senate Bill S3420A

Enacts a balanced budget requirement and creates the New York state governmental accounting review board

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 01 / Feb / 2013
    • REFERRED TO FINANCE
  • 08 / Jan / 2014
    • REFERRED TO FINANCE
  • 24 / Jan / 2014
    • AMEND AND RECOMMIT TO FINANCE
  • 24 / Jan / 2014
    • PRINT NUMBER 3420A

Summary

Enacts a balanced budget requirement and creates the New York state governmental accounting review board.

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Bill Details

Versions:
S3420
S3420A
Legislative Cycle:
2013-2014
Current Committee:
Senate Finance
Law Section:
State Finance Law
Laws Affected:
Add Art 3-A §§35 - 37, amd §22, St Fin L; amd §54, Leg L
Versions Introduced in Previous Legislative Cycles:
2011-2012: S414A
2009-2010: S7284

Sponsor Memo

BILL NUMBER:S3420A

TITLE OF BILL: An act to amend the state finance law and the
legislative law, in relation to enacting a balanced budget requirement
and creating the New York state governmental accounting review board

PURPOSE OR GENERAL IDEA OF BILL:

To require the state to prepare its budget in accordance with
generally accepted accounting principles.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends the state finance law by adding a new article 3-A.

Section 35 provides the definitions for the terms used in the article.

Section 36 requires that the executive budget submission and the
enacted :egisiative budget must be balanced in accordance with
generally accented accounting principles. It also provides for an
appeal process when the executive and/or the legislature request
relief from accounting standards.

Section 37 establishes a new governmental accounting review board.

Section 37 subdivision 1 establishes the administration of the board.

Subdivision 2 established the functions of the board.

Subdivision 3 & 4 established the compositions of the board and
qualifications of the members.

Subdivision 5 establishes the compensation of the beard members.

Subdivision 6 states that other state agencies must cooperate with the
board and provide assistance as needed.

Subdivision 7 states that the chair of the board may hire an executive
director.

Section 2 amends state finance law by adding a section that requires
that all expenditures and revenues submitted by executive in his/her
budget submission must be estimated and balanced in accordance with
generally accepted accounting principles.

Section 3 amends the legislative law requiring the legislature to pass
a balanced budget.

Section 4 amends the legislative law by adding a section that that all
expenditures and revenues submitted by the legislature in the enacted
budget must be estimated and balanced in accordance with generally
accepted accounting principles.

Section 5 provides for a separability clause.

Section 6 states that the bill takes affect on April 1, 2014.


JUSTIFICATION:

New York State has long maintained the impression of having a very
flexible budget process by operating on a cash basis. Under this
system, bills are recorded as paid when funds are spent, not when a
liability is incurred. This non-accrual basis is what allows lawmakers
to roll expenses from the current year to the next and claim the
current budget is balanced. It also allows lawmakers to use the next
fiscal year's revenues to pay the current year's expenses. The result
is less a matter of financial planning than of timing- related
gimmickry.

The State's cash accounting practices have allowed lawmakers to
repeatedly defer payments to creditors so long as cash can be found
somewhere. However, as New York's recent string of fiscal crises is
making evident, the threat of the State running out of cash is very
real. The same holds true for the threat of default. But under the
Constitution, default is not an option for New York.

To address the reality of New York's fiscal position, more
comprehensive and accrual-based accounting standards are needed.
While the standards outlined by the Generally Accepted Accounting
Principles (GAAP) would restrict the flexibility afforded by cash
budgeting, the tradeoff is a different kind of flexibility. It would
be a flexibility that affords lawmakers a clearer picture of the
State's financial situation and the time to make adjustments to it.

PRIOR LEGISLATIVE HISTORY:

2010: S.7284/A.10637

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect immediately , provided that if this act
shall take effect after April 1, 2015, it shall be deemed to have been
in effect April 1, 2015.

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

                                 3420--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            February 1, 2013
                               ___________

Introduced  by  Sens. KRUEGER, MONTGOMERY, SERRANO, STAVISKY, VALESKY --
  read twice and ordered printed, and when printed to  be  committed  to
  the Committee on Finance -- recommitted to the Committee on Finance in
  accordance  with  Senate  Rule 6, sec. 8 -- committee discharged, bill
  amended, ordered reprinted as amended and recommitted to said  commit-
  tee

AN  ACT  to  amend  the  state  finance  law and the legislative law, in
  relation to enacting a balanced budget requirement  and  creating  the
  New York state governmental accounting review board

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The state finance law is amended by adding  a  new  article
3-A to read as follows:
                              ARTICLE III-A
                    BUDGETING ACCORDING TO GENERALLY
                     ACCEPTED ACCOUNTING PRINCIPLES
SECTION 35. DEFINITIONS.
        36. DEVELOPMENT  OF  THE EXECUTIVE BUDGET SUBMISSION AND ENACTED
              BUDGET.
        37. NEW YORK STATE GOVERNMENTAL ACCOUNTING REVIEW BOARD.
  S 35. DEFINITIONS. AS USED IN THIS ARTICLE, THE  FOLLOWING  WORDS  AND
TERMS  SHALL  HAVE THE FOLLOWING MEANINGS UNLESS THE CONTEXT SHALL INDI-
CATE ANOTHER OR DIFFERENT MEANING OR INTENT.
  1. "BOARD" MEANS NEW YORK STATE GOVERNMENTAL ACCOUNTING  REVIEW  BOARD
PURSUANT TO SECTION THIRTY-SEVEN OF THIS ARTICLE.
  2.  "REVENUES"  MEAN  ALL  TAXES,  RENTS, FEES, CHARGES, PAYMENTS, ALL
PROCEEDS FROM BORROWINGS AND OTHER INCOME AND RECEIPTS PAID  OR  PAYABLE
TO OR FOR THE STATE'S TREASURY.
  3.  "GENERALLY  ACCEPTED  ACCOUNTING  PRINCIPLES"  MEANS  THE  SET  OF
ACCOUNTING PRINCIPLES FOR FINANCIAL REPORTING ESTABLISHED BY THE  FINAN-
CIAL  ACCOUNTING  STANDARDS  ADVISORY BOARD AND GOVERNED BY THE AMERICAN

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01845-02-4

S. 3420--A                          2

INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS FOR  FEDERAL  REPORTING  ENTI-
TIES.
  4.  "EXECUTIVE  BUDGET SUBMISSION" MEANS THE DOCUMENT SUBMITTED BY THE
GOVERNOR TO THE LEGISLATURE PURSUANT TO SECTION TWO OF ARTICLE SEVEN  OF
THE STATE CONSTITUTION.
  5.  "ENACTED  BUDGET"  MEANS THE DOCUMENT PASSED BY BOTH HOUSES OF THE
LEGISLATURE PURSUANT TO SECTION FOUR  OF  ARTICLE  SEVEN  OF  THE  STATE
CONSTITUTION.
  S 36. DEVELOPMENT OF THE EXECUTIVE BUDGET SUBMISSION AND ENACTED BUDG-
ET.    1. FOR FISCAL YEARS BEGINNING ON AND AFTER APRIL FIRST, TWO THOU-
SAND FIFTEEN, THE EXECUTIVE BUDGET SUBMISSION  AND  THE  ENACTED  BUDGET
COVERING ALL EXPENDITURES OTHER THAN CAPITAL ITEMS SHALL BE PREPARED AND
BALANCED  SO  THE RESULTS THEREOF WOULD NOT SHOW A DEFICIT WHEN REPORTED
IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
  2. THE GOVERNOR, THE LEGISLATURE AND THE NEW YORK  STATE  GOVERNMENTAL
ACCOUNTING  REVIEW  BOARD  SHALL  CONFER  CONCERNING  THE REQUIREMENT TO
BALANCE THE BUDGET, AS WELL AS THE PROJECTED EFFECT ON  THE  BUDGETS  BY
ANY  CHANGE IN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR CHANGE IN THE
APPLICATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES  TO  THE  STATE.
THE  GOVERNOR  AND/OR  THE  LEGISLATURE MAY PETITION THE BOARD TO EXEMPT
EITHER THE EXECUTIVE BUDGET SUBMISSION OR THE ENACTED  BUDGET  FROM  THE
PROVISIONS OF THIS SECTION.
  S 37. NEW YORK STATE GOVERNMENTAL ACCOUNTING REVIEW BOARD. 1. THERE IS
HEREBY  CREATED THE NEW YORK STATE GOVERNMENTAL ACCOUNTING REVIEW BOARD.
THE BOARD SHALL BE A GOVERNMENTAL AGENCY AND INSTRUMENTALITY AS  IS  SET
FORTH IN THIS ARTICLE.
  2. THE BOARD SHALL HAVE THE FOLLOWING FUNCTIONS:
  A.  TO  CONFER  WITH  THE  GOVERNOR AND THE LEGISLATURE CONCERNING THE
REQUIREMENT TO BALANCE THE BUDGET AS PROVIDED IN SECTION  THIRTY-SIX  OF
THIS  ARTICLE,  THE  PROJECTED  EFFECT  ON  THE BUDGETS BY ANY CHANGE IN
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AND CHANGE IN THE  APPLICATION
OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO THE STATE BUDGET;
  B. TO HEAR PETITIONS FROM THE GOVERNOR OR LEGISLATURE WITH RELATION TO
MODIFYING  OR  EXEMPTING  THE EXECUTIVE BUDGET SUBMISSION OR THE ENACTED
BUDGET FROM THE BALANCED BUDGET REQUIREMENT  OF  SECTION  THIRTY-SIX  OF
THIS  ARTICLE  OR  FROM  THE REQUIREMENTS OF ANY NEW OR EXISTING GOVERN-
MENTAL ACCOUNTING STANDARDS, BOARD STATEMENTS, INTERPRETATIONS,  TECHNI-
CAL BULLETINS, AND CONCEPT STATEMENTS; AND
  C.  TO  DETERMINE  WHETHER IMMEDIATE COMPLIANCE WITH THE PROVISIONS OF
SECTION THIRTY-SIX OF THIS ARTICLE WILL HAVE A MATERIAL EFFECT ON  STATE
BUDGETS  OVER A TIME PERIOD INSUFFICIENT TO ACCOMMODATE THE EFFECT WITH-
OUT A SUBSTANTIAL ADVERSE IMPACT ON THE DELIVERY OF ESSENTIAL  SERVICES,
AND, UPON SUCH DETERMINATION, TO AUTHORIZE AND APPROVE A METHOD OF PHAS-
ING THE REQUIREMENTS OF THIS SECTION INTO SUCH BUDGETS OVER SUCH REASON-
ABLY EXPEDITIOUS TIME PERIOD AS THE BOARD DEEMS APPROPRIATE.
  3.  THE  BOARD  SHALL  BE  COMPRISED OF FIVE MEMBERS, ONE OF WHOM WILL
SERVE AS CHAIR; WHO ARE NOMINATED BY THE  GOVERNOR  AND  APPOINTED  WITH
ADVICE  AND CONSENT OF THE SENATE. ALL OF THE APPOINTED MEMBERS SHALL BE
RESIDENTS OF THE STATE. SUCH APPOINTED MEMBERS SHALL  SERVE  A  TERM  OF
FIVE YEARS.  ALL APPOINTED MEMBERS SHALL HAVE ACADEMIC OR BUSINESS EXPE-
RIENCE  IN  GOVERNMENTAL  ACCOUNTING  STANDARDS  AND  GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES. THE BOARD SHALL ACT BY A MAJORITY QUORUM VOTE  OF
THE  ENTIRE  BOARD. THE BOARD SHALL MAINTAIN A RECORD OF ITS PROCEEDINGS
IN SUCH FORM AS IT MAY DETERMINE, BUT SUCH RECORD SHALL INDICATE ATTEND-
ANCE AND ALL VOTES CAST BY EACH MEMBER.

S. 3420--A                          3

  4. NOTWITHSTANDING ANY INCONSISTENT PROVISIONS OF LAW, NO  OFFICER  OR
EMPLOYEE  OF  THE  STATE,  OR  POLITICAL  SUBDIVISION  OF THE STATE, ANY
GOVERNMENTAL ENTITY OPERATING ANY PUBLIC  SCHOOL  OR  COLLEGE  OR  OTHER
PUBLIC  AGENCY  OR INSTRUMENTALITY OR UNIT OF GOVERNMENT WHICH EXERCISES
GOVERNMENTAL  POWERS  UNDER  THE  LAWS  OF  THE STATE, SHALL FORFEIT HIS
OFFICE OR EMPLOYMENT BY REASON OF HIS ACCEPTANCE  OR  APPOINTMENT  AS  A
MEMBER,  REPRESENTATIVE,  OFFICER,  EMPLOYEE  OR  AGENT OF THE BOARD NOR
SHALL SERVICE AS SUCH MEMBER, OFFICER, EMPLOYEE OR AGENT OF THE BOARD BE
DEEMED INCOMPATIBLE OR IN CONFLICT WITH SUCH OFFICE OR EMPLOYMENT.
  5. THE MEMBERS OF THE BOARD SHALL SERVE WITHOUT  SALARY  OR  PER  DIEM
ALLOWANCE  BUT  SHALL BE ENTITLED TO REIMBURSEMENT FOR ACTUAL AND NECES-
SARY EXPENSES INCURRED IN THE PERFORMANCE OF OFFICIAL DUTIES UNDER  THIS
ACT,  PROVIDED HOWEVER THAT SUCH MEMBERS AND REPRESENTATIVES ARE NOT, AT
THE TIME SUCH EXPENSES ARE INCURRED, PUBLIC EMPLOYEES OTHERWISE ENTITLED
TO SUCH REIMBURSEMENT.
  6. ALL AGENCIES, AUTHORITIES, AND  INSTITUTIONS  OF  THE  STATE  SHALL
COOPERATE WITH AND PROVIDE SUCH ASSISTANCE TO THE BOARD AS THE BOARD MAY
REQUEST.
  7.  THE  CHAIR, IN CONSULTATION WITH THE BOARD, MAY HIRE OR APPOINT AN
EXECUTIVE DIRECTOR FOR THE BOARD IF DEEMED NECESSARY.
  S 2. Section 22 of the state finance law is amended by  adding  a  new
subdivision 17 to read as follows:
  17.  NOTWITHSTANDING  ANY  PROVISION  OF  LAW TO THE CONTRARY, BUDGETS
SUBMITTED PURSUANT TO THIS SECTION SHALL INCLUDE:
  (A) A DESCRIPTION OF ALL OF THE  EXPENDITURES  ESTIMATED  TO  BE  MADE
BEFORE  THE CLOSE OF THE CURRENT FISCAL YEAR AND ALL OF THE EXPENDITURES
PROPOSED TO BE MADE DURING THE ENSUING FISCAL YEAR, BOTH  IN  ACCORDANCE
WITH  GENERALLY  ACCEPTED  ACCOUNTING  PRINCIPLES  AS DEFINED IN ARTICLE
THREE-A OF THIS CHAPTER; AND
  (B) A DESCRIPTION OF ALL THE REVENUES ESTIMATED TO ACCRUE  BEFORE  THE
CLOSE  OF  THE  CURRENT  FISCAL YEAR AND DURING THE ENSUING FISCAL YEAR,
INCLUSIVE OF ANY REVENUES WHICH ARE EXPECTED TO RESULT FROM THE PROPOSED
LEGISLATION WHICH THE  GOVERNOR  DEEMS  NECESSARY  TO  PROVIDE  RECEIPTS
SUFFICIENT TO MEET PROPOSED DISBURSEMENTS, ALL IN ACCORDANCE WITH GENER-
ALLY  ACCEPTED  ACCOUNTING  PRINCIPLES  AS DEFINED IN ARTICLE THREE-A OF
THIS CHAPTER.
  S 3. Paragraph (a) of subdivision 2 of section 54 of  the  legislative
law,  as  added  by chapter 1 of the laws of 2007, is amended to read as
follows:
  (a) The legislature shall enact a budget for the upcoming fiscal  year
that it determines is balanced [in the general fund].
  S  4. Subdivision 2 of section 54 of the legislative law is amended by
adding a new paragraph (d) to read as follows:
  (D) NOTWITHSTANDING ANY PROVISION OF  LAW  TO  THE  CONTRARY,  BUDGETS
SUBMITTED PURSUANT TO THIS SECTION SHALL INCLUDE:
  (I)  ALL  OF THE EXPENDITURES ESTIMATED TO BE MADE BEFORE THE CLOSE OF
THE CURRENT FISCAL YEAR AND ALL OF THE EXPENDITURES PROPOSED TO BE  MADE
DURING  THE  ENSUING  FISCAL  YEAR,  BOTH  IN  ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AS DEFINED  IN  ARTICLE  THREE-A  OF  THE
STATE FINANCE LAW; AND
  (II)  A  DESCRIPTION OF ALL OF THE REVENUES ESTIMATED TO ACCRUE BEFORE
THE CLOSE OF THE CURRENT FISCAL YEAR AND DURING THE ENSUING FISCAL YEAR,
INCLUSIVE OF ANY REVENUES WHICH ARE EXPECTED TO RESULT FROM THE PROPOSED
LEGISLATION WHICH THE LEGISLATURE DEEMS NECESSARY  TO  PROVIDE  RECEIPTS
SUFFICIENT TO MEET PROPOSED DISBURSEMENTS, ALL IN ACCORDANCE WITH GENER-

S. 3420--A                          4

ALLY ACCEPTED ACCOUNTING PRINCIPLES AS DEFINED IN ARTICLE THREE-A OF THE
STATE FINANCE LAW.
  S  5. Separability clause. If any part or provision of this section or
the application thereof to any person is adjudged by a court  of  compe-
tent  jurisdiction  to  be  unconstitutional  or otherwise invalid, such
judgment shall not affect or impair any other part or provision  or  the
application  thereof  to any other person, but shall be confined to such
part or provision.
  S 6. This act shall take effect immediately, provided that if this act
shall take effect after April 1, 2015, it shall be deemed to  have  been
in effect on and after April 1, 2015.

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