What's happening
This bill changes how New York City classifies certain capital costs and restricted fund balances in its budget and deficit calculations.
Why it matters
Redefines what counts as "capital costs". in New York City’s budget by overriding a specific accounting standard (GASB 49), potentially allowing the city to classify more expenditures as capital costs, which can be funded differently than operating expenses.
Excludes certain restricted funds from deficit calculations. , meaning that changes in balances of funds restricted by state/federal law, or by outside parties (not the city itself), will not be counted when determining if the city is running a deficit—potentially making it easier for the city to show a balanced budget.
Specifically exempts several major city-held funds. (health stabilization, school crossing guards health insurance, and management benefits funds) from being considered in deficit calculations, which could give the city more budgetary flexibility and reduce pressure to address short-term changes in these reserves.
May affect transparency and fiscal oversight. by allowing the city to present a more favorable financial position than under stricter interpretations of accounting standards, which could impact credit ratings, negotiations with state oversight bodies, or public perception of the city’s fiscal health.
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Who cares
Headline styles
Change NYC Budget Accounting Rules
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Signed chap.406
- Delivered to governor
- Returned to senate
- Passed assembly
- Ordered to third reading rules cal.452
- Substituted for A6294A
- Referred to cities
- Delivered to assembly
- Passed senateVote 46–12
- Advanced to third reading
- 2nd report cal.
- 1st report cal.792
Show 1 earlier action
- Referred to local government
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.
Change NYC Accounting Rules
Assembly Floor Calendar · Sponsor Helene Weinstein
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4196
2019-2020 Regular Sessions
IN SENATE
March 4, 2019
Introduced by Sen. JACKSON -- read twice and ordered printed, and when printed to be committed to the Committee on Local Government
AN ACT to amend the general municipal law and the New York state financial emergency act for the city of New York, in relation to certain variations from generally accepted accounting principles as applied to the budget and accounts of the city of New York
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The general municipal law is amended by adding a new section 25 to read as follows:
§ 25. Treatment of capital costs and restricted fund balances. Notwithstanding the provisions of any general or special state law or local law to the contrary, including but not limited to the New York city charter, the following shall apply with respect to the budget and accounts of the city of New York:
1. All costs that would be capital costs in accordance with generally accepted accounting principles, but for the application of governmental accounting standards board statement number forty-nine, shall be deemed to be capital costs for purposes of this chapter and any other provision of state or local law, including but not limited to the New York city charter, relevant to the treatment of such costs; and
2. The determination as to the existence of a deficit pursuant to the New York state financial emergency act for the city of New York, while such act remains in effect, and any other provision of state or local law, including but not limited to the New York city charter, shall be made without regard to changes in restricted fund balances, as defined by the governmental accounting standards board, where restrictions in relation to such fund balances are imposed by state or federal law or regulation, or otherwise by private or governmental parties other than the city of New York, and without regard to funds held in the health
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10407-01-9
S. 4196 2
stabilization fund, the school crossing guards health insurance fund and the management benefits fund established by the city of New York.
§ 2. Paragraph a of subdivision 1 of section 8 of section 2 of chapter 868 of the laws of 1975, constituting the New York state financial emergency act for the city of New York, as amended by section 1 of part PP of chapter 56 of the laws of 2010, is amended to read as follows:
a. For its fiscal years ending June thirtieth, nineteen hundred seventy-nine through June thirtieth, nineteen hundred eighty-one, the city's budget covering all expenditures other than capital items shall be prepared and balanced so that the results thereof would not show a deficit when reported in accordance with the accounting principles set forth in the state comptroller's uniform system of accounts for municipalities, as the same may be modified by the comptroller, in consultation with the city comptroller, for application to the city; subject to the provision of subdivision four of section three thousand thirty-eight of the public authorities law with respect to contributions by the city or other public employer to any retirement system or pension fund and subject to the provision of paragraph (c) of subdivision five of section three thousand thirty-eight of the public authorities law with respect to expense items included in the capital budget of the city. For the fiscal year ending June thirtieth, nineteen hundred eighty-two, and for each fiscal year thereafter, the city's budget covering all expenditures other than capital items shall be prepared and balanced so that the results thereof would not show a deficit when reported in accordance with generally accepted accounting principles and would permit comparison of the budget with the report of actual financial results prepared in accordance with generally accepted accounting principles. With respect to financial plans that include the fiscal years ending June thirtieth, nineteen hundred seventy-nine through June thirtieth, nineteen hundred eighty-one, the city's budget covering all expenditures other than capital items shall be prepared in accordance with generally accepted accounting principles and there shall be substantial progress in each such fiscal year towards achieving a city budget covering all expenditures other than capital items the results of which would not show a deficit when reported in accordance with generally accepted accounting principles. The city shall eliminate expense items from its capital budget not later than the commencement of the fiscal year ending June thirtieth, nineteen hundred eighty-two. For the fiscal year ending June thirtieth, nineteen hundred eighty-nine, and for each fiscal year thereafter, the budgets covering all expenditures other than capital items of each of the covered organizations shall be prepared and balanced so that the results thereof would not show a deficit when reported in accordance with generally accepted accounting principles; and for each fiscal year prior thereto, there shall be substantial progress towards such goal. Notwithstanding the foregoing and the provisions of any general or special state law or local law to the contrary, including but not limited to the New York city charter[,]: (i) all costs that would be capital costs in accordance with generally accepted accounting principles, but for the application of governmental accounting standards board statement number forty-nine, shall be deemed to be capital costs for purposes of this [chapter] act and any other provision of state or local law, including but not limited to the New York city charter, relevant to the treatment of such costs; and (ii) the determination as to the existence of a deficit pursuant to this act and any other provision of state or local law, including but not limited to the New York city charter, shall be made without regard to changes in
S. 4196 3
restricted fund balances, as defined by the governmental accounting standards board, where restrictions in relation to such fund balances are imposed by state or federal law or regulation, or otherwise by private or governmental parties other than the city of New York, and without regard to funds held in the health stabilization fund, the school crossing guards health insurance fund and the management benefits fund established by the city of New York.
§ 3. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general municipal law and the New York state financial emergency act for the city of New York, in relation to certain variations from generally accepted accounting principles as applied to the budget and accounts of the city of New York
Purpose
This legislation exempts amounts reported as restricted fund balance, as a result of the Governmental Accounting Standards Board Statement No. 84, Fiduciary Activities, which establishes stricter standards on the use of the funds classified as fiduciary activities, from being included in the Generally Accepted Accounting Principles.
Summary of provisions
Section 1 adds a new section 25 to the General Municipal Law. Subdivi- sion 1 makes permanent the provision currently in section 8(1)(a) of the Financial Emergency Act for the City of New York that provides, with respect to the budget and accounts of New York City, that all costs that would be treated as capital costs but for the application of Govern- mental Accounting Standards Board Statement No. 49 would be deemed to be capital costs. Subdivision 2 adds provisions relating to the determi- nation of the existence of a deficit pursuant to provisions of state and local law, including the Financial Emergency Act for the City of New York (while it remains in effect) and the City Charter. These provisions provide that such determination would be made without regard to changes in restricted fund balances, as defined by the Governmental Accounting Standards Board, where restrictions in relation to such fund balances are imposed by state or federal law or regulation or by private or governmental parties other than the City, and without regard to funds held in the City's Health Stabilization, School Crossing Guards Health Insurance and Management Benefits Funds.
Read the full memo (1,021 words)
Section 2 adds provisions relating to the determination of the existence of a deficit pursuant to provisions of state and local law, including the Financial Emergency Act for the City of New York (while it remains in effect) and the City Charter. These provisions provide that such determination would be made without regard to changes in restricted fund balances, as defined by the Governmental Accounting Standards Board, where restrictions in relation to such fund balances are imposed by state or federal law or regulation or by private or governmental parties other than the City, and without regard to funds held in the City's Health Stabilization, School Crossing Guards Health Insurance and Management Benefits Funds.
Section 3 is the effective date.
Justification
Governmental Accounting Standards Board ("GASB") Statement No. 49 addresses the accounting and financial reporting standards for certain pollution remediation obligations. Part PP of Chapter 56 of the Laws of 2010 amended the Financial Emergency Act for the City of New York ("FEA") to provide for a variation from generally accepted accounting principles with respect to GASB Statement No. 49 as it applies to the City, but did not address its applicability if the FEA were to expire. The new General Municipal Law ("GML") § 25(1) would make this provision permanent.
The new GML § 25(2) and the proposed amendment to the FEA similarly address the applicability of GASB guidance as it relates to the City. GASB issued its Statement No. 84 ("GASB 84") in January 2017 with updated criteria for identifying and reporting fiduciary fund activities of state and local governments. Pursuant to GASB 84, some funds current- ly classified by the City as fiduciary activities will need to be reclassified to the City's general fund (the "General Fund"). GASB 84 changed generally accepted accounting principles by providing for all state and local governments to report an activity as a fiduciary activ- ity only if, among other criteria: (1) the government controls the assets of the activity; and (2) the assets of the activity are not derived solely from the government's own-source revenue or from govern- ment-mandated non-exchange transactions or voluntary non-exchange trans- actions. This reclassification will require the City to expend restricted funds during the year in which they are received as a result of the City's obligation, pursuant to the FEA and the City's Charter, to maintain balance in each fiscal year.
As of June 30, 2018, there was approximately $3.3 billion spread over more than 400 accounts held outside the General Fund. This amount includes:
(1) Restricted Assets ($1.7 billion). These are funds generated from a private entity or government entity other than the City of New York where use of such funds is restricted by private or government parties other than the City of New York.
(2) Health Stabilization Fund ($1.3 billion). Created in July 1984, this fund is used to provide reserves to maintain current employee health insurance benefits and to enhance benefits in certain instances. This money is invested and used to pay for various benefit enhancements that are collectively bargained or agreed to by the City and its public employee unions. The City makes contributions to the fund in accordance with collectively bargained obligations and can only draw down from the fund by mutual agreement with public employee unions.
(3) Management Benefits Fund ($91 million). This is the managerial welfare benefit fund used to pay for benefits, such as dental and vision care, for unrepresented employees. The account is funded with City money based on the collectively bargained civilian welfare fund rate. It is crucial to ensure that the account is sufficiently funded to preserve employee benefits.
(4) School Crossing Guards Health Insurance Fund ($1.1 million). This fund is used to pay for health insurance for school crossing guards working during summer school sessions. The account is funded with City money based on collectively bargained rates. It is crucial to ensure that the account is sufficiently funded to preserve employee benefits.
The new GML § 25(2) and the proposed amendment to the FEA would exempt these accounts that do not meet GASB 84 criteria for exemption from deficit determinations, allowing the City to carry such funds across fiscal years and properly expend them in accordance with their purposes.
Legislative history
New bill.
State and local fiscal implications
To be determined.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.