NY State Senate Bill 2019-S6804

Senate Bill S6804

2019-2020 Legislative Session

Relates to expenditures supported by monies retained in a municipal contingency and tax stabilization reserve fund

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Archive: Last Bill Status - In Senate Committee Local Government Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to local government
Oct 25, 2019	referred to rules

co-Sponsors

2019-S6804 (ACTIVE) - Details

See Assembly Version of this Bill:: A8737
Current Committee:: Senate Local Government
Law Section:: General Municipal Law
Laws Affected:: Amd §6-e, Gen Muni L; amd §8, Chap 868 of 1975
Versions Introduced in 2021-2022 Legislative Session:: A758

2019-S6804 (ACTIVE) - Summary

Excludes certain expenditures supported by monies retained in a municipal contingency and tax stabilization reserve fund from the budget when determining whether the budget is balanced in accordance with generally accepted accounting principles set forth in the state comptroller's uniform system of accounts for municipalities.

2019-S6804 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S6804

SPONSOR: BENJAMIN
 
TITLE OF BILL:  An act to amend the general municipal law and the New
York state financial emergency act for the city of New York, in relation
to expenditures supported by monies retained in a municipal contingency
and tax stabilization reserve fund

 
PURPOSE:

Expands the ability of the City of New York to grow a contingency and
tax stabilization reserve fund and lays out conditions in which it may
be used.

 
SUMMARY OF PROVISIONS:

Section one amends section 6-e of the General Municipal Law as follows:
adds 'economic recession' to the conditions that could cause an unantic-
ipated revenue loss.

-defines 'economic recession'

- removes the cap of 10% of the eligible portion of a budget that can be
placed in a contingency and tax stabilization reserve fund for New York
City.

- removes the requirement that any amount of contingency and tax
stabilization reserve fund in excess of 10% of the eligible portion of a
municipality's budget be directed to property tax relief for New York
City.

- allows New York City to utilize funds in a contingency and tax
stabilization fund to be used to finance an unanticipated revenue loss
due to an economic recession.

Section two amends Section 8(1)(a) of the laws of 1975, the New York
State Financial emergency act for the city of New York to exclude the
monies of the contingency and tax stabilization reserve fund from the
calculation of whether the city's budget is balanced.

Section three sets the effective date.

 
EXISTING LAW:

Current law restricts the amount of and the use to which any excess
income of the City of New York can be put.

 
JUSTIFICATION:

New York City experienced a financial crisis in the early 70's. This
crisis was exacerbated by the fact that the city was funding significant
social programs without the needed revenue to do so. In order to promote
fiscal responsibility, the state legislature passed the Financial Emer-
gency Act of 1975. This statute regulated New York City's accounting
practices and helped pull the city back into financial stability. Howev-
er, the FEA did not contemplate the need for the city to prepare for
future economic downturns.


Currently, municipalities in New York are limited in the amount of money
that they can budget for contingency purposes. They are additionally
kept from saving excess revenue for contingency purposes.  Existing law,
requires balanced accounting by the city and allocates excess revenue to
be put towards alleviating real property taxes.  Additionally, existing
law requires that anticipated revenue be allocated for within the
impacted year's budget.

These unnecessary restraints, are not reflective of the economic reali-
ties of municipalities across the state or the current financial situ-
ation of New York City.

This legislation would allow municipalities to keep and grow a rainy day
fund during periods of economic growth to prepare for unforeseen emer-
gencies, including unforeseen economic conditions.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

None.

 
LOCAL FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Immediately.

2019-S6804 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6804
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                             October 25, 2019
                                ___________
 
 Introduced  by Sen. BENJAMIN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the general municipal law and the New York state  finan-
   cial  emergency  act for the city of New York, in relation to expendi-
   tures supported by monies retained in a municipal contingency and  tax
   stabilization reserve fund
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph l of subdivision 1 of section 6-e of the  general
 municipal  law,  as added by chapter 655 of the laws of 1992, is amended
 and a new paragraph o is added to read as follows:
   l. "Unanticipated revenue  loss"  means  estimated  revenue  which  is
 rendered  unreceivable  because  of  a  change in federal or state laws,
 rules or regulations, a court order, judgement or  decree,  AN  ECONOMIC
 RECESSION,  or  other  circumstance,  which takes effect or occurs after
 final adoption of the annual  budget  and  which  could  not  have  been
 reasonably anticipated prior to final adoption of the annual budget.
   O. "ECONOMIC RECESSION" MEANS TWO QUARTERS OF NEGATIVE ECONOMIC GROWTH
 AS EVIDENCED BY A DECLINE IN INCOME, EMPLOYMENT OR SPENDING.
   § 2. Subdivisions 3 and 4 of section 6-e of the general municipal law,
 subdivision 3 and paragraph d of subdivision 4 as amended by chapter 528
 of  the  laws  of  2000 and subdivision 4 as added by chapter 655 of the
 laws of 1992, are amended to read as follows:
   3. There may be  paid  into  the  contingency  and  tax  stabilization
 reserve  fund  such  amounts  as  may  be provided therefor by budgetary
 appropriation, unappropriated unreserved fund balance  in  the  eligible
 portion  of  the annual budget, and such revenues as are not required by
 law to be paid into any other fund or account; provided,  however,  that
 no  amount  may  be  appropriated for payment into a contingency and tax
 stabilization reserve fund which would cause the balance of the fund  to
 exceed  ten percent of the eligible portion of the annual budget for the
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD14029-02-9

 S. 6804                             2
 
 fiscal year for which the appropriation would be made ; PROVIDED, HOWEV-
 ER, THAT NO SUCH LIMITATION SHALL EXIST FOR FUNDS ESTABLISHED IN A  CITY
 HAVING A POPULATION OF ONE MILLION OR MORE.
   4.  a.  The moneys in a contingency and tax stabilization reserve fund
 may be expended only pursuant to an appropriation for a purpose  author-
 ized  by this subdivision. Except as provided in paragraph [e] F of this
 subdivision, such an appropriation shall be made only upon the recommen-
 dation of the chief executive officer and the adoption of  a  resolution
 appropriating  the  recommended  amount  by  at  least two-thirds of the
 voting strength of the governing board.
   b. The moneys in a contingency and tax stabilization reserve fund  may
 be  used  to  finance  an  unanticipated  revenue loss chargeable to the
 eligible portion of the annual budget, subject to the following  limita-
 tions:
   (1)  the  maximum  amount  of  moneys  in the fund that may be used to
 finance an unanticipated revenue loss shall equal either the  amount  of
 the  revenue  actually  received  for the base year or the amount of the
 estimated revenue for the current fiscal year, whichever is less,  minus
 the amount of the revenue actually received for the current fiscal year;
 and
   (2) the moneys in the fund may be used only to finance that portion of
 the  unanticipated  revenue  loss  which,  as a matter of law, cannot be
 financed with amounts available in any other account or fund.
   c. THE MONEYS IN A CONTINGENCY AND TAX STABILIZATION RESERVE FUND  MAY
 BE  USED  TO  FINANCE  AN  UNANTICIPATED REVENUE LOSS DUE TO AN ECONOMIC
 RECESSION CHARGEABLE TO THE  ELIGIBLE  PORTION  OF  THE  ANNUAL  BUDGET,
 SUBJECT TO THE FOLLOWING LIMITATIONS:
   (1)  THE  MAXIMUM  AMOUNT  OF  MONEYS  IN THE FUND THAT MAY BE USED TO
 FINANCE AN UNANTICIPATED REVENUE LOSS  DUE  TO  A  RECESSION  SHALL  NOT
 EXCEED  ONE  HUNDRED TWO PERCENT OF EXPENDITURES IN THE BASE YEAR OR THE
 AMOUNT OF THE ESTIMATED EXPENDITURES FOR THE CURRENT FISCAL YEAR, WHICH-
 EVER IS LESS, MINUS THE AMOUNT OF THE REVENUE ACTUALLY RECEIVED FOR  THE
 CURRENT FISCAL YEAR; AND
   (2) THE MONEYS IN THE FUND MAY BE USED ONLY TO FINANCE THAT PORTION OF
 THE  UNANTICIPATED  REVENUE  LOSS  WHICH,  AS A MATTER OF LAW, CANNOT BE
 FINANCED WITH AMOUNTS AVAILABLE IN ANY OTHER ACCOUNT OR FUND.
   D. The moneys in a contingency and tax stabilization reserve fund  may
 be used to finance an unanticipated expenditure chargeable to the eligi-
 ble portion of the annual budget, subject to the following limitations:
   (1)  the  maximum  amount  of  moneys  in the fund that may be used to
 finance an unanticipated expenditure shall equal the sum of  the  amount
 of  the  unanticipated  expenditure and the amount appropriated for that
 purpose for the current fiscal year minus either the amount appropriated
 for that purpose for the current fiscal year or the  actual  expenditure
 for the same purpose in the base year, whichever is greater; and
   (2) the moneys in the fund may be used only to finance that portion of
 an  unanticipated  expenditure  which,  as  a  matter  of law, cannot be
 financed with amounts available in any other account or fund.
   [d.] E. The moneys in the contingency and  tax  stabilization  reserve
 fund  may  be used to lessen or prevent any projected increase in excess
 of two and one-half percent in the amount of the real property tax  levy
 needed to finance the eligible portion of the annual budget for the next
 succeeding  fiscal  year.  The maximum amount of moneys in the fund that
 may be used for this purpose shall  equal  the  difference  between  the
 projected  amount of such real property tax levy and one hundred two and
 one-half percent of the amount of the real property tax levy  needed  to

 S. 6804                             3
 
 finance the eligible portion of the annual budget for the current fiscal
 year.
   [e.]  F.  When  preparing  the  tentative budget of a municipal corpo-
 ration, if the current balance of a contingency  and  tax  stabilization
 reserve  fund,  as  shown  by  the statement of the chief fiscal officer
 required by subdivision six of this section, exceeds ten percent of  the
 eligible  portion of the annual budget for the current fiscal year, such
 excess shall be used to reduce the amount of real property taxes  needed
 to  finance  the  eligible  portion  of  the  annual budget for the next
 succeeding fiscal year; PROVIDED,  HOWEVER,  THAT  NO  SUCH  REQUIREMENT
 SHALL  EXIST  FOR FUNDS ESTABLISHED IN A CITY HAVING A POPULATION OF ONE
 MILLION OR MORE.
   § 3. Paragraph a of subdivision 1 of section 8 of section 2 of chapter
 868 of the laws of 1975, constituting the New York state financial emer-
 gency act for the city of New York, as amended by section 1 of  part  PP
 of chapter 56 of the laws of 2010, is amended to read as follows:
   a.  (I)  For  its fiscal years ending June thirtieth, nineteen hundred
 seventy-nine through June thirtieth, nineteen  hundred  eighty-one,  the
 city's  budget  covering all expenditures other than capital items shall
 be prepared and balanced so that the results thereof would  not  show  a
 deficit  when  reported in accordance with the accounting principles set
 forth in the state comptroller's uniform system of accounts for  munici-
 palities,  as  the same may be modified by the comptroller, in consulta-
 tion with the city comptroller, for application to the city; subject  to
 the provision of subdivision four of section three thousand thirty-eight
 of  the public authorities law with respect to contributions by the city
 or other public employer to any retirement system or  pension  fund  and
 subject to the provision of paragraph (c) of subdivision five of section
 three  thousand  thirty-eight of the public authorities law with respect
 to expense items included in the capital budget of  the  city.  For  the
 fiscal  year ending June thirtieth, nineteen hundred eighty-two, and for
 each fiscal year thereafter, the city's budget covering all expenditures
 other than capital items shall be prepared  and  balanced  so  that  the
 results  thereof  would  not  show a deficit when reported in accordance
 with generally accepted accounting principles and would  permit  compar-
 ison  of the budget with the report of actual financial results prepared
 in  accordance  with  generally  accepted  accounting  principles.  With
 respect  to  financial  plans  that include the fiscal years ending June
 thirtieth, nineteen hundred seventy-nine through June  thirtieth,  nine-
 teen  hundred  eighty-one,  the  city's budget covering all expenditures
 other than capital items shall be prepared in accordance with  generally
 accepted  accounting  principles and there shall be substantial progress
 in each such fiscal year towards achieving a city  budget  covering  all
 expenditures  other  than  capital  items the results of which would not
 show a deficit when  reported  in  accordance  with  generally  accepted
 accounting  principles.  The city shall eliminate expense items from its
 capital budget not later than the commencement of the fiscal year ending
 June thirtieth, nineteen hundred eighty-two. For the fiscal year  ending
 June  thirtieth,  nineteen hundred eighty-nine, and for each fiscal year
 thereafter, the budgets covering all  expenditures  other  than  capital
 items  of  each  of  the  covered  organizations  shall  be prepared and
 balanced so that the results thereof  would  not  show  a  deficit  when
 reported  in  accordance  with generally accepted accounting principles;
 and for each fiscal year  prior  thereto,  there  shall  be  substantial
 progress  towards  such  goal.  Notwithstanding  the  foregoing  and the
 provisions of any general or special state  law  or  local  law  to  the

 S. 6804                             4
 
 contrary,  including  but  not limited to the New York city charter, all
 costs that would be capital costs in accordance with generally  accepted
 accounting  principles, but for the application of governmental account-
 ing  standards  board statement number forty-nine, shall be deemed to be
 capital costs for purposes of this chapter and any  other  provision  of
 state or local law, including but not limited to the New York city char-
 ter, relevant to the treatment of such costs.
   (II)  EXPENDITURES SUPPORTED BY MONIES RETAINED IN A MUNICIPAL CONTIN-
 GENCY AND TAX STABILIZATION RESERVE FUND CREATED  PURSUANT  TO,  AND  IN
 ACCORDANCE  WITH,  SECTION  SIX-E  OF THE GENERAL MUNICIPAL LAW SHALL BE
 EXCLUDED FROM THE BUDGET WHEN DETERMINING WHETHER THE BUDGET IS BALANCED
 IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES SET FORTH IN
 THE STATE COMPTROLLER'S UNIFORM SYSTEM OF ACCOUNTS  FOR  MUNICIPALITIES,
 AS THE SAME MAY BE MODIFIED BY THE COMPTROLLER, IN CONSULTATION WITH THE
 CITY COMPTROLLER.
   § 4. This act shall take effect immediately.

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Senate Bill S6804

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Sponsored By

Brian Benjamin