Letter of credit issued to local government.

1. As used in this section, “letter of credit” means an authorization from a county treasurer to a county auditor to honor warrants of a local government prior to the distribution of tax receipts to the account of the local government. 2. A letter of credit may be issued on behalf of an entity at the option of the county treasurer if the following conditions are met: (a) The letter of credit must be requested of the county treasurer by the governing body. (b) A letter of credit cannot be issued to cover more than 75 percent of the undistributed tax receipts on hand in the county treasury to be distributed to the entity. (c) The county treasurer shall make a distribution of taxes to cover any outstanding letters of credit prior to the end of each fiscal year.