BILL NUMBER:S3332

TITLE OF BILL:  An act to amend the state finance law, in relation to
prompt payment to counties from the state

PURPOSE:

To ensure that counties receive reimbursements from the State for
mandated programs within a reasonable timeframe.

SUMMARY:

Section 1 amends subdivision 1 of section 179-f of the state finance
law to add county governments to the state's prompt payment law.

Section 2 provides the effective date.

JUSTIFICATION:

As counties across the State face increasing budget challenges in
already difficult economic times, it is imperative that the
legislature take action to ensure timely reimbursements for State
mandated programs. At times, fiscal challenges at the State level lead
to the delay in payment or withholding of reimbursement funds from the
counties as a way to mitigate shortfalls for the State.  Currently,
payments from the state to a contractor or subcontractor under § 179-f
              

of the Finance Law must be paid by the required payment date or are
subject to interest payments. This legislation adds county governments
to the entities requiring prompt payment under this section of the
Finance Law, known as the Prompt Payment Law.

The Prompt Payment Law was enacted in 1995 at the bequest of private
businesses and nonprofit agencies that contract with the state and
where constantly subject to delayed payments. The law requires
interest payments after a set deadline and also forces the state to
pay interest on income tax refunds that are delayed more than 45 days
after the April 15 due date. Interest rates are set by the
Commissioner of Taxation and Finance, and currently range from 2
percent to 12.

It is essential that these provisions of the Prompt Payment Law apply
to counties. Under the current law, counties must pay up front for
mandated services while the State may delay payment for monies owed to
counties. Some counties have turned to expensive borrowing to balance
their books because of delays in State payments. St. Lawrence County
recently announced it was borrowing up to $8.5 million, with interest
charges nearing thousands of dollars, to help cover its annual
expenses. Franklin County is also considering short-term borrowing, as
it is owed $3.8 million by the state. Clinton County is owed $6.1
million.

If counties are late with payments they owe to the State, they have to
pay interest. Analogously, the State should have to meet its
obligations owed to counties or face interest payment consequences,
just as it must do with private entities. While these payments remain
unpaid local taxpayers are left footing the bill. The legislature must
hold the State accountable for its owed payments and foster the


financial wellbeing of our counties. The enactment of this legislation
will achieve those dual objectives.

LEGISLATIVE HISTORY:

2013-2014: S.3695 - referred to finance / A.4907 - referred to
governmental operations
2011-2012: S.5909 - referred to finance / A.9519 - referred to
governmental operations

FISCAL IMPLICATIONS:

None to the state.

EFFECTIVE DATE:

This act shall take effect ninety days after it shall have become a
law.