Authorizes the comptroller and each examiner of municipal affairs to examine the financial affairs of certain organizations controlled by local government entities.
Ayes (6): Stewart-Cousins, Oppenheimer, Valesky, Thompson, Johnson C, Little
Ayes W/R (1): Bonacic
Excused (1): Morahan
Ayes (54): Adams, Addabbo, Alesi, Aubertine, Bonacic, Breslin, Diaz, Dilan, Duane, Espada, Farley, Foley, Fuschillo, Golden, Griffo, Hannon, Hassell-Thomps, Huntley, Johnson C, Klein, Krueger, Kruger, Lanza, Larkin, LaValle, Leibell, Libous, Little, Marcellino, Maziarz, McDonald, Montgomery, Nozzolio, Onorato, Oppenheimer, Parker, Peralta, Perkins, Ranzenhofer, Robach, Saland, Sampson, Savino, Schneiderman, Serrano, Seward, Smith, Squadron, Stachowski, Stavisky, Stewart-Cousins, Thompson, Valesky, Young
Nays (7): DeFrancisco, Flanagan, Johnson O, Padavan, Skelos, Volker, Winner
Excused (1): Morahan
BILL NUMBER: S7907
TITLE OF BILL : An act to amend the general municipal law, in relation to audits by the state comptroller of certain organizations controlled by local government entities
PURPOSE : This bill would amend section 34 of the General Municipal Law to Authorize the State Comptroller to examine into the financial affairs of local government subsidiary organizations. The term "local government subsidiary organization" would mean any organization, other than an entity already subject to audit by the Comptroller, that is controlled by one or more municipal corporations or other local government entities subject to audit by the Comptroller pursuant to the General Municipal Law. The circumstances under which an organization is considered to be under the control of one or more municipal corporations or other local government entities would include, but not be limited to, any situation where municipal or local government officials select or serve as either a majority of the organization's highest policy-making body or the organization's chief executive officer.
JUSTIFICATION : In Recent years, municipal corporations and other local government entities have relied on a variety of separate and legally distinct organizations to perform various functions (e.g. local development corporations organized under Section 1411 of the Not-Far-Profit Corporation Law: a limited liability company organized under the Limited Liability Company; a for-profit corporation apparently organized under the Business Corporation Law). Under current law, when a municipal corporation or other local government entity has a financial or business relationship with another legally distinct organization, the Comptroller may examine that relationship, but only as part of an audit of the municipal corporation or other 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, to examine the organizations overall finances and operations.
Similarly, there is no express authority for the Comptroller to separately audit the overall finances or operations of such an organization. This bill would expand the Comptroller's express audit authority to include audits of such organizations having a financial or business relationship with a municipal corporation or other local government entity, but only when the organization is under the control of one or more municipal corporations or other local government entities.
This expansion of the Comptroller's audit 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 as an instrumentality of that municipal corporation or 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 distinctive or disincentives to the use of any particular organization, this bill would apply to every type of organization that is under the control of a municipal corporation or other local government entity, except an organization already subject to audit by the Comptroller.
The Comptroller urges the passage of this legislation.
EFFECTIVE DATE : Immediately.
STATE OF NEW YORK ________________________________________________________________________ 7907 IN SENATE May 21, 2010 ___________Introduced by Sens. STEWART-COUSINS, KLEIN, KRUEGER, ONORATO, PERALTA, STAVISKY -- (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 local govern- ment 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 PUBLIC CORPORATION, THAT IS DIRECTLY OR INDIRECT- LY CONTROLLED BY ONE OR MORE OF ANY SUCH MUNICIPAL CORPORATIONS, INDUS- TRIAL 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, AMONG OTHER CIRCUMSTANCES, THE LAW OR DOCUMENTS ESTABLISHING THE ORGANIZATION'S INTERNAL GOVERNANCE PROVIDE FOR ONE OR MORE OFFICERS OR EMPLOYEES OF ANY SUCH MUNICIPAL CORPORATION, INDUSTRIAL DEVELOPMENT AGENCY, DISTRICT OR AGENCY, ACTING IN THEIR OFFICIAL CAPACITIES, TO: (A) SELECT A MAJORITY OF A QUORUM 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 A QUORUM OF THE ORGAN- IZATION'S HIGHEST POLICY-MAKING BODY OR THE ORGANIZATION'S CHIEF EXECU- TIVE OFFICER; OR (C) SERVE EX OFFICIO AS EITHER: (I) A MAJORITY OF A QUORUM OF THE ORGANIZATION'S HIGHEST POLICY-MAKING BODY; (II) THE ORGAN- IZATION'S CHIEF EXECUTIVE OFFICER; OR (III) A PARTNER IN THE ORGANIZA- TION. AN ORGANIZATION UNDER THE CONTROL OF ONE OR MORE MUNICIPAL CORPO-EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD17014-01-0 S. 7907 2
RATIONS, INDUSTRIAL DEVELOPMENT AGENCIES, DISTRICTS OR AGENCIES SHALL ALSO INCLUDE ANY OTHER ORGANIZATION THAT IS CONTROLLED BY SUCH ORGANIZA- TION. 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. S 2. This act shall take effect immediately.