What's happening
This bill proposes a constitutional amendment to restrict the diversion of dedicated funds for other uses, allowing exceptions only during declared fiscal emergencies with legislative approval and detailed reporting.
Why it matters
Strengthens financial accountability. by making it much harder for the state government to use money from dedicated funds (like those earmarked for transportation or environmental programs) for unrelated purposes, ensuring funds go where taxpayers expect.
Limits executive and legislative flexibility. in budget crises, meaning that even during tough fiscal times, leaders can only tap into protected funds after declaring a fiscal emergency, securing a two-thirds legislative vote, and providing detailed public reporting—raising the bar for emergency fund diversions.
Increases transparency and public oversight. through mandatory “diversion impact statements” that detail the amount, timing, cumulative history, and effects of any fund diversion, helping the public and watchdog groups monitor and challenge questionable fiscal moves.
Could impact program stability and emergency response. While it protects dedicated funds, the amendment may also slow down government responses to unexpected crises or economic downturns, as more procedural hurdles and supermajority approval would be required before shifting funds.
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Who cares
Headline styles
Stop Fund Diversion
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Opinion referred to judiciary
- To attorney-general for opinion
- Referred to judiciary
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Stop Fund Diversions
In Senate Committee · Judiciary · Sponsor Brian Kavanagh
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
486
2017-2018 Regular Sessions
IN SENATE (Prefiled)
January 4, 2017
Introduced by Sen. SQUADRON -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary
CONCURRENT RESOLUTION OF THE SENATE AND ASSEMBLY proposing an amendment to article 7 of the constitution, in relation to the diversion of dedicated funds
Section 1. Resolved (if the Assembly concur), That article 7 of the constitution be amended by adding a new section 20 to read as follows:
§ 20. Restrictions on diversion of dedicated funds; declaration of fiscal emergency. 1. The legislature shall not divert revenues derived from taxes and fees paid by the public into any dedicated fund for purposes other than those for which that fund was intended. Prohibited diversions shall include, without limitation:
(a) budgetary transfers of dedicated fund revenues into the general fund of the state or into any other fund maintained for the support of another governmental purpose;
(b) administrative acts by the executive that would transfer dedicated fund revenues into the general fund of the state or into any other fund maintained for the support of another governmental purpose;
(c) addition, by statute or administrative action, of new purposes for which appropriation shall be made available for use of dedicated fund revenues, including addition of new purposes into dedicated fund enacting legislation; and
(d) removal, by statute or administrative action, of sources of revenue created by statute, unless replaced with a greater source of dedicated revenue.
2. The only instance in which dedicated revenues may be diverted shall be upon declaration of a fiscal emergency by the governor, which shall be accompanied by a diversion impact statement.
(a) A fiscal emergency may be declared by the governor and diversion of funds may be authorized if the governor needs the revenues to repel invasion, suppress insurrection, defend the state after a declaration of
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD89007-01-7
S. 486 2
war, respond to an act of terrorism, or respond to a natural disaster. Prior to diverting revenues, the governor shall notify the majority and minority leadership of the legislature. The diversion impact statement may be provided retroactively under these circumstances.
(b) No other diversions shall be authorized until the governor declares a state of fiscal emergency to the majority and minority leadership of the legislature, which shall, by concurrent resolution, ratify this fiscal emergency declaration. The assent of two-thirds of the members elected to the legislature shall be requisite to pass such resolution and any legislative appropriations that authorize the diversion of funds.
(c) If any diversion of funds occurs upon declaration of fiscal emergency during a regular or extraordinary session of the legislature, the budget or legislation diverting funds shall include a diversion impact statement which includes the following information:
(i) The amount diverted from each fund;
(ii) The cumulative amount diverted from each of the funds subject to diversion during the preceding five years, which shall also be categorized by fund type;
(iii) The date or dates when the diversion or diversions are to occur;
(iv) A detailed estimate of the impact of diversion from each fund; and
(v) The purpose for which the funds will be diverted.
(d) The diversion impact statement may be provided retroactively upon declaration of a fiscal emergency under the circumstances of paragraph (a) of this subdivision. The diversion impact statement shall be provided concurrently with the governor's fiscal emergency declaration and prior to introduction of the concurrent legislative resolution if the fiscal emergency is declared pursuant to paragraph (b) of this subdivision.
(e) Notwithstanding paragraph (a) of this subdivision, a fiscal emergency may only be declared if certain economic conditions are met. These indicators and the process for briefing the legislature and public shall be established by statute. If the fiscal emergency declaration is made before passage of the aforementioned statute, the governor shall use the composite index of business cycle indicators established pursuant to section 14 of chapter 1 of the laws of 2007.
§ 2. Resolved (if the Assembly concur), That the foregoing be referred to the first regular legislative session convening after the next succeeding general election of members of the assembly, and, in conformity with section 1 of article 19 of the constitution, be published for 3 months previous to the time of such election.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
CONCURRENT RESOLUTION OF THE SENATE AND ASSEMBLY proposing an amendment to article 7 of the constitution, in relation to the diversion of dedicated funds
Purpose
Prohibits the diversion of revenue from dedicated funds for purposes other than that for which the fund was created, except in cases of fiscal emergency.
Summary of provisions
Section 1 adds a new Section 20 to Article 7 of the State Constitution that restricts the diversion of revenues from dedicated funds for purposes other than their intended use. The section provides for exception to the prohibition in cases in which the Governor declares a fiscal emergency, accompanied by a Diversion Impact Statement to the Legislature.
Read the full memo (721 words)
The Diversion Impact Statement must contain the amount of the diversion the amount diverted from each fund; the cumulative amount diverted from each of the funds subject to diversion during the preceding five years, which shall also be categorized by fund type; the date or dates when the diversion is to occur; a detailed estimate of the impact of diversion from each fund; and the purpose for which the funds will be diverted. In cases where the emergency involves the need to repel invasion, suppress insurrection, defend the state after a declaration of war, respond to an act of terrorism, or respond to a natural disaster, the Diversion Impact Statement may be submitted retroactively. Under all other circumstances, the Legislature must receive the Diversion Impact Statement prior introduction concurrent resolution declaring a fiscal emergency, the passage of which requires a two-thirds majority vote.
A fiscal emergency may only be declared if certain economic conditions are met, as determined by the Legislature in statute. If the fiscal emergency declaration before the Legislature can establish such requirements, the Governor must use the composite index of business cycle indicators established pursuant to section 14 of chapter 1 of the laws of 2007.
Justification
The public has a right to expect that the taxes it pays for a specific purpose actually go to that purpose. This constitutional amendment would prohibit the diversion of any dedicated revenue from these funds to a purpose other than their intended use, except in cases of extraordinary circumstance. In such cases, a diversion would require joint action by the Executive and the Legislature.
New York has a number of dedicated funds, often called "lockboxes," that were established to ensure funds were available for key infrastructure projects. These lockboxes include the Dedicated Highway and Bridge Trust Fund (DHBTF) designed to support critical road and bridge needs; the Mass Transportation Operating Assistance (MTOA) Fund and the Mass Transportation Trust Fund to support transit; and the Environmental Protection Fund (EPF) and Regional Greenhouse Gas Initiative (RGGI) fund to support investments to protect the environment, including through water infrastructure and energy efficiency projects.
The state could do a much better job of protecting or "locking" these funds. From 2000 to 2010, more than $3.7 billion was diverted from dedicated State funds to the General Fund.(1) from its inception through fiscal year 2008-09, the DHBTF collected over $33 billion meant for road and bridge repair and capital improvements, but only about $11 billion was spent on capital construction rather than operating or debt service costs.(2) As recently as this April, the 2015-16 Enacted Budget included sweeps of $41 million and $25 million, from the RGGI and EPF, respectively, to the General Fund, with no specific language authorizing its replacement.(3)
Other states have faced this same difficulty, and have "locked their lockboxes." Maryland and Wisconsin have passed constitutional amendments to prevent sweeps of dedicated infrastructure funding.{4} This constitutional amendment would "lock the lockboxes" in New York State.
Legislative history
2016: S.6297 - AG OPINION REFERRED TO JUDICIARY
Fiscal implications
EFFECTIVE DATE : Resolved, that the foregoing be referred to the first regular legislative session convening after the next succeeding general election of members of the assembly, and, in conformity with section 1 of article 19 of the constitution, be published for 3 months previous to the time of such election. (1) Office of the State Comptroller. New York's Deficit Shuffle. Apr, 2010. (2} Id. {3} Office of the State Comptroller. Report on the State Fiscal Year 2015-16 Enacted Budget, Apr, 2015. (4) Council of State Governments, Transportation Trust Funds & Lockbox Protections, Mar. 2015.
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