§ 10.10 — Municipalities and school districts authorized to incur debt to liquidate operating deficits; requirements and procedures; period of prob...

New York § 10.10

• Jurisdiction: New York
• Law LFN: Local Finance
• Title 1: Power to Contract Indebtedness and Periods of Probable Usefulness
• Art. 2: Local Indebtedness

Text

§ 10.10 Municipalities and school districts authorized to incur debt\nto liquidate operating deficits; requirements and procedures; period of\nprobable usefulness. In the case of a municipality or school district\nthat is authorized by a special or general law to incur debt to\nliquidate an operating deficit:\n a. no bonds to fund the liquidation of such a deficit may be issued\nunless and until the state comptroller shall first review and confirm\nthe existence of the deficit, as well as certify the amount of the\ndeficit. As soon as practicable after the effective date of the law\nauthorizing the incurrence of debt to fund the deficit, but in no event\nprior to the close of the then current fiscal year of the municipality\nin the case of a projected deficit, the municipality or school district\nshall prepare a report detailing the amount and cause of the deficit and\nsubmit to the state comptroller such report, together with the\nmunicipality's or school district's independent audit report for its\nlast completed fiscal year, if any such audit report has been or is to\nbe prepared, and such other information as the state comptroller may\ndeem necessary. Within thirty days after receiving all necessary reports\nand information, the state comptroller shall:\n 1. perform such reviews as may be necessary;\n 2. confirm the existence and certify the amount of the deficit; and\n 3. provide notification to the finance board of the municipality or\nschool district as to the existence and amount of any such deficit.\n b. bonds to liquidate such deficit may not be issued in an amount\nexceeding the amount of such deficit as certified by the state\ncomptroller. If the municipality or school district issues bond\nanticipation notes for the purpose of liquidating such deficit prior to\na determination by the state comptroller pursuant to paragraph a of this\nsection in an amount in excess of the amount of such deficit as\nconfirmed by the state comptroller, the municipality or school district\nshall, from funds other than proceeds of bonds or bond anticipation\nnotes, either redeem such bond anticipation notes in the amount by which\nthe amount of such bond anticipation notes exceeds the amount of such\ndeficit as confirmed by the comptroller or deposit a sum equal to the\namount by which such bond anticipation notes exceed the amount of such\ndeficit as confirmed by the comptroller into a reserve fund for the\npayment of bonded indebtedness that shall be established pursuant to\nsection six-h of the general municipal law.\n c. for each fiscal year occurring during the time deficit bonds or\nbond anticipation notes issued in anticipation of the sale of such bonds\nare outstanding, up to and including the last fiscal year during which\nsuch debt or debt issued to refund such debt is outstanding, the chief\nfiscal officer of the municipality or school district on whose behalf\nsuch deficit bonds or notes have been issued shall monitor budgets of\nthe municipality or school district and for each budget, prepare a\nquarterly report of summarized budget data depicting overall trends of\nactual revenues and budget expenditures for the entire budget rather\nthan individual line items. Such reports shall compare revenue estimates\nand appropriations as set forth in such budget with the actual revenues\nand expenditures made to date. All quarterly reports shall be\naccompanied by a recommendation by the chief executive officer of the\nmunicipality or school district setting forth any remedial action\nnecessary to resolve any unfavorable budget variance including the\noverestimation of revenues and the underestimation of appropriations,\nand shall be completed within thirty days of the end of each quarter.\nThe chief fiscal officer shall also prepare, as part of such report, a\nquarterly trial balance of general ledger accounts. The above quarterly\nbudgetary reports and quarterly trial balances shall be prepared in\naccordance with generally accepted accounting principles. These reports\nshall be submitted to the governing board and chief executive officer of\nsuch municipality or school district, the state director of the budget,\nthe state comptroller, the chair of the assembly ways and means\ncommittee, the chair of the senate finance committee and, in the case of\na school district, the commissioner of education.\n d. beginning with the fiscal year during which the municipality or\nschool district is authorized to incur debt to finance the deficit, to\nand including the last fiscal year during which such debt or any debt\nincurred to refund such debt is outstanding, the chief executive officer\nor other individual or individuals responsible for the preparation of\nthe tentative budget, or in the case of a town, the preliminary budget,\nshall submit the tentative or preliminary budget for the next succeeding\nfiscal year to the state comptroller and, in the case of a school\ndistrict, also to the commissioner of education, no later than thirty\ndays before the date scheduled for the governing board's vote on the\nadoption of the final budget or the last date on which the budget may be\nfinally adopted, whichever is sooner. The state comptroller and, in the\ncase of a school district, the commissioner of education, shall examine\nsuch proposed budget and make such recommendations as deemed appropriate\nthereon to the municipality or school district prior to the adoption of\nthe budget, but no later than ten days before the date scheduled for the\ngoverning board's vote on the adoption of the final budget or the last\ndate on which the budget must be adopted, whichever is sooner. Such\nrecommendations shall be made after examination into the estimates of\nrevenues and expenditures of such municipality or school district. The\ngoverning board of the municipality or school district, no later than\nfive days prior to the adoption of the budget, shall review any such\nrecommendations and may make adjustments to its proposed budget\nconsistent with any recommendations made by the state comptroller and,\nin the case of a school district, by the commissioner of education. Any\nrecommendations that the board rejects shall be explained in writing to\nthe state comptroller and, in the case of recommendations made by the\ncommissioner of education, to the commissioner. The action or inaction\nof the state comptroller or the commissioner of education under this\nsection shall not be construed to affect the legal validity of any\nbudget of the municipality or school district nor to affect the powers\nor duties of the municipality or school district with respect to the\nlocal budget process, provided, however, that the municipality or school\ndistrict may not issue bonds for any object or purpose unless and until\nadjustments to its proposed budget consistent with any recommendations\nmade by the state comptroller and, in the case of a school district, by\nthe commissioner of education, are made, or any such recommendations\nthat are rejected have been explained in writing to the state\ncomptroller and, in the case of school districts, the commissioner of\neducation.\n e. beginning with the fiscal year during which the municipality or\nschool district is authorized to incur debt to finance the deficit, to\nand including the last fiscal year during which such debt or any debt\nincurred to refund such debt is outstanding, the chief executive officer\nor other officer or officers responsible for the preparation of the\ntentative budget, or in the case of a town, the preliminary budget, of\nthe municipality or school district, within thirty days after the final\nadoption of the budget for the next succeeding fiscal year, shall\nprepare a three-year financial plan covering the next succeeding fiscal\nyear and the two fiscal years thereafter. The financial plan shall, at a\nminimum, contain projected employment levels, projected annual\nexpenditures for personal service, fringe benefits, non-personal\nservices and debt service; appropriate reserve fund amounts; estimated\nannual revenues including projection of property tax rates, the value of\nthe taxable real property and resulting tax levy, annual growth in sales\ntax and non-property tax revenues; and the proposed use of one-time\nrevenue sources. Copies of the financial plan shall be provided to the\nchief executive and chief fiscal officers of the municipality or school\ndistrict, the state director of the budget, the state comptroller, the\nchair of the assembly ways and means committee and the chair of the\nsenate finance committee. This financial plan requirement shall not\napply to the extent a municipality or school district is subject to a\ndifferent multi-year financial plan requirement under state law.\n f. beginning with the fiscal year during which the municipality or\nschool district is authorized to incur debt to finance the deficit, to\nand including the last fiscal year during which such debt or any debt\nincurred to refund such debt is outstanding, the chief fiscal officer of\nthe municipality or school district shall notify the state comptroller\nat least fifteen days prior to the issuance of any bonds or notes or\nentering to any installment purchase contract and the state comptroller\nmay review and make recommendations regarding the affordability to the\nmunicipality or school district of any such proposed issuance or\ncontract.\n g. to facilitate the marketing of bonds authorized pursuant to law to\nbe issued to fund a deficit, the municipality or school district may,\nnotwithstanding any limitation on the private sales of bonds provided by\nlaw and subject to the approval of the state comptroller of the terms\nand conditions of such sales:\n 1. arrange for the underwriting of such bonds at private sale through\nnegotiated fees or by sale of such bonds to an underwriter at a price\nless than the sum of par value of, and the accrued interest on, such\nobligations; or\n 2. arrange for the private sale of such bonds through negotiated\nagreement, with compensation for such sales to be provided by negotiated\nagreement and/or negotiated fee, if required. The cost of such\nunderwriting or private placement shall be deemed a preliminary cost for\npurposes of section 11.00 of this title.\n h. the financing of a deficit, when authorized by a special or general\nlaw as hereinbefore described, is hereby declared to be an object or\npurpose of the municipality or school district for which indebtedness\nmay be incurred, the period of probable usefulness of which is\ndetermined to be ten years, computed from the date of such bonds or the\ndate of the first bond anticipation note issued in anticipation of the\nsale of such bonds, whichever is earlier.\n i. except as provided in this section or in the general or special law\nauthorizing the incurrence of debt to finance the deficit, all\nproceedings in connection with the issuance of such debt shall be had\nand taken in accordance with the provisions of this chapter, provided,\nhowever, that any resolution or resolutions authorizing the issuance of\nsuch bonds shall not be subject to either a mandatory or permissive\nreferendum. To the extent the provisions of this section are\ninconsistent with any general, special or local law concerning budget\nprocedures, this section shall apply and any budget schedule set forth\nin any such law shall be modified to conform with this section.\n