S5909-2011 Actions

• Jan 4, 2012: REFERRED TO FINANCE
• Oct 7, 2011: REFERRED TO RULES

S5909-2011 Memo

BILL NUMBER:S5909

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.

FISCAL IMPLICATIONS:


None to the state.

EFFECTIVE DATE:
This act shall take effect ninety days after it shall have
become a law.

S5909-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    5909

                         2011-2012 Regular Sessions

                              I N  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