SECTION 19A. Inability to pay interest or principal of bonds, notes or certificates of indebtedness; notice; certification to state treasurer; payment by state treasurer

If it appears to the treasurer of a city, town or district, including a regional school district, that the city, town or district is, or is likely to be, unable to pay in whole or in part the principal or interest, or both, on any of its bonds, notes or certificates of indebtedness when due, he shall forthwith notify the city manager, if any, otherwise the mayor in a city, the selectmen in a town, the town manager or town council in a municipality with a town council form of government, the regional district school committee in a regional school district, or the prudential committee or commissioners in another district, of the inability or likely inability. If the city manager, mayor, town manager, town council, selectmen, committee or commissioners, whether or not so notified, finds upon investigation that the payment cannot or is not likely to be made when due, he or they shall certify the inability or likely inability to the commissioner of revenue. Upon receipt of the certificate, the commissioner shall immediately investigate the circumstances and, if he finds that the city, town or district is, or in his opinion will be, unable to make the payment when due, he shall forthwith certify the inability, the amount of the due or overdue payment and the name of the paying agent for the bonds, notes or certificates of indebtedness to the state treasurer.

Not later than three days after receipt of the certification from the commissioner or one business day prior to the date on which the principal or interest, or both, becomes due, whichever is later, the state treasurer shall pay to the paying agent the amount of the due or overdue payment certified to him to the extent of the sums otherwise then payable and the sums estimated to become payable during the remainder of the fiscal year, from the treasury, to the city, town or district. If for any reason any portion of the certified sum has not been so paid to the paying agent at the close of the fiscal year, the state treasurer shall pay the same as soon as practicable in the next fiscal year to the extent of sums otherwise then payable, and sums estimated to become payable during that fiscal year, from the treasury, to the city, town or district.

The amounts so paid to the paying agent shall be in trust and shall be exempt from being levied upon, taken, sequestered or applied for any purpose other than paying principal or interest, or both, on bonds, notes or certificates of indebtedness of the city, town or district.

Any amounts paid by the state treasurer under the provisions of this section, together with all costs accruing to the commonwealth as a result of actions undertaken pursuant to this section, including administrative costs as well as loss of interest income, shall be charged against the amounts otherwise payable or becoming payable from the treasury to the city, town or district.

For purposes of this section, the sums otherwise payable from the treasury to a city or town shall be the remainder after any deduction authorized by section twenty A of chapter fifty-eight or section twenty of chapter fifty-nine. In estimating the sums to become payable from the treasury to a city or town during the remainder of a fiscal year the state treasurer shall first deduct any amounts or estimated amounts not yet paid which, if not otherwise paid, would be deductible under section twenty A of chapter fifty-eight or section twenty of chapter fifty-nine during the remainder of the fiscal year.