Authorizes the comptroller and each examiner of municipal affairs to examine the financial affairs of certain organizations controlled by local government entities

5 Co-sponsors

• Jeffrey D. Klein
• Liz Krueger
• George Onorato
• José Peralta
• Toby Ann Stavisky

Title of bill

An act to amend the general municipal law, in relation to audits by the state comptroller of certain organizations controlled by local government entities

Purpose

This bill would amend section 34 of the General Municipal Law to Authorize the State Comptroller to examine into the financial affairs of local government subsidiary organizations. The term "local government subsidiary organization" would mean any organization, other than an entity already subject to audit by the Comptroller, that is controlled by one or more municipal corporations or other local government entities subject to audit by the Comptroller pursuant to the General Municipal Law. The circumstances under which an organization is considered to be under the control of one or more municipal corporations or other local government entities would include, but not be limited to, any situation where municipal or local government officials select or serve as either a majority of the organization's highest policy-making body or the organization's chief executive officer.

Justification

In Recent years, municipal corporations and other local government entities have relied on a variety of separate and legally distinct organizations to perform various functions (e.g. local development corporations organized under Section 1411 of the Not-Far-Profit Corporation Law: a limited liability company organized under the Limited Liability Company; a for-profit corporation apparently organized under the Business Corporation Law). Under current law, when a municipal corporation or other local government entity has a financial or business relationship with another legally distinct organization, the Comptroller may examine that relationship, but only as part of an audit of the municipal corporation or other local government entity. Even in the context of such an audit, there is no authority for the Comptroller to look beyond the financial or business relationship, to examine the organizations overall finances and operations.

Similarly, there is no express authority for the Comptroller to separately audit the overall finances or operations of such an organization. This bill would expand the Comptroller's express audit authority to include audits of such organizations having a financial or business relationship with a municipal corporation or other local government entity, but only when the organization is under the control of one or more municipal corporations or other local government entities.

This expansion of the Comptroller's audit is necessary to promote and increase transparency in municipal and local government finances and operations because an organization that is under the control of a municipal corporation or local government entity functions as an instrumentality of that municipal corporation or local government entity, it is necessary to examine the finances and operations of organizations controlled by the municipal corporation or local government entity. To avoid creating incentives or distinctive or disincentives to the use of any particular organization, this bill would apply to every type of organization that is under the control of a municipal corporation or other local government entity, except an organization already subject to audit by the Comptroller.

The Comptroller urges the passage of this legislation.

Effective date

Immediately.