Bill S7555-2011

Relates to the time frame in which municipalities and school districts that incur debt can make adjustments to their budget, updating the types of obligations and other technical amendments

Relates to the time frame in which municipalities and school districts that incur debt can make adjustments to their budget, updating the types of obligations and other technical amendments.

Details

Actions

  • Jul 18, 2012: SIGNED CHAP.255
  • Jul 6, 2012: DELIVERED TO GOVERNOR
  • Jun 14, 2012: returned to senate
  • Jun 14, 2012: passed assembly
  • Jun 14, 2012: ordered to third reading rules cal.211
  • Jun 14, 2012: substituted for a9692
  • Jun 13, 2012: referred to ways and means
  • Jun 13, 2012: DELIVERED TO ASSEMBLY
  • Jun 13, 2012: PASSED SENATE
  • Jun 13, 2012: ORDERED TO THIRD READING CAL.1218
  • Jun 4, 2012: REFERRED TO RULES

Votes

VOTE: COMMITTEE VOTE: - Rules - Jun 13, 2012
Ayes (22): Skelos, Alesi, Farley, Fuschillo, Hannon, Johnson, Larkin, Libous, Marcellino, Nozzolio, Saland, Seward, Sampson, Breslin, Dilan, Duane, Hassell-Thompson, Montgomery, Parker, Perkins, Smith, Stewart-Cousins
Ayes W/R (1): LaValle
Nays (1): Maziarz
Excused (1): Krueger

Memo

BILL NUMBER:S7555

TITLE OF BILL: An act to amend the local finance law, in relation to making technical amendments to the time frame within which a governing board of the municipality or school district authorized to incur debt to finance a deficit may make adjustments to its proposed budget; updating the list of types of obligations which may be issued by municipalities, school districts or district corporations; and to amend chapter 386 of the laws of 2010, amending the local finance law relating to the private sale of bonds, in relation to eliminating the expiration and repeal of such provisions

PURPOSE: To correct two technical errors in the Local Finance Law and to repeal the expiration of the increase in the amount of bonds a municipality, school district or district corporation annually may sell at private sale in any fiscal year.

SUMMARY OF PROVISIONS: Section 1 of this bill would amend Paragraph d of Section 10.10 of the Local Finance Law to delete the phrase "within fifteen days after receipt of any such recommendations."

Section 2 of this bill would add a new Subdivision 12 to Paragraph a of Section 20.00 of the Local Finance Law to update the list of types of obligations which may be issued by municipalities, school districts or district corporations to add deficiency notes.

Section 3 of this bill would amend Section 14 of Chapter 386 of the Laws of 2010 to repeal the sunset provision that would have the increase in the amount of bonds a municipality, school district or district corporation annually may sell at private (negotiated) sale in any fiscal year from $51 million to $55 million expire on June 1, 2012.

PRIOR LEGISLATIVE HISTORY: New bill.

JUSTIFICATION: Section 1 of this bill is a technical amendment to language added by Chapter 341 of the Laws of 2007, which enacted Section 10.10 of the Local Finance Law. Section 10.10 provides uniform requirements applicable to municipalities and school districts that are authorized by general or special law to contract indebtedness to finance the liquidation of operating deficits. Paragraph d of Section 10.10 sets forth a procedure for the submission of the proposed budget of the municipality or school district to the State Comptroller (and, in the case of a school district, the Commissioner of Education) for review and recommendation. Among other things, Paragraph d provides that "no later than five days prior to the adoption of the budget" the municipality or school district must review those recommendations and either make adjustments to the proposed budget consistent with the recommendations or explain in writing the reasons for the rejection of any recommendation. Later in the same sentence as the quoted provision,

the phrase "within fifteen days after receipt of any such recommendations" appears, creating an ambiguity as to the proper timeframe for the municipality or school district to act. It is apparent that the inclusion of this phrase in Paragraph d was inadvertent and likely a carryover from an earlier version of the bill that was enacted. The phrase "within fifteen days after the receipt of any such recommendations" is inconsistent with the budget review timeframe otherwise set forth in Paragraph d of Section 10.10 of the Local Finance Law and should be deleted so that the statute is consistent and clear.

Section 2 of this bill makes a technical amendment relating to Chapter 386 of the Laws of 2010, which, among other things, added Local Finance Law § 29.20 to authorize municipalities, school districts and district corporations to issue deficiency notes to finance a deficiency in any fund or funds arising from revenues being less than the amount estimated in the budget for the current fiscal year. Paragraph a of Section 20.00 of the Local Finance Law, which lists by name the types of bonds and notes that a municipality, school district or district corporation may issue, also should have been amended at that time, but was not. This bill will correct that oversight.

Section 3 of this bill relates to the increase from $1 million to $5 million in the maximum amount of bonds that municipalities, school districts and district corporations may sell at private sale annually, which was enacted into law by Chapter 386 of the Laws of 2010. Pursuant to Section 14 of Chapter 386 of the Laws of 2010, the increased maximum amount is scheduled to expire on June 1, 2012. Section 6 of Chapter 386 of the Laws of 2010 required the State Comptroller to prepare a report on the private sales of bonds conducted pursuant to Paragraph b of Section 63.00 of the Local Finance Law, including recommendations with respect to such private sales. Section 6 also required municipalities, school districts and district corporations to file reports of each private sale with the Comptroller.

In December 2011, the Comptroller prepared a report on private sales of bonds by municipalities, school districts and district corporations as required by Chapter 386 of the Laws of 2010 (http://www.osc.state.ny.us/localgov/pubs/research/ privatesalesbonds.pdf). As noted in this report, the increase in the private sale cap did not significantly increase the number of localities that issued bonds at private sale. Also, given that a number of the sales over the $1 million threshold were conducted through some form of competitive process that included the receipt of bids, it is unclear that a formal public sale, as would have been required under the law prior to the amendment in Chapter 386 of the Laws of 2010, would have yielded appreciably different results. The increase in the cap did give local issuers with relatively small bond issues additional options on how best to gain market access. The enhanced flexibility afforded by this private sale option also allowed issuers the opportunity to premarket their bonds to both retail and institutional investors, potentially expanding the pool of investors. Finally, the report noted that private bond sales are particularly useful to smaller local governments that generally conduct bond sales involving smaller principal amounts and may find the cost of obtaining a bond rating and/or the cost of publishing a formal notice of sale to be economically prohibitive. In consideration of these points, the Comptroller's report

recommended keeping the statutory private sale cap of $5 million in place and repealing the sunset provision. This bill would implement the recommendation made in such report.

The Comptroller urges the passage of this proposed legislation.

FISCAL IMPLICATIONS FOR STATE: This bill has no significant State fiscal impact.

EFFECTIVE DATE: This act shall take effect immediately; provided, however, if section three of this act shall become a law on or after June 1, 2012 such section shall take effect immediately and shall be deemed to have been in full force and effect on and after June 1, 2012.


Text

STATE OF NEW YORK ________________________________________________________________________ 7555 IN SENATE June 4, 2012 ___________
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 Rules AN ACT to amend the local finance law, in relation to making technical amendments to the time frame within which a governing board of the municipality or school district authorized to incur debt to finance a deficit may make adjustments to its proposed budget; updating the list of types of obligations which may be issued by municipalities, school districts or district corporations; and to amend chapter 386 of the laws of 2010, amending the local finance law relating to the private sale of bonds, in relation to eliminating the expiration and repeal of such provisions THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph d of section 10.10 of the local finance law, as added by chapter 341 of the laws of 2007, is amended to read as follows: d. beginning with the fiscal year during which the municipality or school district is authorized to incur debt to finance the deficit, to and including the last fiscal year during which such debt or any debt incurred to refund such debt is outstanding, the chief executive officer or other individual or individuals responsible for the preparation of the tentative budget, or in the case of a town, the preliminary budget, shall submit the tentative or preliminary budget for the next succeeding fiscal year to the state comptroller and, in the case of a school district, also to the commissioner of education, no later than thirty days before the date scheduled for the governing board's vote on the adoption of the final budget or the last date on which the budget may be finally adopted, whichever is sooner. The state comptroller and, in the case of a school district, the commissioner of education, shall examine such proposed budget and make such recommendations as deemed appropriate thereon to the municipality or school district prior to the adoption of the budget, but no later than ten days before the date scheduled for the governing board's vote on the adoption of the final budget or the last date on which the budget must be adopted, whichever is sooner. Such
recommendations shall be made after examination into the estimates of revenues and expenditures of such municipality or school district. The governing board of the municipality or school district, no later than five days prior to the adoption of the budget, shall review any such recommendations and may make adjustments to its proposed budget consist- ent with any recommendations made by the state comptroller and, in the case of a school district, by the commissioner of education[, within fifteen days after receipt of any such recommendations]. Any recommenda- tions that the board rejects shall be explained in writing to the state comptroller and, in the case of recommendations made by the commissioner of education, to the commissioner. The action or inaction of the state comptroller or the commissioner of education under this section shall not be construed to affect the legal validity of any budget of the muni- cipality or school district nor to affect the powers or duties of the municipality or school district with respect to the local budget proc- ess, provided, however, that the municipality or school district may not issue bonds for any object or purpose unless and until adjustments to its proposed budget consistent with any recommendations made by the state comptroller and, in the case of a school district, by the commis- sioner of education, are made, or any such recommendations that are rejected have been explained in writing to the state comptroller and, in the case of school districts, the commissioner of education. S 2. Paragraph a of section 20.00 of the local finance law is amended by adding a new subdivision 12 to read as follows: 12. DEFICIENCY NOTES. S 3. Section 14 of chapter 386 of the laws of 2010, amending the local finance law relating to the private sale of bonds, is amended to read as follows: S 14. This act shall take effect immediately[; provided, however, that the provisions of sections two, three, four and five of this act shall expire June 1, 2012 when upon such date the provisions of such sections shall be deemed repealed]. S 4. This act shall take effect immediately; provided, however, if section three of this act shall become a law on or after June 1, 2012 such section shall take effect immediately and shall be deemed to have been in full force and effect on and after June 1, 2012.

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Discuss!

blog comments powered by Disqus