WILLIAM DONALD SCHAEFER, Governor

(A)  (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE
MEANINGS INDICATED.

(2)  "CODE" MEANS THE INTERNAL REVENUE CODE OF 1986
AND INCLUDES REGULATIONS AND RULINGS ISSUED UNDER THAT CODE.

(3)  "PROCEEDS" MEANS MONEYS RECEIVED FROM THE SALE OF
STATE BONDS, AND INCLUDES ANY MONEYS DEEMED TO BE PROCEEDS OF
STATE BONDS UNDER THE CODE.

(B)  THE TREASURER AND THE COMPTROLLER SHALL ESTABLISH AND
MAINTAIN FUNDS AND ACCOUNTS FOR THE ADMINISTRATION, MANAGEMENT,
INVESTMENT AND ACCOUNTING OF PROCEEDS, INCLUDING ANY INVESTMENT
EARNINGS ON PROCEEDS, THAT MAY BE NECESSARY OR APPROPRIATE FROM
TIME TO TIME TO COMPLY WITH THE CODE AND TO ESTABLISH OR MAINTAIN
THE EXCLUSION FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES
OF INTEREST ON STATE BONDS.

(C)  THE TREASURER SHALL MANAGE AND INVEST PROCEEDS,
INCLUDING ANY INVESTMENT EARNINGS ON PROCEEDS, IN A MANNER SO AS
TO MAINTAIN THE EXCLUSION FROM GROSS INCOME FOR FEDERAL INCOME
TAX PURPOSES OF INTEREST ON STATE BONDS. THE TREASURER SHALL
RESTRICT THE YIELDS ON INVESTMENTS OF PROCEEDS IF AND TO THE
EXTENT NECESSARY TO MAINTAIN THE EXCLUSION FROM GROSS INCOME FOR
FEDERAL INCOME TAX PURPOSES OF INTEREST ON STATE BONDS.

(D)  THE TREASURER AND THE COMPTROLLER SHALL PREPARE AND
MAINTAIN RECORDS OF THE RECEIPT, DEPOSIT, INVESTMENT, MANAGEMENT,
DISBURSEMENT AND APPLICATION OF PROCEEDS, INCLUDING ANY
INVESTMENT EARNINGS ON PROCEEDS, THAT MAY BE NECESSARY OR
APPROPRIATE FROM TIME TO TIME TO COMPLY WITH THE CODE AND TO
MAINTAIN OR VERIFY THE EXCLUSION FROM GROSS INCOME FOR FEDERAL
INCOME TAX PURPOSES OF INTEREST ON STATE BONDS.

(E)  THE TREASURER SHALL ESTABLISH A SEPARATE REBATE FUND TO
BE USED TO MAKE ANY PAYMENTS TO THE UNITED STATES WITH RESPECT TO
INVESTMENT EARNINGS ON PROCEEDS THAT MAY BE REQUIRED FROM TIME TO
TIME BY THE CODE. THERE MAY BE SEPARATE ACCOUNTS WITHIN THE
REBATE FUND. AMOUNTS DEPOSITED TO THE REBATE FUND SHALL BE USED
ONLY FOR THE PURPOSE OF MAKING REBATE PAYMENTS TO THE UNITED
STATES. THE TREASURER SHALL MAKE PAYMENTS FROM THE REBATE FUND
AS MAY BE REQUIRED FROM TIME TO TIME IN ORDER TO COMPLY WITH THE
CODE AND TO MAINTAIN THE EXCLUSION FROM GROSS INCOME FOR FEDERAL
INCOME TAX PURPOSES OF INTEREST ON STATE BONDS. ANY EXCESS
MONEYS HELD IN THE REBATE FUND WITH RESPECT TO AN ISSUE OF STATE
BONDS AFTER ALL REQUIRED REBATE PAYMENTS FOR THAT ISSUE HAVE BEEN
MADE, AS CERTIFIED BY THE TREASURER, SHALL BE DEPOSITED IN THE
GENERAL FUND.

(F)  THE TREASURER AND THE COMPTROLLER SHALL PREPARE AND
FILE FROM TIME TO TIME WITH THE APPROPRIATE AGENCY OF THE UNITED
STATES ANY FORMS, INFORMATION, AND REPORTS WITH RESPECT TO STATE

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