In this subtitle the following words have the meanings indicated. “Bond” means an obligation for the payment of money, by whatever name known or source of funds secured, issued by a governmental entity under general or special statutory authority. “Bond” includes: a bond; a certificate of indebtedness; an interim certificate; and a note. “Pension liability funding bond” means a bond authorized to be issued under this subtitle.

This subtitle applies only to: charter counties; code counties; and municipalities. This subtitle applies only to a pension or retirement plan or system: that is closed to new membership; and under which a county or municipality is directly or indirectly obligated to pay or cause to be paid retirement, disability, death, or other benefits.

The General Assembly finds that it is in the best interests of the charter counties, code counties, and municipalities and the residents of the State to authorize each charter county, code county, or municipality to issue bonds in order to fund any unfunded liability of the county or municipality with respect to any pension or retirement plan or system to: use favorable market conditions that may exist to reduce the cost of the pension or retirement plan or system to the county or municipality; or otherwise structure and provide for pension plan liability funding in a manner consistent with the financial plans of the county or municipality.

A county or municipality that is authorized under law to borrow money and issue bonds may issue pension liability funding bonds to fund any unfunded present or contingent liability of any kind under a pension or retirement plan or system. Pension liability funding bonds may be issued for the public purposes of: realizing savings with respect to the aggregate cost of the pension or retirement plan or system being funded, on either a direct comparison or present value basis; or structuring or restructuring pension or retirement plan or system costs in a manner that: in the aggregate effects a reduction in the total cost of the pension or retirement plan or system as provided in item (1) of this subsection; or is determined by the county or municipality: to be in the best interests of the county or municipality; to be consistent with the county’s or municipality’s long–term financial plan; and to realize a financial objective of the county or municipality, including: improving the relationship of pension or retirement plan or system costs to a source of payment such as taxes, assessments, or other charges; or improving the benefits payable under the pension or retirement plan or system. The authority to issue pension liability funding bonds under this subtitle is supplemental to any authority to borrow money or issue bonds granted to a county or municipality under any other law. Except as otherwise provided in this subtitle, pension liability funding bonds are subject to any requirement that applies to the issuance of the county’s or municipality’s bonds that have the same source of payment as the pension liability funding bonds regarding: the terms, conditions, and covenants of the bonds; the taxes or other sources of money for payment of the bonds; and the procedures for issuance of the bonds.

Notwithstanding any State or local law to the contrary, a county or municipality may: issue pension liability funding bonds: without regard to: any provision of the county’s or municipality’s charter or any other law that: requires a public referendum before the issuance of public debt by the county or municipality; or requires that debt be issued only to finance certain projects such as capital projects defined in a charter; or any other provision that is inconsistent with this subtitle; in one or more series, each series being in the principal amount that the county or municipality determines to be required to achieve the purpose for the issuance of the pension liability funding bonds; and as serial bonds or as term bonds with provisions for mandatory sinking fund or other annual principal redemption; sell pension liability funding bonds on a negotiated basis without solicitation of bids at a price at, above, or below par; provide for pension liability funding bonds to bear interest at fixed rates determined by the county or municipality or at floating or variable rates established by a method of determination approved by the county or municipality; and provide for the principal and interest installments on pension liability funding bonds to be unequal from year to year and to be consistent with the general financial plan of the county or municipality. A county or municipality may not issue pension liability funding bonds that mature later than 30 years from the date of issue. The first principal installment payment or mandatory redemption of any pension liability funding bonds may not be later than 3 years from the date of issue.

The proceeds of pension liability funding bonds may be deposited, in amounts determined by the county or municipality, in trust with a trust company or other banking institution as trustee, in a trust fund established in the name of the county or municipality. Money in the trust fund may be invested and reinvested in any taxable or tax–exempt securities, obligations, or other investments and at any yields that are determined by the county or municipality to be consistent with the purposes for which the pension liability funding bonds were issued and with the financial plan of the county or municipality. The interest, income, and profits earned or realized on any investment may be: applied to the payment of a portion of the benefits under the pension or retirement plan or system to be funded; applied to the payment of the pension liability funding bonds; or otherwise applied in any lawful manner. Money in the trust fund shall be available to pay: the benefits under the pension or retirement plan or system being funded; the pension liability funding bonds; and any other related costs, as the county or municipality requires.

In any proceeding involving the validity or enforceability of pension liability funding bonds or any security for the bonds, a finding by the legislative or other governing body of the county or municipality as to the public purpose of any actions taken under this subtitle or as to other matters relating to the issuance of the bonds is conclusive.

Pension liability funding bonds, the transfer of the bonds, the interest payable on the bonds, and any income derived from the bonds, including any profit realized in the sale and exchange of the bonds, are exempt from State and local taxes. This subtitle does not prevent a county or municipality from authorizing the issuance and sale of pension liability funding bonds, the interest on which is not excludable from gross income for federal income tax purposes.