.02 |
2003 | 6,570,000.00 | 3,063,458.77 | 9,633,458.77 |
2004 | 4,925,000.00 | 2,713,813.76 | 7,638,813.76 |
2005 | 5,200,000.00 | 2,427,058.76 | 7,627,058.76 |
2006 | 5,505,000.00 | 2,122,645.01 | 7,627,645.01 |
2007 | 5,365,000.00 | 1,831,300.00 | 7,196,300.00 |
2008 | 4,780,000.00 | 1,555,250.00 | 6,335,250.00 |
2009 | 4,760,000.00 | 1,315,872.50 | 6,075,872.50 |
2010 | 4,280,000.00 | 1,077,242.50 | 5,357,242.50 |
2011 | 2,760,000.00 | 867,180.00 | 3,627,180.00 |
2012 | 2,600,000.00 | 726,065.00 | 3,326,065.00 |
2013 | 2,740,000.00 | 594,055.00 | 3,334,055.00 |
2014 | 2,910,000.00 | 454,915.00 | 3,364,915.00 |
2015 | 2,650,000.00 | 307,135.00 | 2,957,135.00 |
2016 | 2,815,000.00 | 175,640.00 | 2,990,640.00 |
2017 | 375,000.00 | 35,955.00 | 410,955.00 |
2018 | 390,000.00 | 18,330.00 | 408,330.00 |
TOTAL | $78,190,000.00 | $29,017,734.48 | $107,207,734.48 |
Debt Service Requirements for |
|||
Fiscal Year | |||
Ending | Total | Total | Total Principal |
June 30 | Principal | Interest | and Interest |
2000 | $4,020,000.00 | $7,935,922.50 | $11,955,922.50 |
2001 | 6,805,000.00 | 15,601,007.50 | 22,406,007.50 |
2002 | 9,235,000.00 | 15,273,476.25 | 24,508,476.25 |
2003 | 9,765,000.00 | 14,831,637.50 | 24,596,637.50 |
2004 | 12,220,000.00 | 14,362,758.75 | 26,582,758.75 |
2005 | 12,680,000.00 | 13,778,160.00 | 26,458,160.00 |
2006 | 13,305,000.00 | 13,149,166.25 | 26,454,166.25 |
2007 | 15,730,000.00 | 12,489,391.25 | 28,219,391.25 |
2008 | 20,285,000.00 | 11,725,616.25 | 32,010,616.25 |
2009 | 21,850,000.00 | 10,740,072.50 | 32,590,072.50 |
2010 | 22,320,000.00 | 9,692,022.50 | 32,012,022.50 |
2011 | 23,025,000.00 | 8,628,922.50 | 31,653,922.50 |
2012 | 18,775,000.00 | 7,583,810.00 | 26,358,810.00 |
2013 | 20,060,000.00 | 6,676,877.50 | 26,736,877.50 |
2014 | 17,360,000.00 | 5,783,402.50 | 23,143,402.50 |
2015 | 17,505,000.00 | 4,953,100.00 | 22,458,100.00 |
2016 | 17,645,000.00 | 4,114,967.50 | 21,759,967.50 |
2017 | 17,790,000.00 | 3,269,250.00 | 21,059,250.00 |
2018 | 17,935,000.00 | 2,414,812.50 | 20,349,812.50 |
2019 | 18,085,000.00 | 1,552,112.50 | 19,637,112.50 |
2020 | 4,240,000.00 | 680,887.50 | 4,920,887.50 |
2021 | 4,490,000.00 | 447,637.50 | 4,937,637.50 |
2022 | 4,625,000.00 | 204,368.75 | 4,829,368.75 |
2023 | 1,210,000.00 | 54,450.00 | 1,264,450.00 |
TOTAL | $330,960,000.00 | $185,943,830.00 | $516,903,830.00 |
Debt Service Requirements1 Of All State General Obligation Debt To Be Outstanding Following the Issuance Of The Series 1999MB Bonds Offered Herein |
|||
Fiscal Year | |||
Ending | Total | Total | Total Principal |
June 30 | Principal | Interest | and Interest |
2000 | $80,985,000.00 | $31,987,250.65 | $112,972,250.65 |
2001 | 118,862,500.00 | 58,620,158.07 | 177,482,658.07 |
2002 | 102,185,000.00 | 50,780,627.79 | 152,965,627.79 |
2003 | 118,148,500.00 | 46,728,820.42 | 164,877,320.42 |
2004 | 97,230,000.00 | 40,132,165.54 | 137,362,165.54 |
2005 | 119,540,000.00 | 41,827,021.37 | 161,367,021.37 |
2006 | 91,595,000.00 | 30,354,886.79 | 121,949,886.79 |
2007 | 83,770,000.00 | 25,797,683.03 | 109,567,683.03 |
2008 | 84,814,700.00 | 23,165,850.28 | 107,980,550.28 |
2009 | 82,138,000.00 | 22,295,919.52 | 104,433,919.52 |
2010 | 53,000,000.00 | 14,093,352.52 | 67,093,352.52 |
2011 | 46,070,700.00 | 14,187,449.81 | 60,258,149.81 |
2012 | 36,415,000.00 | 9,783,240.00 | 46,198,240.00 |
2013 | 36,065,000.00 | 8,109,060.00 | 44,174,060.00 |
2014 | 26,850,000.00 | 6,648,562.50 | 33,498,562.50 |
2015 | 27,080,000.00 | 5,398,735.00 | 32,478,735.00 |
2016 | 20,460,000.00 | 4,290,607.50 | 24,750,607.50 |
2017 | 18,165,000.00 | 3,305,205.00 | 21,470,205.00 |
2018 | 18,325,000.00 | 2,433,142.50 | 20,758,142.50 |
2019 | 18,085,000.00 | 1,552,112.50 | 19,637,112.50 |
2020 | 4,240,000.00 | 680,887.50 | 4,920,887.50 |
2021 | 4,490,000.00 | 447,637.50 | 4,937,637.50 |
2022 | 4,625,000.00 | 204,368.75 | 4,829,368.75 |
2023 | 1,210,000.00 | 54,450.00 | 1,264,450.00 |
TOTAL | $1,294,349,400.00 | $442,879,194.54 | $1,737,228,594.54 |
1 Includes a
pro forma debt service schedule for the Series 1999MB Bonds assuming an interest rate of 5.25% per annum and the debt 1service schedule for the Series 1999A Capital Improvement Bonds..FISCAL ADMINISTRATION AND PLANNING
The Budgeting Process
Article X, Section 7(a) of the South Carolina Constitution requires that the
General Assembly provide for a budgetary process Article III, Section 36 of the Constitution requires the establishment of a
General Reserve Fund for the purpose of covering operating deficits of State government and a separate and distinct Capital
Reserve Fund for the purpose of providing capital improvements or for retiring State bonds previously issued. Amounts in the Capital Reserve
Fund may, as hereinafter described, be used to fund a year end deficit. The General Reserve Fund is required to be funded in an amount
equal to three percent (3%) of the general fund revenue of the latest completed Fiscal Year. Funds may be withdrawn from the General
Reserve Fund only for the purpose of covering operation deficits. The General Assembly is required to provide for the orderly
restoration of funds withdrawn from the General Reserve Fund.
The Capital Reserve Fund is required to be funded in an amount equal to two
percent (2%) of the prior Fiscal Year's general fund revenues. The Constitution requires that the General Assembly provide that,
if revenue forecasts before April 1 project that revenues for the current Fiscal Year will be less than expenditures authorized by
appropriation for that Fiscal Year, the current Fiscal Year's appropriation to the Capital Reserve Fund shall be reduced to the extent
necessary before any reduction is made in operating appropriations. If it is determined that the Fiscal Year has ended with an
operating deficit, the Constitution requires that funds in the Capital Reserve Fund shall be applied, to the extent necessary, to the Fiscal
Year's end operating deficit before withdrawing moneys from the General Reserve Fund for such purpose.
Fiscal responsibility in the State lies with the Budget and Control Board.
The Governor is required to submit an Executive Budget to the General Assembly within five (5) days after the beginning of each
regular session. Such budget is required to conform to the funding requirements contained in Article III, Section 36 of the
Constitution. Regular sessions of the General Assembly begin on the second Tuesday of January in each year. In order to enable the Governor to
present his budget to the General Assembly at the time required, the Governor is required, by law, to complete a survey of all
departments, bureaus, divisions, offices, boards, commissions, institutions, and other agencies to obtain information upon which to base his
budget recommendations no later than November 1 of each year. In this connection, each of several State departments, bureaus,
divisions, offices, boards, commissions, institutions, and other agencies receiving or requesting financial aid from the State are required to
report to the Governor in itemized form, no later than November 1, of each year, the amount needed or requested in the succeeding
Fiscal Year. In addition, on or before November 1 of each The budget presented to the General Assembly by the Governor must be
accompanied by detailed statements of prior years' revenues and expenditures, a statement of current assets and liabilities and
other information with respect to the State's finances and economic condition. The General Assembly is authorized by law to increase or
decrease items in the budget bill. The Constitution mandates the General Assembly to provide a balanced budget and provides that
if there be a casual deficit, such deficit shall be provided for in the succeeding Fiscal
Year.
As noted above, the Constitution requires a procedure for the monitoring of
revenues and expenditures with a view to a reduction of appropriations as may be necessary to prevent a deficit. For the purpose
of providing projections and forecasts of revenues and expenditures and advising the Budget and Control Board on economic trends,
the General Assembly established the Board of Economic Advisors. In particular with respect to the Constitutional requirement of
monitoring revenues, statutory provisions require that the Board of Economic Advisors provide to the Budget and Control Board quarterly
estimates of State revenues. If at the end of the first or second quarter of any Fiscal Year quarterly revenue collections are four percent or
more below the amount projected for such quarter by the Board of Economic Advisors, the State Board is required, within fifteen days of
such determination, to take action to avoid a Fiscal Year end deficit.
In 1993 the General Assembly provided that beginning with appropriations for
Fiscal Year 1994-95, appropriations in the annual general Appropriations Act may not exceed the base revenue estimate. The base
revenue estimate is defined as the lesser of (i) the total of recurring general fund revenues collected in the latest completed Fiscal
Year before the General Assembly first considers the annual general appropriations bill plus an increase of seventy-five percent of the
difference between the general fund revenue estimate of the Board of Economic Advisors for the upcoming Fiscal Year and the actual
revenue collections from the latest completed Fiscal Year; or (ii) the Board of Economic Advisors’ general fund revenue estimate for the
upcoming Fiscal Year.
For many years, each annual Appropriations Act has contained a provision
requiring the Budget and Control Board to monitor the collection of revenues and the expenditure of funds. The Appropriations
Act for Fiscal Year 1994-95, Act 497 of 1994, Part I, section 17G.36, provides that if, because of an inaccurate estimate of revenues, a
deficit appears likely, the State Board shall effect such reductions of appropriations as may be necessary to prevent a deficit.
For the Fiscal Year ended June 30, 1994, the State had a budgetary surplus of
$273.48 million. The General Assembly designated the application of most of this surplus, including a transfer to the Capital
Reserve Fund in the amount of $66.83 million.
For the Fiscal Year ended June 30, 1995, the State had a budgetary surplus of
$393 million. The General Assembly designated the application of all of this surplus, including a transfer to the Capital
Reserve Fund in the amount of $73.4 million.
For the Fiscal Year ended June 30, 1996, the State had a budgetary surplus of
$316.7 million. The General Assembly designated the application of all of this surplus, including a transfer to the Capital
Reserve Fund in the amount of $80.5 million.
For the Fiscal Year ended June 30, 1997, the State had a budgetary surplus of
$297.8 million. The General Assembly designated the application of all of this surplus, including a transfer to the Capital
Reserve Fund in the amount of $83.6 million.
For the Fiscal Year ended June 30, 1998, the State had a budgetary surplus of
$254 million. The General Assembly designated the application of all of this surplus, including a transfer to the Capital
Reserve Fund in the amount of $86.9 million.
For the Fiscal Year ended June 30, 1999, the State had a budgetary surplus of
$410 million. The General Assembly designated the application of $322 million of this surplus, including a transfer to the
Capital Reserve Fund in the amount of $92 million. Certain Taxes
General Fund Revenues are derived by the State from the various taxes imposed
and collected by the State. Following is a
description of the taxes which provide the major portion of the State's
revenues.
Income Tax: Individual income taxes are collected primarily through the withholding
process and the filing of declarations of estimated tax. Corporations are required to file declarations of estimated tax and to make
quarterly advance payment of taxes. Estate Tax: Stamp and Business License Tax: Cigarettes--A tax of three and one-half mills (.35¢) is imposed on each
cigarette. The "license tax" imposed on the sale of cigarettes is paid by means of stamps affixed to packages sold by
manufacturers, wholesale dealers, distributors, or retail dealers. The South Carolina Code assigns liability for the payment of the tax
to distributors. Distributors must file monthly returns showing the quantity and wholesale price of all tobacco products
transported into the State or manufactured in the State for sale by the distributor. Payment of the tax must be made on a monthly
basis. A 2% deduction is allowed to distributors for timely payment of the tax.
Beer and Wine--All beer offered for sale in the State is subject to a tax of
six-tenths of a cent (.6¢) per ounce or fractional quantity thereof. Wines sold in containers of one (1) gallon or
more are subject to a tax of 90¢ per gallon or fractional quantity thereof; wines sold in containers of less than one (1) gallon are
subject to a tax of 6¢ for each eight ounces or fractional quantity thereof; wines sold in liter containers are subject to a tax of
25.35¢ per liter. Any "domestic" wine, as defined in the tax statutes, is subject to a tax of 45¢ per gallon, or 3.6¢ for each eight
ounces or fractional quantity thereof if sold in containers of less than one gallon.
Each wholesaler must make a report to the Department of Revenue not later
than the twentieth day of the month following any sale of beer or wine and pay at that time the prescribed tax thereon.
Failure to pay such taxes may result in a penalty of 1/4% per day.
Soft Drinks--A tax of one cent (1¢) for every twelve ounces or fractional
part thereof is imposed on soft drinks offered
Coin-Operated Devices--License taxes are imposed on certain coin-operated
devices or machines operated within the State. These license taxes are payable bi-annually and are as follows:
(1) $50.00 for "juke boxes" or "kiddy rides";
(2) $200.00 for any machine for the playing of amusements or video games
(without free play feature) and any pin table type machine with levers or flippers; and
(3) $4,000.00 for any video game or pin table game (without levers or
flippers) with a free play feature.
Gasoline Tax: Monthly reports, on forms prescribed and furnished by the Department of
Revenue, must be filed with the Department of Revenue on or before the twenty-second day of each month, setting forth the number of
gallons of gasoline sold, used, shipped, or distributed for the purpose of sale within the State during the previous month, and there
must be remitted therewith the amount of tax provided for. Failure to make the required return or to pay the required taxes may result
in a penalty to be determined in accordance with Chapter 54 of Title 12 of the South Carolina Code as well as various civil penalties in
accordance with Chapter 28 of Title 12 of the South Carolina Code. Fuel Oil Tax: Monthly reports, on forms prescribed and furnished by the Department of
Revenue, must be filed with the Department of Revenue on or before the twenty-second day of each month, setting forth the number of
gallons of gasoline sold, used, shipped, or distributed for the purpose of sale within the State during the previous month, and there
must be remitted therewith the amount of tax provided for. Failure to make the required return or to pay the required taxes may result
in a penalty to be determined in accordance with Chapter 54 of Title 12 of the South Carolina Code as well as various civil penalties in
accordance with Chapter 28 of Title 12 of the South Carolina Code.
Road Tax: Motor carriers are required to file quarterly reports and to pay the
necessary road tax at the time of filing such report. Failure to pay such taxes may result in a penalty of twenty-five percent (25%)
thereof plus interest at the rate of one-half percent (½%) per month.
Motor Vehicle License Tax: Alcoholic Liquors Tax: Returns for the above taxes are required to be made monthly to the Department
of Revenue and such returns are to be accompanied by payment of the tax on the amount of alcoholic liquors sold in
the previous month. Failure to file such return results in a penalty of not more than $1,000, and failure to pay the tax within the time
allotted may result in a penalty to be determined in accordance with Sections 6621 and 6622 of the Internal Revenue
Code. Sales and Use Tax: Returns and the payment of sales tax for each month are required to be made
by the twentieth day of the following month. Returns and payment of use tax are required to be made quarterly. Failure to
pay the sales tax may result in a penalty of 25% plus interest at the rate of 1/2% per month. Insurance Tax: Selected Financial Data
The following tables set forth selected financial data which have been
derived from the financial statements of the State audited by independent accountants. This financial data include only the General Fund
of the State and do not include any other funds, account groups or component units that are a part of the State’s reporting entity.
General Fund Balance Sheet Data As of June 30
Total assets and other Total fund equity and . . General Fund Statement of Revenues and Expenditures Fiscal Year Ended June 30
Total revenues
Total....... Revenues over . . Total Other ... Revenues over . . Assessed Value of All Taxable Property in the State
No (1) Real and Personal property of Manufacturers and Utilities -- 10 1/2% of
fair market value; (2) Transportation Companies for Hire (railroads and pipelines) -- 9 1/2% of
fair market value;.(3) Legal Residence not more than five contiguous acres -- 4% of fair market
value; (4) Agricultural property used for such purposes owned by individuals and
certain small corporations-- 4% of use value;
(5) Agricultural and timberlands belonging to large corporations (more than
ten stockholders) -- 6% of use value;
(6) All other real property -- 6% of use value;
(7) Inventories of business establishments -- 6% of fair market value; (8) Farm Machinery and Equipment -- 5% of fair market value; (9) All other personal property -- 10 1/2% of fair market value 1 Certain
real property owned by, or leased to, manufacturers for use in "research
and development", office buildings, and warehousing and wholesale distribution of wearing apparel is excluded from
this classification by Section 12-43-220 of the South Carolina Code and would be subject to the 6% assessment ratio for
"all other real property". Certain new industrial facilities may be entitled to pay a "fee in lieu of taxes" computed
on an assessment ratio of not less than 6% of original cost less depreciation, 4% of original cost less depreciation in the case of
certain particularly large industrial projects.
2 Legislation recently
adopted by the General Assembly provides for the exemption of the value of
residential real property up than debt service and payments pursuant to lease-purchase agreements. The
legislation provides for a Property Tax Relief Fund (the "Relief Fund") from which reimbursements will be made to local
governments for revenues not collected as a result of the residential exemption. The precise level of the exemption is to be
established by the Director of the Department of Revenue, based on the amount approximate to the Relief Fund for that year.
3 Property otherwise subject to the business inventory tax provided for by
Section 12-37-1420 of the South Carolina Code is exempted from such tax by Section 12-37-450 of the South Carolina Code. Such
amendment is, however, conditional on the appropriation by the State to the counties and municipalities for each year
in an amount equal to the tax revenue not collected by reason of the exemption based on the 1987 tax year millage and the 1987
tax year assessed value of inventories in the counties and municipalities.
4 These categories are presently exempt from taxation.
5 Intangible personal property is exempt from taxation. The General Assembly has required the appraisal every fourth year of all real
property in each of the counties in the State in accordance The following table shows the assessed value of all taxable property in the
State for the years shown below:
1997
..........................................................................
$11,164,486,169
1996
...........................................................................
10,693,390,455
1995
...........................................................................
10,155,004,939
1994
............................................................................
9,643,659,330
1993
............................................................................
9,254,159,161
1992
............................................................................
8,707,129,077
1991
............................................................................
8,288,681,832
1990
............................................................................
8,015,831,771
1989
............................................................................
7,595,154,469
1988
............................................................................
7,111,317,081
1987
............................................................................
6,763,502,131
1986
............................................................................
5,997,677,612
1985
............................................................................
5,393,615,426
Data for 1998 and 1999 is not available. Year 2000 Compliance
The "Year 2000 Compliance" (Y2K) issue arises because most computer
software programs allocate two digits to the date field for "year" on the assumption that the first two digits will be
"19." Such programs will thus interpret, for example, the year 2000 as
the year 1900 and the year 2001 as 1901, absent reprogramming. Y2K affects both
computer hardware (i.e. the embedded logic of computer chips) and computer software and could impact both the ability to enter data
into computer programs and the ability of such programs to process data correctly. Y2K affects the computer applications of the State's
agencies and institutions and other entities with which those agencies and institutions transact business.
The South Carolina General Assembly mandated through a legislative enactment
in 1997 and re-enacted in 1998 that the Budget
The State Treasurer’s Office is aware of the problems that could occur
related to Y2K. The State Treasurer’s Office has identified its equipment and systems which are critical to its mission and
the consequence of the failure of that equipment and those systems. The State Treasurer’s Office has made the needed replacement or
modification of the equipment and those systems a priority and has committed the personnel resources and funding necessary to achieve
Y2K compliance before October 15, 1999.
The State Treasurer’s Office’s Y2K project is divided into three phases.
The first phase, which is completed, identified the
LEGAL MATTERS
Litigation
There is presently no litigation challenging the validity of any general
obligation debt issued or proposed to be issued by the State. The Attorney General of the State advises that, except as hereinafter
described, there is neither threatened nor, to his knowledge pending, any litigation which would have any serious adverse effect upon the revenues
of the State.
The South Carolina Retirement System ("SCRS") is involved in a
lawsuit filed by four retired members. The Circuit Court ruled in favor of the SCRS at trial, and the plaintiffs appealed the decision to
the State Supreme Court. The case was argued in the State Supreme Court in May 1999, and no opinion has been issued as of the date
hereof. The plaintiffs challenge the plan’s treatment of unused annual leave in the calculation of retirement payments. The present value of
SCRS’s liability in the event of an unfavorable outcome would be approximately $340 million for current retirees, and approximately
$800 million for current active members of the State Employees Retirement System and the Police Officers Retirement System. The
Circuit Court determined that the State has been providing retirement benefits to its members in accordance with the law. The State
continues to defend its position and believes it is meritorious.
for sale in sealed containers. Syrup for use in mixing soft drinks is taxed
at the rate of 95¢ per gallon.
(Expressed in Thousands
1994
1995
1996
1997
1998
debits $788,294
$1,026,184
$1,039,104
$980,208
$983,084
Total liabilities .......
$756,213
$767,862
$754,373
$823,755
$805,607
other credits$32,081
$258,322
$284,731
$156,453
$177,477
(Expressed in Thousands):
1994
1995
1996
1997
1998
Revenues:
Taxes ........
$3,508,991
$3,773,013
$4,030,815
$4,234,943
$4,519,397
Other ........
637,339
674,551
621,037
664,638
659,097
4,146,330
4,447,564
4,651,852
4,899,581
5,178,494
Expenditures:
Current .......
$1,920,659
$1,976,582
$1,979,697
$2,107,651
$2,185,607
Debt Service . . .
131,015
136,612
131,994
144,511
152,615
Intergovernmental
1,433,854
1,501,288
1,787,894
1,871,747
1,998,408
expenditures
3,485,528
3,614,482
3,899,585
4,123,909
4,336,630
expenditures
660,802
833,082
752,267
775,672
841,864
Financing uses(533,207)
(611,291)
(726,333)
(903,582)
(820,829)
(under)
expenditures
and other uses
127,595
221,791
25,934
(127,910)
21,035
Legal Opinion and Certificates
The State will furnish the Series 1999MB Bonds in typewritten or printed form
along with the approving legal opinion of Nexsen Pruet Jacobs & Pollard, LLP, Bond Counsel to the State. The opinion with
respect to the Series 1999MB Bonds will state in substance:
Nexsen Pruet Jacobs & Pollard, LLP has assisted the State by compiling
certain information supplied by the State and others and included in this Preliminary Official Statement, but has not undertaken to
verify the accuracy of such information. The opinions of Nexsen Pruet Jacobs & Pollard, LLP will be limited solely to the legality and
enforceability of the Series 1999MB Bonds, and no opinion will be given with respect to this Preliminary Official Statement.
The various legal opinions to be delivered concurrently with the delivery of
the Series 1999MB Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues
explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of
professional judgment, of the transaction opined upon, or of the future performance of parties to such transaction. Nor does the rendering
of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. Tax Exemption
In the opinion of Nexsen Pruet Jacobs & Pollard, LLP, Columbia, South
Carolina, Bond Counsel, based on existing statutes, regulations and court decisions and assuming continuing compliance by the
State with certain covenants in the Bond Resolution and the requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), regarding, among other things, the use, expenditure and investment of Bond proceeds and the timely payment of certain investment
earnings to the U.S. Treasury and further subject to certain considerations as described in this section, interest on the Series 1999MB
Bonds is excludable from the gross income of the Registered Holders of the Series 1999MB Bonds for purposes of federal income taxation.
Interest on the Series 1999MB Bonds will not be treated as a preference item in calculating the alternative minimum taxable income of
individuals or corporations; however, interest on the Series 1999MB Bonds will be included in the calculation of certain taxes, including
the alternative minimum tax liability of corporations. Bond Counsel expresses no opinion regarding other federal tax consequences arising
with respect to the Series 1999MB Bonds.
Ownership of tax-exempt obligations may result in collateral federal income
tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance
companies, certain foreign corporations doing business in the United States, certain S corporations with excess passive income, individual
recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to
purchase or carry tax-exempt obligations. Prospective purchasers of the Series 1999MB Bonds should consult their tax advisors as to
the applicability and impact of any such collateral consequences.
Under existing law, the Series 1999MB Bonds and the interest thereon are
exempt from all State, county, municipal, school district and all other taxes or assessments, direct or indirect, general or
special, whether imposed for purposes of general revenue or otherwise, except inheritance, estate or transfer taxes. Section 12-11-20 of
the South Carolina Code imposes upon every bank engaged in business in the State a fee or franchise tax computed on the entire net
income of such bank. Interest on the Bond will be included in such computation.
No assurance can be given that any future legislation, or clarifications or
amendments to the Code, if enacted into law, will not contain provisions which could cause the interest on the Series 1999MB Bonds
to be subject directly or indirectly to federal or State of South Carolina income taxation, adversely affect the market price or
marketability of the Series 1999MB Bonds or otherwise prevent the Registered Holders of the Series 1999MB Bonds from realizing the full current
benefit of the status of the interest thereon.
Continuing Disclosure
Pursuant to Section 11-1-85 of the South Carolina Code, the Budget and
Control Board has covenanted as to the Series 1999MB Bonds to file with a central repository for availability in the secondary
bond market when requested:
(1) An annual independent audit; within thirty days of the State's receipt of
the audit; and
(2) Event specific information within thirty days of an event adversely
affecting more than five percent of revenue or the State's tax base.
The only remedy for failure by the Budget and Control Board to comply with
these covenants shall be an action for specific performance. Moreover, the Budget and Control Board has specifically reserved the right to
amend the covenants to reflect any change in Section 11-1-85 without the consent of any Bondholder. Conclusion
The information in this Preliminary Official Statement has been assembled for
the purpose of enabling those who may purchase the Series 1999MB Bonds to have appropriate information to evaluate the worth
of the Series 1999MB Bonds. The undersigned believes that the information herein furnished should be sufficient for the purposes
for which it is intended. If, however, additional information or explanations are required, inquires may be made to the undersigned.
Grady L. Patterson, Jr.
State Treasurer of the State of South Carolina