Relates to comptroller audits of certain organizations controlled by municipal corporations and certain other government entities

Summary of provisions

Section 1 of this bill amends Section 34 of the General Municipal Law to authorize the State Comptroller to examine the financial affairs of any organization (other than a statewide association of local governments or local government officials) that is controlled by one or more municipal corporations, industrial development agencies, or certain districts or agencies. An organization shall be deemed "under the control" of a municipal corporation, industrial development agency, district or agency when one or more individuals who serve as officers or employees of any such municipal corporation, industrial development agency, district or agency: (a) select either a majority of the organization's highest policy-making body or the organization's chief executive officer; (b) constitute a majority of the voting strength that selects either a majority of the organization's highest policy-making body or the organization's chief executive officer; or (c) serve as (i) a majority of the organization's highest policy-making body; (ii) in his or her official capacity, the organization's chief executive officer; or (iii) in his or her official capacity, a partner in the organization. An organization under the control of one or more more municipal corporations, industrial development agencies, districts or agencies shall also include any other organization that is controlled by such organization.

Section 2 of this bill provides that this act shall take effect immediately.

Prior legislative history

S. 7907 (Passed Senate) and A. 11088 of 2009-2010 S. 7540 and A. 9689 (Passed Assembly) of 2011-2012

Justification

Currently, the State Comptroller does not have express authority to directly audit Local Development Corporations (LDCs) and other similar types of private entities, even when they are controlled by a local government entity. However, many local governments rely upon, and have some type of business or financial relationship with, one or more such entities. In these cases, the Comptroller may examine that relationship, but only as part of an audit of the 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 in order to examine the overall finances and operations of the private entity.

Similarly, there is no express authority for the Comptroller to audit the overall finances or operations of such an organization separately. This bill would expand the Comptroller's express audit authority to include audits of such organizations, but only when the organization is under the control of one or more local government entities.

This expansion of the Comptroller's audit authority 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 in many ways essentially as an instrumentality of that municipal corporation or local government entity. Thus, in order to fully understand the financial condition and operations of a municipal corporation or other 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 disincentives to the use of any particular type of organization, this bill would apply to every type of organization under the control of a municipal corporation or other local government entity that is not already subject to audit by the Comptroller, except a statewide association of local governments or local government officials.

The Comptroller urges the passage of this proposed legislation.

BUDGET IMPLICATIONS

This bill has no significant fiscal impact.

Effective date

This bill would take effect immediately.