§ 10.10 Municipalities and school districts authorized to incur debt
to liquidate operating deficits; requirements and procedures; period of
probable usefulness. In the case of a municipality or school district
that is authorized by a special or general law to incur debt to
liquidate an operating deficit:

a. no bonds to fund the liquidation of such a deficit may be issued
unless and until the state comptroller shall first review and confirm
the existence of the deficit, as well as certify the amount of the
deficit. As soon as practicable after the effective date of the law
authorizing the incurrence of debt to fund the deficit, but in no event
prior to the close of the then current fiscal year of the municipality
in the case of a projected deficit, the municipality or school district
shall prepare a report detailing the amount and cause of the deficit and
submit to the state comptroller such report, together with the
municipality's or school district's independent audit report for its
last completed fiscal year, if any such audit report has been or is to
be prepared, and such other information as the state comptroller may
deem necessary. Within thirty days after receiving all necessary reports
and information, the state comptroller shall:

1. perform such reviews as may be necessary;

2. confirm the existence and certify the amount of the deficit; and

3. provide notification to the finance board of the municipality or
school district as to the existence and amount of any such deficit.

b. bonds to liquidate such deficit may not be issued in an amount
exceeding the amount of such deficit as certified by the state
comptroller. If the municipality or school district issues bond
anticipation notes for the purpose of liquidating such deficit prior to
a determination by the state comptroller pursuant to paragraph a of this
section in an amount in excess of the amount of such deficit as
confirmed by the state comptroller, the municipality or school district
shall, from funds other than proceeds of bonds or bond anticipation
notes, either redeem such bond anticipation notes in the amount by which
the amount of such bond anticipation notes exceeds the amount of such
deficit as confirmed by the comptroller or deposit a sum equal to the
amount by which such bond anticipation notes exceed the amount of such
deficit as confirmed by the comptroller into a reserve fund for the
payment of bonded indebtedness that shall be established pursuant to
section six-h of the general municipal law.

c. for each fiscal year occurring during the time deficit bonds or
bond anticipation notes issued in anticipation of the sale of such bonds
are outstanding, up to and including the last fiscal year during which
such debt or debt issued to refund such debt is outstanding, the chief
fiscal officer of the municipality or school district on whose behalf
such deficit bonds or notes have been issued shall monitor budgets of
the municipality or school district and for each budget, prepare a
quarterly report of summarized budget data depicting overall trends of
actual revenues and budget expenditures for the entire budget rather
than individual line items. Such reports shall compare revenue estimates
and appropriations as set forth in such budget with the actual revenues
and expenditures made to date. All quarterly reports shall be
accompanied by a recommendation by the chief executive officer of the
municipality or school district setting forth any remedial action
necessary to resolve any unfavorable budget variance including the
overestimation of revenues and the underestimation of appropriations,
and shall be completed within thirty days of the end of each quarter.
The chief fiscal officer shall also prepare, as part of such report, a
quarterly trial balance of general ledger accounts. The above quarterly
budgetary reports and quarterly trial balances shall be prepared in
accordance with generally accepted accounting principles. These reports
shall be submitted to the governing board and chief executive officer of
such municipality or school district, the state director of the budget,
the state comptroller, the chair of the assembly ways and means
committee, the chair of the senate finance committee and, in the case of
a school district, the commissioner of education.

d. beginning with the fiscal year during which the municipality or
school district is authorized to incur debt to finance the deficit, to
and including the last fiscal year during which such debt or any debt
incurred to refund such debt is outstanding, the chief executive officer
or other individual or individuals responsible for the preparation of
the tentative budget, or in the case of a town, the preliminary budget,
shall submit the tentative or preliminary budget for the next succeeding
fiscal year to the state comptroller and, in the case of a school
district, also to the commissioner of education, no later than thirty
days before the date scheduled for the governing board's vote on the
adoption of the final budget or the last date on which the budget may be
finally adopted, whichever is sooner. The state comptroller and, in the
case of a school district, the commissioner of education, shall examine
such proposed budget and make such recommendations as deemed appropriate
thereon to the municipality or school district prior to the adoption of
the budget, but no later than ten days before the date scheduled for the
governing board's vote on the adoption of the final budget or the last
date on which the budget must be adopted, whichever is sooner. Such
recommendations shall be made after examination into the estimates of
revenues and expenditures of such municipality or school district. The
governing board of the municipality or school district, no later than
five days prior to the adoption of the budget, shall review any such
recommendations and may make adjustments to its proposed budget
consistent with any recommendations made by the state comptroller and,
in the case of a school district, by the commissioner of education. Any
recommendations that the board rejects shall be explained in writing to
the state comptroller and, in the case of recommendations made by the
commissioner of education, to the commissioner. The action or inaction
of the state comptroller or the commissioner of education under this
section shall not be construed to affect the legal validity of any
budget of the municipality or school district nor to affect the powers
or duties of the municipality or school district with respect to the
local budget process, provided, however, that the municipality or school
district may not issue bonds for any object or purpose unless and until
adjustments to its proposed budget consistent with any recommendations
made by the state comptroller and, in the case of a school district, by
the commissioner of education, are made, or any such recommendations
that are rejected have been explained in writing to the state
comptroller and, in the case of school districts, the commissioner of
education.

e. beginning with the fiscal year during which the municipality or
school district is authorized to incur debt to finance the deficit, to
and including the last fiscal year during which such debt or any debt
incurred to refund such debt is outstanding, the chief executive officer
or other officer or officers responsible for the preparation of the
tentative budget, or in the case of a town, the preliminary budget, of
the municipality or school district, within thirty days after the final
adoption of the budget for the next succeeding fiscal year, shall
prepare a three-year financial plan covering the next succeeding fiscal
year and the two fiscal years thereafter. The financial plan shall, at a
minimum, contain projected employment levels, projected annual
expenditures for personal service, fringe benefits, non-personal
services and debt service; appropriate reserve fund amounts; estimated
annual revenues including projection of property tax rates, the value of
the taxable real property and resulting tax levy, annual growth in sales
tax and non-property tax revenues; and the proposed use of one-time
revenue sources. Copies of the financial plan shall be provided to the
chief executive and chief fiscal officers of the municipality or school
district, the state director of the budget, the state comptroller, the
chair of the assembly ways and means committee and the chair of the
senate finance committee. This financial plan requirement shall not
apply to the extent a municipality or school district is subject to a
different multi-year financial plan requirement under state law.

f. beginning with the fiscal year during which the municipality or
school district is authorized to incur debt to finance the deficit, to
and including the last fiscal year during which such debt or any debt
incurred to refund such debt is outstanding, the chief fiscal officer of
the municipality or school district shall notify the state comptroller
at least fifteen days prior to the issuance of any bonds or notes or
entering to any installment purchase contract and the state comptroller
may review and make recommendations regarding the affordability to the
municipality or school district of any such proposed issuance or
contract.

g. to facilitate the marketing of bonds authorized pursuant to law to
be issued to fund a deficit, the municipality or school district may,
notwithstanding any limitation on the private sales of bonds provided by
law and subject to the approval of the state comptroller of the terms
and conditions of such sales:

1. arrange for the underwriting of such bonds at private sale through
negotiated fees or by sale of such bonds to an underwriter at a price
less than the sum of par value of, and the accrued interest on, such
obligations; or

2. arrange for the private sale of such bonds through negotiated
agreement, with compensation for such sales to be provided by negotiated
agreement and/or negotiated fee, if required. The cost of such
underwriting or private placement shall be deemed a preliminary cost for
purposes of section 11.00 of this title.

h. the financing of a deficit, when authorized by a special or general
law as hereinbefore described, is hereby declared to be an object or
purpose of the municipality or school district for which indebtedness
may be incurred, the period of probable usefulness of which is
determined to be ten years, computed from the date of such bonds or the
date of the first bond anticipation note issued in anticipation of the
sale of such bonds, whichever is earlier.

i. except as provided in this section or in the general or special law
authorizing the incurrence of debt to finance the deficit, all
proceedings in connection with the issuance of such debt shall be had
and taken in accordance with the provisions of this chapter, provided,
however, that any resolution or resolutions authorizing the issuance of
such bonds shall not be subject to either a mandatory or permissive
referendum. To the extent the provisions of this section are
inconsistent with any general, special or local law concerning budget
procedures, this section shall apply and any budget schedule set forth
in any such law shall be modified to conform with this section.