Relates to interest and collection fees assessed on debts owed by the state to municipalities

BILL NUMBER:S6205

Title of bill

An act to amend the state finance law, in relation to interest and collection fees assessed on debts owed by the state to municipalities

Purpose

This bill would entitle municipalities to interest and collection fees when the state fails to pay amounts due within thirty days after submission of bills.

Summary of provisions

Section 1 creates a new section 16-a of the State Finance Law.

1. includes definitions 2. relates to submitting a bill from a municipality to the state 3. provides that the State shall pay such bill within thirty days after receiving a bill from a municipality. 4. provides that except under certain circumstances, interest will be due if payment is not made within thirty days. 5. provides that State will be liable for costs of collection if payment is not made within thirty days 6. provides that interest and late payment charges will be paid upon notice to State 7. directs the Director of Budget to promulgate any necessary regulations 8.provides that this law will not supercede any contract provision calling for interest or late payments 9. provides that any contract term which attempts to waive this section shall be void 10. provides that municipalities may enter into agreements for payment with the State 11. Indicates when the time limits in this section are tolled, including when the billing is incomplete, and the municipality is advised within thirty days that the bill is incomplete, until the billing is complete; when the State is being reimbursed from another source, until the State receives such funds; or when the State is not authorized or approved to make such expenditure, until such authorization or approval is made.

Section 2. This act shall take effect on the ninetieth day after it shall have become law.

Justification

Local governments expend funds that are often to be reimbursed by the State, many times due to mandates for service made by the State. When the State delays payment of amounts due to schools and local governments, these municipalities are often forced to borrow funds to carry on their responsibilities. Section 18 of the State Finance Law grants the State a right to interest and other

charges when a payment to it is delinquent, and local governments are entitled to the same rights to interest and other charges. The bill does recognize that sometimes a billing submitted by a municipality may not be complete, and provides to a tolling of the thirty day time limit until the billing is submitted correctly. Also, many times funds that will go from the State to municipalities is being passed through from another source, often the federal government, and the bill provides that payment will not be due until these pass through funds are received. Finally, when a budget has not been passed, or when third party approval is also required, the State may not be authorized to make payment, and in such case time for payment is tolled until authorization has been received.

Legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take place on the ninetieth day after it shall have become law.