What's happening
This bill creates a system for the state comptroller to monitor and address local government fiscal stress, including escalating interventions and possible financial control boards.
Why it matters
Creates a graduated oversight system. The bill introduces a tiered process for identifying and addressing municipal fiscal stress, with increasing levels of intervention based on the severity and duration of financial problems. This could result in earlier detection of fiscal issues and more targeted support or intervention, potentially preventing full-blown fiscal crises.
Mandates corrective action and transparency. Local governments identified as fiscally stressed must submit corrective action plans, four-year financial plans, and periodic budget reports. This increases transparency, requires proactive financial planning, and may help restore public trust in local government finances.
Limits local autonomy in crisis. At the highest level of fiscal distress, the state can impose significant controls—such as requiring approval for issuing new debt and potentially instituting a financial control board with broad powers. This could impact local decision-making but may also protect residents from the consequences of municipal insolvency or mismanagement.
Establishes a new state-level board. The bill creates a New York State Board of Local Government Deficit Financing Authorization, giving state officials the ability to approve or deny municipal requests to issue deficit bonds. This centralizes oversight of municipal borrowing and aims to ensure new debt is sustainable, possibly reducing the risk of repeated bailouts or chronic fiscal mismanagement.
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Track Local Fiscal Health
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History
- Referred to local governments
- Referred to local governments
Full text
10 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1524
2017-2018 Regular Sessions
IN ASSEMBLY
January 12, 2017
Introduced by M. of A. ZEBROWSKI -- read once and referred to the Committee on Local Governments
AN ACT to amend the general municipal law, in relation to enacting the local government fiscal indicator system act
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. This act shall be known as the "local government fiscal indicator system act".
§ 2. The general municipal law is amended by adding a new article 4-A to read as follows:
ARTICLE 4-A
LOCAL GOVERNMENT FISCAL INDICATOR SYSTEM Section 60. Definitions.
61. Review of financial information; request for response.
62. Level one fiscal stress.
63. Level two fiscal stress.
64. Level three fiscal stress.
65. Fiscal crisis.
66. New York state board of local government deficit financing
authorization.
67. Inconsistency with other laws.
68. Notice of benchmarks and additional criteria.
69. Reports.
69-a. No duplication.
§ 60. Definitions. As used in this article:
1. "Municipality" shall mean any county, town, village, school district or city other than a city having a population of one million or more.
2. "Comptroller" shall mean the New York state comptroller.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04341-01-7
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3. "Annual financial report" shall mean the report of a municipality's financial condition required to be made annually to the comptroller pursuant to section thirty of this chapter.
4. "Tentative budget" shall mean the tentative budget prepared pursuant to section three hundred fifty-four of the county law, section one hundred six of the town law or section 5-504 of the village law, the annual estimate proposed pursuant to section seventy-five of the second class cities law, or similar document prepared pursuant to general, special or local law.
5. "Benchmark" shall mean a standard or reference point based on an analysis of other municipalities of similar size and character, statewide or national trends or similar commonly accepted factors in municipal finance.
6. "Major operating fund" shall mean a municipality's general fund and any other fund that represents more than twenty per centum of that municipality's total funds.
7. "Financial control board" shall mean a public authority created by the state that has legal control over a municipality for a period of time in order to improve the financial condition. During that control period, the board shall have powers including but not limited to approval of contracts, issuance of debt, approval of financial plan and ability to conduct meetings. The board shall remain in control until certain triggers are met indicating that the financial condition of the municipality has improved.
§ 61. Review of financial information; request for response. In furtherance of the purposes of this article, the comptroller shall establish a program for the review of annual financial report data of municipalities, and such other related data and information as may be deemed relevant. The comptroller may request the submission by any municipality of additional information or data for this purpose. The comptroller shall consult with municipal officials, as appropriate, during the review process. Based upon the comptroller's review, the comptroller, in such manner as he or she deems appropriate, may make recommendations to the chief executive officer and chief fiscal officer of the municipality as to actions which may be taken by the municipality in connection with the fiscal affairs of the municipality. The chief executive officer or chief fiscal officer shall respond to the comptroller's recommendations, in such manner as the comptroller deems appropriate, by indicating actions taken or proposed to be taken or, if the chief executive officer or the chief fiscal officer indicates that no action is warranted or is to be taken or proposed, by providing an explanation.
§ 62. Level one fiscal stress. 1. Based upon the comptroller's review of annual financial report data, and other appropriate data and information pursuant to section sixty-one of this article, the comptroller may identify those municipalities that:
a. have failed to timely provide additional information or data requested by the comptroller or have failed to sufficiently respond to any recommendations made by the comptroller pursuant to section sixtyone of this article; or
b. the comptroller determines that the municipality meets one of the following criteria:
(i) the municipality, in the last completed fiscal year, had an unplanned operating deficit in a major operating fund in excess of one and one half per centum of such major operating fund's expenditures in the last completed fiscal year;
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(ii) the municipality, in its last completed fiscal year, had an unappropriated or unreserved fund balance deficit in the municipality's general fund; or
(iii) the municipality, in its last completed fiscal year, had a ratio of non-recurring revenues used to fund recurring expenditures to total expenditures in excess of a benchmark determined by the comptroller and had a ratio of debt service to total revenue in excess of a benchmark determined by the comptroller.
2. For each municipality identified pursuant to subdivision one of this section, the comptroller shall notify the chief executive officer, chief fiscal officer and governing body of the affected municipality that the municipality has fallen within the criteria set forth in subdivision one of this section and of their designation of level one fiscal stress. The notification shall include details of the determination and the criteria used. Such notification shall be made in such manner as the comptroller deems appropriate. Within thirty days after receipt of such notification, the chief executive officer of the municipality shall respond to the comptroller's notification in such form as required by the comptroller, with a self-evaluation of the fiscal affairs of the municipality, addressing the matters raised in the notification. Such response shall include a corrective action plan that details specific courses of action that have been taken or will be taken to address the fiscal stress identified by the comptroller. After receipt and review of the response, the comptroller may require any local official or employee of the municipality, or his or her designee, to attend a relevant municipal training course conducted or approved by the comptroller. The chief executive officer or chief fiscal officer of the municipality may request assistance from the comptroller in reviewing the matters raised in the comptroller's notification and shall receive such assistance as may be reasonably necessary from any officer or employee of the municipality.
§ 63. Level two fiscal stress. 1. Based upon the comptroller's review of annual financial report data and other appropriate data and information pursuant to section sixty-one of this article, the comptroller may identify those municipalities that:
a. have failed to timely provide additional information or data requested by the comptroller or have failed to sufficiently respond to any recommendations made by the comptroller pursuant to section sixtyone of this article; or
b. the comptroller determines that the municipality meets the following criteria that the municipality, in each of its last two completed fiscal years, had at least one of the following:
(i) an unplanned operating deficit in a major operating fund in excess of one and one half per centum of such major operating fund's expenditures in the last completed fiscal year;
(ii) an unappropriated or unreserved fund balance deficit in the municipality's general fund; or
(iii) a ratio of non-recurring revenues used to fund recurring expenditures to total expenditures in excess of a benchmark determined by the comptroller and had a ratio of debt service to total revenue in excess of a benchmark determined by the comptroller.
2. For each municipality identified pursuant to subdivision one of this section, the comptroller shall notify the chief executive officer, chief fiscal officer and governing body of the affected municipality that the municipality has fallen within the criteria set forth in subdivision one of this section and of their designation of level two fiscal
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stress. The notification shall include details of the determination and the criteria used. Such notification shall be made in such manner as the comptroller deems appropriate. The chief executive officer and governing body of the municipality, upon notification by the comptroller that they have been designated level two fiscal stress, shall be required to fulfill the following conditions within the next succeeding fiscal year:
a. develop a corrective action plan that details specific courses of action that have been taken or will be taken to address the fiscal stress identified by the comptroller; and
b. adopt a four-year financial plan in such form as may be prescribed by the comptroller.
3. The financial plan shall be adopted no later than the last date on which the municipality's budget is required to be adopted, and may be modified from time to time. The financial plan shall provide that the operating funds of the municipality will be in balance.
4. The chief fiscal officer of the municipality shall, until otherwise notified by the comptroller, prepare and submit to the governing body of the municipality monthly financial reports, within fifteen days from the end of each month, and prepare and submit to the comptroller quarterly financial reports, within fifteen days from the end of each quarter, both in such form as may be prescribed by the comptroller. In the event that the comptroller provides any recommendations regarding any reports required by this subdivision, the chief executive officer shall prepare a response to the comptroller's recommendations. Such response shall include, with respect to each recommendation, an acceptance statement for actions taken or proposed to be taken and if no action is warranted or is to be taken or proposed, a local law shall be proposed by the chief executive officer and must be approved by a majority of the governing body.
§ 64. Level three fiscal stress. 1. Based upon the comptroller's review of annual financial report data and other appropriate data and information pursuant to section sixty-one of this article, the comptroller may identify those level two fiscal stress municipalities that the comptroller believes fit within any of the following criteria: a level two fiscal stress municipality, in each of its last two completed fiscal years, had at least one of the following:
a. an unplanned operating deficit in a major operating fund in excess of one and one half per centum of the major operating fund's expenditures in the last completed fiscal year;
b. an unappropriated or unreserved fund balance deficit in the municipality's general fund; or
c. a ratio of non-recurring revenues used to fund recurring expenditures to total expenditures in excess of a benchmark determined by the comptroller and had a ratio of debt service to total revenue in excess of a benchmark determined by the comptroller.
2. a. For each municipality identified pursuant to subdivision one of this section, the comptroller shall notify the chief executive officer, chief fiscal officer and governing body of the affected municipality that the municipality has fallen within the criteria set forth in subdivision one of this section and of their designation of level three fiscal stress. The notification shall include details of the determination and the criteria used. Such notification shall be made in such manner as the comptroller deems appropriate. The chief executive officer and governing body of the municipality, upon notification by the comptroller that they have been designated level three fiscal stress, shall
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be required to fulfill the following conditions within the next succeeding fiscal year:
(i) develop a corrective action plan that details specific courses of action that have been taken or will be taken to address the fiscal stress identified by the comptroller; and
(ii) adopt a four-year financial plan in such form as may be prescribed by the comptroller.
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