Relates to prompt payments to counties by the state.
TITLE OF BILL: An act to amend the state finance law, in relation to prompt payment to counties from the state
PURPOSE: To ensure that counties receive reimbursements from the State for mandated programs within a reasonable timeframe.
SUMMARY: Section 1 amends subdivision 1 of section 179-f of the state finance law to add county governments to the states prompt payment law.
Section 2 provides the effective date.
JUSTIFICATION: As counties across the State face increasing budget challenges in already difficult economic times, it is imperative that the legislature take action to ensure reimbursements for State mandated programs are timely. At times, fiscal challenges at the State level lead to the delay in payment or withholding of reimbursement funds from the counties as a way to mitigate shortfalls for the State.
State law requires counties to pay for mandated services up front while the State delays payment for monies owed to counties. Some counties have turned to expensive borrowing to balance their books because of delays in State funds. St. Lawrence County, which recently announced it was borrowing up to $8.5 million-with interest charges that could run into the thousands of dollars-to help cover its expenses for the rest of the year. Franklin County is also considering short-term borrowing, even though it is owed $3.8 million by the state. Clinton County is owed $6.1 million.
If counties are late with payments they owe to Albany, they have to pay interest. It's only fair that the state should have to meet its obligations, or face consequences, so that local taxpayers aren't the ones left holding the bag.
Prompted by an outcry from private businesses and non-profit agencies that do business with the state, Albany was forced to enact a Prompt Payment Law in 1995 that required interest payments after a set deadline. Current law does not cover payments owed to counties and local governments.
The state also pays interest on income tax refunds that are delayed more than 45 days after the April 15 due date. Interest rates are set by the Commissioner of Taxation and Finance, and currently range from 2 percent to 12 percent, the same rates that would apply to payments under Senator Ritchie's bill.
LEGISLATIVE HISTORY: New bill.
None to the state.
EFFECTIVE DATE: This act shall take effect ninety days after it shall have become a law.
STATE OF NEW YORK ________________________________________________________________________ 5909 2011-2012 Regular Sessions IN SENATE October 7, 2011 ___________Introduced by Sens. RITCHIE, GRIFFO -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the state finance law, in relation to prompt payment to counties from the state THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 1 of section 179-f of the state finance law, as amended by chapter 332 of the laws of 1989, is amended to read as follows: 1. Each state agency which is required to make a payment from state funds pursuant to a contract and which does not make such contract payment by the required payment date shall make an interest payment to the contractor OR COUNTY GOVERNMENT in accordance with this article, OR OTHER PROVISIONS OF LAW, on the amount of the contract payment which is due, unless failure to make such contract payment is the result of a lien, attachment, or other legal process against the money due said contractor OR COUNTY GOVERNMENT, or unless the amount of the interest payment as computed in accordance with the provisions of section one hundred seventy-nine-g of this article is less than ten dollars. A pro rata share of such interest shall be paid by the contractor or subcon- tractor, as the case may be, to subcontractors and materialmen in a proportion equal to the percentage of their pro rata share of the contract payment. Such pro rata share of interest shall be due to such subcontractors and materialmen only for those payments which are not paid to such subcontractors and materialmen prior to the date upon which interest begins to accrue between the state agency and the contractor. Such pro rata share of interest shall be computed daily until such payments are made to the subcontractors and materialmen. S 2. This act shall take effect on the ninetieth day after it shall have become a law.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13504-06-1