[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 2939 Introduced in Senate (IS)]

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114th CONGRESS
  2d Session
                                S. 2939

     To prohibit the provision of Federal funds to State and local 
   governments for payment of obligations, to prohibit the Board of 
  Governors of the Federal Reserve System from financially assisting 
          State and local governments, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 17, 2016

  Mr. Vitter introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
     To prohibit the provision of Federal funds to State and local 
   governments for payment of obligations, to prohibit the Board of 
  Governors of the Federal Reserve System from financially assisting 
          State and local governments, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``State, Territory, and Local 
Government Bailout Prevention Act''.

SEC. 2. DEFINITION.

    In this Act, the term ``State'' includes--
            (1) the Commonwealth of Puerto Rico; and
            (2) any other territory or possession of the United States.

SEC. 3. PROHIBITION ON THE USE OF FEDERAL FUNDS TO PAY STATE AND LOCAL 
              OBLIGATIONS.

    (a) In General.--Notwithstanding any other provision of law, no 
Federal funds may be used to purchase or guarantee obligations of, 
issue lines of credit to, or provide direct or indirect grants-and-aid 
to, any State government, municipal government, local government, or 
county government which, on or after May 1, 2016, has defaulted on its 
obligations, is at risk of defaulting, or is likely to default, absent 
such assistance from the United States Government.
    (b) Limit on Use of Borrowed Funds.--The Secretary of the Treasury 
shall not, directly or indirectly, use general fund revenues or funds 
borrowed pursuant to title 31, United States Code, to purchase or 
guarantee any asset or obligation of any State government, municipal 
government, local government, or county government, or otherwise to 
assist such government entity, if, on or after May 1, 2016, that State 
government, municipal government, or county government has defaulted on 
its obligations, is at risk of defaulting, or is likely to default, 
absent such assistance from the United States Government.
    (c) Prohibition on Federal Reserve Assistance.--Notwithstanding any 
other provision of law, the Board of Governors of the Federal Reserve 
System shall not provide or extend to, or authorize with respect to, 
any State government, municipal government, local government, county 
government, or other entity that has taxing authority or bonding 
authority, any funds, loan guarantees, credits, or any other financial 
instrument or other authority, including the purchasing of the bonds of 
such State, municipality, locality, county, or other bonding authority, 
or to otherwise assist such government entity under any authority of 
the Board of Governors.
    (d) Limitation.--Subsections (a) through (c) shall not apply to 
Federal assistance provided in response to a declared disaster.

SEC. 4. APPLICABILITY.

    The prohibition under section 3--
            (1) includes debt restructuring or any other related 
        activity; and
            (2) does not include--
                    (A) any discretionary appropriations or direct 
                spending, as those terms are defined in section 250(c) 
                of the Balanced Budget and Emergency Deficit Control 
                Act of 1985 (2 U.S.C. 900(c)); and
                    (B) any grant awarded by the United States to the 
                State government, municipal government, local 
                government, or county government.
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