Bill S4497-2013

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

Relates to audits by the state comptroller of certain organizations directly or indirectly controlled by municipal corporations and certain other government entities.

Details

Actions

  • Jan 8, 2014: REFERRED TO LOCAL GOVERNMENT
  • Jun 21, 2013: COMMITTED TO RULES
  • May 29, 2013: ADVANCED TO THIRD READING
  • May 23, 2013: 2ND REPORT CAL.
  • May 22, 2013: 1ST REPORT CAL.754
  • Apr 3, 2013: REFERRED TO LOCAL GOVERNMENT

Votes

VOTE: COMMITTEE VOTE: - Local Government - May 22, 2013
Ayes (9): Martins, Ball, Boyle, Marchione, Ritchie, Valesky, Gipson, Latimer, O'Brien

Memo

BILL NUMBER:S4497

TITLE OF BILL: An act to amend the general municipal law, in relation to audits by the state comptroller of certain organizations controlled by municipal corporations and certain other government entities

PURPOSE :

To expand the State Comptroller's express audit authority to include auditing organizations controlled by local 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.


Text

STATE OF NEW YORK ________________________________________________________________________ 4497 2013-2014 Regular Sessions IN SENATE April 3, 2013 ___________
Introduced by Sen. MARTINS -- (at request of the State Comptroller) -- 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, in relation to audits by the state comptroller of certain organizations controlled by municipal corporations and certain other government entities THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 34 of the general municipal law, as amended by chapter 233 of the laws of 2006, is amended to read as follows: S 34. Powers and duties of examiners. 1. The comptroller and each examiner of municipal affairs shall have power to examine into the financial affairs of every such municipal corporation, industrial devel- opment agency, district, [fire company as defined in section two hundred four-a of this chapter,] agency and activity [and], ANY FIRE COMPANY AS DEFINED IN SECTION TWO HUNDRED FOUR-A OF THIS CHAPTER, AND ANY OTHER ORGANIZATION, EXCEPT A STATEWIDE ASSOCIATION OF LOCAL GOVERNMENTS OR LOCAL GOVERNMENT OFFICIALS, THAT IS CONTROLLED BY ONE OR MORE OF ANY SUCH MUNICIPAL CORPORATIONS, INDUSTRIAL DEVELOPMENT AGENCIES, DISTRICTS OR AGENCIES. AN ORGANIZATION SHALL BE DEEMED UNDER THE CONTROL OF ONE OR MORE MUNICIPAL CORPORATIONS, INDUSTRIAL DEVELOPMENT AGENCIES, DISTRICTS OR AGENCIES 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 ORGAN- IZATION'S HIGHEST POLICY-MAKING BODY OR THE ORGANIZATION'S CHIEF EXECU- TIVE 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 OFFI- CER; OR (III) IN HIS OR HER OFFICIAL CAPACITY, A PARTNER IN THE ORGAN-
IZATION. AN ORGANIZATION UNDER THE CONTROL OF ONE OR MORE MUNICIPAL CORPORATIONS, INDUSTRIAL DEVELOPMENT AGENCIES, DISTRICTS OR AGENCIES SHALL ALSO INCLUDE ANY OTHER ORGANIZATION THAT IS CONTROLLED BY SUCH ORGANIZATION. 2. IN CONNECTION WITH ANY EXAMINATION AUTHORIZED BY SUBDIVISION ONE OF THIS SECTION, THE COMPTROLLER AND EACH EXAMINER OF MUNICIPAL AFFAIRS SHALL HAVE POWER to administer an oath to any person whose testimony may be required, and to compel the appearance and attendance of such person for the purpose of any such examination and investigation, and the production of books and papers. In the case of a municipal corporation, industrial development agency, or school district, no such person shall be compelled to appear or be examined elsewhere than within such munici- pal corporation, industrial development agency, or school district. In the case of any district other than a school district, no such person may be compelled to appear or be examined elsewhere than within the town or one of the towns in which such district or portion thereof is located. In the case of an urban renewal agency, no such person shall be compelled to appear or be examined outside the municipal corporation wherein such agency is established. In the case of a fire company, no such person shall be compelled to appear or be examined outside the area served by the company. In the case of an activity, no such person shall be compelled to appear outside the area served by the activity. IN THE CASE OF AN ORGANIZATION UNDER THE CONTROL OF ONE OR MORE MUNICIPAL CORPORATIONS, INDUSTRIAL DEVELOPMENT AGENCIES, DISTRICTS OR AGENCIES, NO SUCH PERSON SHALL BE COMPELLED TO APPEAR OR TO BE EXAMINED OUTSIDE THE COUNTY IN WHICH THE ORGANIZATION HAS ITS PRINCIPAL HEADQUARTERS. Willful false swearing in such examination shall be perjury and shall be punish- able as such. 3. FOR PURPOSES OF THIS SECTION, THE TERM "A MAJORITY OF THE ORGANIZA- TION'S HIGHEST POLICY-MAKING BODY" SHALL MEAN A MAJORITY OF THE WHOLE NUMBER OF POSITIONS COMPRISING SUCH BODY, PROVIDED, HOWEVER, THAT IF THE DOCUMENTS ESTABLISHING THE ORGANIZATION'S INTERNAL GOVERNANCE ALLOW SUCH BODY TO ACT BY A MAJORITY OF A QUORUM, THEN SUCH TERM SHALL MEAN A MAJORITY OF THE QUORUM. S 2. This act shall take effect immediately.

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