Extends until 1/1/2024 the authority of counties, cities, towns & villages to exclude from constitutional debt limits indebtedness related to sewage facilities

Summary of provisions

Section 1 of this bill amends Paragraph E of Section 5 of Article 8 of the Constitution to extend, until January 1, 2024, the authority of counties, cities, towns and villages to exclude from their constitutional debt limits indebtedness contracted for the construction and reconstruction of facilities for the conveyance, treatment and disposal of sewage by eliminating the expiration provision.

Prior legislative history

New bill proposed for Second Passage. First Passage: S. 7554 and A. 9691 of 2012.

Justification

The exclusion of sewer debt from the constitutional debt limits of counties, cities, towns and villages was originally authorized in 1963 for a ten-year period. When first enacted, the general purpose of the exclusion was to encourage and enable municipalities to participate in the State's then-new sewer construction assistance plan without fear that, by incurring indebtedness for sewer purposes, they would diminish their power to incur debt for other capital improvements which they desired to undertake and finance.

It initially was believed that limiting the exclusion to indebtedness incurred during a 10-year period would encourage municipalities to take action during such 10-year period, and that the exclusion would thus assist in accomplishing the purposes of the States water anti-pollution program. Reflecting the fact that these pollution concerns are continuing and require an ongoing effort, however, the exclusion has been subsequently extended for four successive ten-year periods. Without a further extension, the exclusion will apply only to debt contracted through the end of 2013. This amendment would permit the exclusion of such indebtedness until January 1, 2024.

The concerns addressed in 1963 and by subsequent extensions of the exclusion are still valid today. Although many pollution problems have been abated, there are still significant concerns that need to be addressed. Technology continues to evolve to make more efficient systems available, additional development necessitates the construction of new systems, and existing sewage treatment facilities age, necessitating reconstruction and refurbishment.

Further, municipalities have been able to benefit from the State's current loan program, the Clean Water State Revolving Fund (CWSRF), administered by the State Department of Environmental Conservation (DEC) and the Environmental Facilities Corporation (EFC). This program provides loans at below-market interest rates to municipalities for a

variety of projects relating to water pollution, including waste-water treatment facilities and sewer systems. Since its inception in 1990, the CWSRF program has loaned more than $12.1 billion for 1,500 projects across the State. According to the 2012 intended use plan prepared with respect to the CWSRF, DEC and EFC anticipate financing approximately $705 million in diverse projects, including many for the conveyance, treatment and disposal of sewage in New York State.

These numbers are indicative of the continuing efforts by the State and municipalities to help manage sewage in the State. In addition, certain federal agencies, such as the U.S. Department of Agriculture Rural Development, may make loans at below-market rates, along with grants, available. Under these programs, however, municipalities generally still must issue their own indebtedness and, therefore, the need for debt contracting capacity continues.

The constitutional exclusion has been implemented by Local Finance Law Section 124.10, which requires that applications for the exclusion of sewer indebtedness be filed with the State Comptroller. The Office of the State Comptroller's records indicates that from January of 2001 through the close of 2011, municipalities have applied for and were granted 178 exclusions of sewer debt. Each applicant derived benefit from its exclusion by virtue of protecting its debt contracting margin, thereby preserving the ability to issue debt for other capital projects and needs. This bill would continue the exclusion of sewer debt from debt limitations and so maintain the resulting significant benefits to municipalities throughout the State.

The current authorization for excluding indebtedness for sewage construction from municipal debt limitations will expire on December 31, 2013. Since a constitutional amendment requires passage by two consecutively elected legislatures and approval by the voters, the current authorization will expire unless the Legislature extends the sunset date by passing an amendment during the 2012 legislative session, which it has done, and again in the current 2013 legislative session.

The Comptroller urges the passage of this proposed legislation.

Fiscal implications for state

This bill has no significant State fiscal impact.

Effective date

This amendment would become effective on the first day of January next succeeding approval of both houses of two consecutively elected legislatures and approval of the people in the subsequent general election.