Relates to stabilizing the cultural education account and the local government records management improvement fund

Summary of provisions

Section 1 would amend subparagraph b of paragraph 4 of subdivision a and subparagraph b of paragraph 11 of subdivision b of §8021 of the Civil Practice Law and Rules to increase the LGRMIF and CE Account fees charged by the county clerk's office for the recording, entering, index- ing, and endorsing of a certificate on any instrument relating to real property in such county and any instrument required by statute to be recorded in such clerk's office. Currently, the clerk's office imposes a surcharge of $5.00 for deposit to the LGRMIF and a $15.00 surcharge for deposit in the CE Account. Of the $5.00 surcharge, counties retain twen- ty-five cents (.25), and of the $15.00 surcharge, counties retain seven- ty-five cents (.75). Section 1 would increase the LGRMIF fee by $2.50, from $5.00 to $7.50, and increase the CE Account fee $7.50, from $15.00 to $22.50. Section 1 would also increase the amount of the CE Account fee that may be retained by counties by twenty-five cents (.25), from $.75 to $1.00.

Section 2 would add a new subdivision 1-a to §57.35 to the Arts and Cultural Affairs Law to authorize the Commissioner of Education to award formula grants for local government records management improvement to county clerks and in New York City, to the New York register or other officer or agency having custody of real property records and any offi- cer or agency having custody of Supreme Court records. The amount of each grant award shall equal the product of seventy-five cents (.75) and the number of transactions on which a surcharge was imposed by the public officer or agency applying for a grant in the prior calendar year for deposit to LGRMIF as set forth in §§80l8 and 8021 of Civil Practice Law and Rules, and §7-604 of the Administrative Code of the City of New York.

Sections 3 and 5 would make technical amendments to subdivision 3 of §57.35 of the Arts and Cultural Affairs Law and subdivision 2 of §97-zz of the State Finance Law to correct cross references to paragraph 3 of subdivision a of §80 18 of the Civil Practice Law and Rules, which contains the Cultural Education Account and LGRMIF fees.

Section 4 would amend subdivision a of §7-604 of the Administrative Code of the City of New York to similarly increase the LGRMIF and the CE Account fees charged in the City .of New York by $2.50 and $7.50 respec- tively, and to increase the amount to be retained by the City from the CE Account fee to $1.00.

Section 7 is the effective date.

Justification

In 2002, Chapter 83 of the Laws of 2002 amended §§ 8018 and 8021 of the Civil Practice Law and Rules and §§7-604 and 7-614 of the Administrative Code of the City of New York, and added §97-zzz to the State Finance Law, to establish the CE Account and authorize the imposition of a $15.00 surcharge by county clerks on the filing and recording of various instruments to be deposited in the Cultural Education Account. The funds deposited in the Cultural Education Account were made available to support the administrative costs of the State Education Department's Office of Cultural Education previously supported by appropriations from the State's general fund. The CE Account provides a major share of the operational funding for the State Museum, State Archives, State Library, and Office of Public Broadcasting and Educational Television. The fund also provides annual support of $1 Million to the General Fund; $1 Million to the Summer School for the Arts program; up to $650,000 for the Empire State Performing Arts Center programs; and up to an approxi- mate $3.272 Million for New York State Theater Institute programs.

As a result of this shift from funding through the State's general fund to funding through fees collected by county clerks, the continued func- tioning of the State Education Department's Office of Cultural Education became dependent upon the availability of sufficient revenues generated by the fee surcharges to support operations. Presently, the account balance of the Cultural Education Account is fully depleted as a result of severe declines in revenue and annual and special transfers of funds to support other state purposes. The annual fee revenue has declined by more than 38% from the historically highest levels in the years imme- diately following establishment of the CE Account. Because of the current economic downturn, which is expected to reduce the number of real estate transactions and other transactions that generate these fees, we anticipate that this decline in revenues will continue in the next few years. It is anticipated that an annual deficit of approximate- ly $15 Million in 2009-2010 will likely result in a negative cash balance of more than $20 Million by the end of next fiscal year. There- fore, it is crucial to the existence of this Account and the continued funding it provides to our State Museum, Library and Office of Public Broadcasting and Educational Television to increase the surcharge. This bill would provide for a $7.50 increase in the surcharge payable to the

Cultural Education Account for the recording of an instrument relating to real property and any instrument required by statue to be recorded, in order to eliminate the projected deficit and provide the funding needed to support the Office of Cultural Education and its many impor- tant functions. The bill would also authorize county clerks to retain an additional twenty-five cents per transaction to defray their costs in collecting this additional surcharge.

In 1989, the Local Government Records Management Improvement Fund (LGRMIF) was created to (I) support grants to local governments to improve records and local archives administration, (2) establish a regionally-based program of technical assistance and advisory services to local governments for records management, and (3) support the State Archives administration and oversight of these programs (amounting to 56% of the operational funding for the State Archives). The LGRMIF's generates its revenue from the county clerks' imposition of a $5.00 surcharge on the recording, entering, indexing, and endorsing of a certificate of any instrument relating to real property in such county and required by statute to be recorded in such county clerk's office and on the assignment of an index number on an action pending in a Supreme or County Court of such county. The $5.00 surcharge has not been increased since 1989.

Since the LGRMIF imposes a fee on the recording of instruments required to be recorded by statute and relating to real property, its cash balance primarily depends on the housing market and fluctuates with state and national economic conditions of such market. Currently, the housing market is depressed. The LGRMIF's revenue has decreased and is anticipated to continue to diminish. While the surcharge has not increased since 1989, the average project costs for local government records management projects has increased by 65% since 2004, due to the need to transition to more complex and costly electronic record-keeping systems.

The current fees do not provide sufficient funding to meet the demand by local governments for local government records management grants. Requests for grant funding have increased by 104% since 2004, and in 2008, only 40% of the requests for grants could be funded. At the same time, the operational costs of the program have been increasing. This bill would provide for a fee increase of $2.50 on the fee charged by the county clerk's office for the recording of an instrument relating to real property and any instrument required by statue to be recorded in such clerk's office, which would be used to stabilize the LGRMIF by providing sufficient funding to support existing local government records management activities, which benefit all local governments. This bill would also authorize the Commissioner of Education to use a portion of this fee increase for formula grants to county clerks to support their local government records management activities. The new formula grants would generate funds on a per transaction basis and help assure that county clerk records are preserved for the benefit of the public.

Legislative history

New bill.

Fiscal implications

This bill will not impose any additional costs on the State. We estimate that this bill would generate approximately $12 to $14 Million annually in additional revenues for the Cultural Education Account and approxi- mately $4 to $5 Million for the LGRMIF. This bill is necessary for the continued funding of our State Museum, Archives, Library and Office of Public Broadcasting and Educational Television and other essential func- tions of the Office of Cultural Education. The CE Account's annual revenue has declined to the point that for the first time in 2008-2009, it will be less than the cost of operation of Cultural Education's programs alone, excluding transfers of funds. An annual operating defi- cit of almost $7.5 Million is projected for Office of Cultural Education programs in the fiscal year 2008-2009. The current cash balance of such account is negative $5.3 Million when outstanding and projected obli- gations are considered.

By the close of 2009-2010, the deficit in the cash balance will he more than $20 Million, barring any significant changes in the economy. Simi- larly, the LGRMIF is on a steady decline and projected to continue to decrease in revenue.

Effective date

On the 60th day after it shall have become a law.