NY State Senate Bill 2023-S3563

Senate Bill S3563

2023-2024 Legislative Session

Relates to enacting a balanced budget requirement and creates the New York state governmental accounting review board

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Current Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to finance
Feb 01, 2023	referred to finance

co-Sponsors

2023-S3563 (ACTIVE) - Details

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 Other Legislative Sessions:: 2009-2010: S7284
2011-2012: S414
2013-2014: S3420
2015-2016: S2662
2017-2018: S5017
2019-2020: S3980
2021-2022: S1438

2023-S3563 (ACTIVE) - Summary

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

2023-S3563 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S3563

SPONSOR: KRUEGER
 
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
legislative 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 quali-
fications 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 effect on April 1, 2024.
 
JUSTIFICATION:

New York State has long maintained the impression of having a very flex-
ible 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 repeat-
edly 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. .

 
LEGISLATIVE HISTORY:

2021-2022- S.1438/A.6635 - died in Finance

2019-2020- S.2980/A.7338 - died in Finance

2017-2018- S.5017 No Same As - died in Finance

2015-2016- S.2662-A No Same As - died in Finance

2012-2014- S.3420 - No Same As - died in Finance

2011-2012- S.414/A.3794-A Morelle -committee consideration/discharged to
Rules

2010-2011  S.7284/A.10637 Morelle - died in Finance

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately, provided that if this act shall
take effect after April 1, 2024, it shall be deemed to have been in
effect April 1, 2024.

2023-S3563 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3563
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             February 1, 2023
                                ___________
 
 Introduced  by Sens. KRUEGER, GOUNARDES, SERRANO, STAVISKY -- read twice
   and ordered printed, and when printed to be committed to the Committee
   on Finance
 
 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.
   §  35.  DEFINITIONS.  AS USED IN THIS ARTICLE, THE FOLLOWING WORDS AND
 TERMS SHALL HAVE THE FOLLOWING MEANINGS  UNLESS  THE  CONTEXT  OTHERWISE
 REQUIRES.
   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
 INSTITUTE  OF  CERTIFIED  PUBLIC ACCOUNTANTS FOR FEDERAL REPORTING ENTI-
 TIES.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD05550-01-3
 S. 3563                             2

 
   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.
   § 36. DEVELOPMENT OF THE EXECUTIVE BUDGET SUBMISSION AND ENACTED BUDG-
 ET. 1. FOR FISCAL YEARS BEGINNING ON AND AFTER APRIL FIRST, TWO THOUSAND
 TWENTY-FOUR,  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.
   § 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.
   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
 S. 3563                             3
 
 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.
   § 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.
   § 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].
   §  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-
 ALLY ACCEPTED ACCOUNTING PRINCIPLES AS DEFINED IN ARTICLE THREE-A OF THE
 STATE FINANCE LAW.
   §  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-
 S. 3563                             4
 
 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.
   § 6. This act shall take effect immediately, provided that if this act
 shall  take  effect after April 1, 2024, it shall be deemed to have been
 in effect on and after April 1, 2024.

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Senate Bill S3563

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Sponsored By

Liz Krueger