NY State Senate Bill 2009-S7839

Senate Bill S7839

2009-2010 Legislative Session

Relates to a variation in generally accepted accounting principles for certain capital costs

download bill text pdf

Archive: Last Bill Status - In Senate Committee Rules 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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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 15, 2010	reported and committed to rules
May 14, 2010	referred to finance

Votes

- Jun 15, 2010 - Finance Committee Vote
  S7839
  
  21
  
  Aye
  
  0
  
  Nay
  
  12
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Finance Committee Vote: Jun 15, 2010
      
      aye (21)
      
      Breslin
      
      Diaz
      
      Dilan
      
      Duane
      
      Espada
      
      Hannon
      
      Klein
      
      Krueger
      
      Kruger
      
      Montgomery
      
      Oppenheimer
      
      Parker
      
      Peralta
      
      Perkins
      
      Seward
      
      Stachowski
      
      Stavisky
      
      Stewart-Cousins
      
      Thompson
      
      Valesky
      
      Volker
      
      aye wr (12)
      
      DeFrancisco
      
      Farley
      
      Johnson
      
      LaValle
      
      Larkin
      
      Leibell
      
      Marcellino
      
      Maziarz
      
      Nozzolio
      
      Padavan
      
      Robach
      
      Saland

2009-S7839 (ACTIVE) - Details

Current Committee:: Senate Rules
Law Section:: New York State Financial Emergency Act for the City of NY
Laws Affected:: Amd §2, Chap 868 of 1975

2009-S7839 (ACTIVE) - Summary

Relates to a variation in generally accepted accounting principles by classifying as capital costs pollution remediation costs which are now accounted as expense items.

2009-S7839 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S7839

 TITLE OF BILL :  An act to amend the New York state financial
emergency act for the city of New York, in relation to a variation
from generally accepted accounting principles

 SUMMARY OF PROVISIONS :  This bill would amend paragraph a of
subdivision 1 of section 8 of the New York State Financial Emergency
Act for the City of New York (§2 of Chapter 868 of the Laws of 1975)
("FEA") to provide that, notwithstanding the provisions of such
paragraph and of any general or special state law or local law,
including but not limited to the New York City Charter, all costs that
would be capital costs in accordance with generally accepted
accounting principles but for the application of Government Accounting
Standards Statement number 49 shall continue to be capital costs for
purposes of any general or special state law or local law, including
but not limited to the New York City Charter.

 REASONS FOR SUPPORT :  This bill addresses the financing of pollution
remediation costs.  Currently, such costs are part of the City's
capital budget and are financed substantially through the proceeds of
bonds. In 2006, however, the Governmental Accounting Standards Board
("GASB") issued its Statement No. 49 ("GASB 49"), which requires that
certain pollution remediation costs be accounted for as expense items.
This change to Generally Accepted Accounting Principles ("GAAP"),
introduced for financial reporting purposes, applied, with respect to

the City, on July 1, 2008. On April 30, 2008, the New York State
Financial Control Board ("FCB") authorized the City, pursuant to
subdivision 2-a of Section 8 of the Financial Emergency Act ("FEA"),
to continue to include in its capital budget, and finance with the
proceeds of bonds, pollution remediation costs associated with any
capital project that has been authorized prior to July 1, 2010. Under
the current provisions of the FEA in conjunction with the FCB's
determination, pollution remediation costs associated with capital
projects authorized after July 1, 2010 could no longer be included in
the City's capital budget or financed through the issuance of bonds.

Pollution remediation costs are a significant component of many
critical City capital projects. Moreover, the inclusion of such costs
in the City's capital budget appropriately reflects their contribution
to the usefulness and functionality of the City's underlying assets
over time. The removal of pollution remediation from the capital to
the expense budget would result in significant reductions in the funds
available for such projects, including lead paint and asbestos
remediation and cleanup of brownfields sites to prepare them for
productive use, This would certainly be at odds with the public's
health and safety and with the public policy of the City and the
State. In light of these considerations, the FCB's power under
existing law (subdivision 2-a of Section 8 of the FEA) to postpone the
implementation of changes to GAAP for a limited period is not a
long-term solution to the difficulties that would be caused by the
application of GASB 49 to the City's budget.

In fiscal year 2009, when GASB 49 was implemented by the City for
financial reporting purposes, the City reported pollution remediation
expenditures in the amount of $236 million. The City estimates that
pollution remediation costs associated with City capital projects that
could no longer be financed with bonds under GASB 49 would total
approximately $200 million per year starting in fiscal year 2011.
Shifting costs of this magnitude from the capital to the expense
budget would substantially burden the City's finances, which are
already suffering from the effects of the current recession.

Accordingly, the Mayor urges the earliest possible favorable
consideration of this proposal by the Legislature.

 EFFECTIVE DATE :  Immediately.

2009-S7839 (ACTIVE) - Bill Text download pdf

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

                                  7839

                            I N  S E N A T E

                              May 14, 2010
                               ___________

Introduced  by  Sen.  KRUGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Finance

AN ACT to amend the New York state financial emergency act for the  city
  of  New  York,  in  relation  to  a  variation from generally accepted
  accounting principles

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

  Section  1.  Paragraph a of subdivision 1 of section 8 of section 2 of
chapter 868 of the laws of 1975, constituting the New York state  finan-
cial  emergency  act for the city of New York, as amended by chapter 777
of the laws of 1978, is amended to read as follows:
  a. For its fiscal years ending June thirtieth, nineteen hundred seven-
ty-nine through June thirtieth, nineteen hundred eighty-one, the  city's
budget  covering  all  expenditures  other  than  capital items shall be
prepared and balanced so that the results thereof would not show a defi-
cit when reported in accordance with the accounting principles set forth
in the state  comptroller's  uniform  system  of  accounts  for  munici-
palities,  as  the same may be modified by the comptroller, in consulta-
tion with the city comptroller, for application to the city; subject  to
the provision of subdivision four of section three thousand thirty-eight
of  the public authorities law with respect to contributions by the city
or other public employer to any retirement system or  pension  fund  and
subject to the provision of paragraph (c) of subdivision five of section
three  thousand  thirty-eight of the public authorities law with respect
to expense items included in the capital budget of  the  city.  For  the
fiscal  year ending June thirtieth, nineteen hundred eighty-two, and for
each fiscal year thereafter, the city's budget covering all expenditures
other than capital items shall be prepared  and  balanced  so  that  the
results  thereof  would  not  show a deficit when reported in accordance
with generally accepted accounting principles and  [that]  WOULD  permit
comparison  of  the  budget  with the report of actual financial results
prepared in accordance with generally  accepted  accounting  principles.
With  respect  to  financial  plans that include the fiscal years ending
June thirtieth, nineteen hundred seventy-nine  through  June  thirtieth,

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

                                                           LBD17360-01-0

S. 7839                             2

nineteen hundred eighty-one, the city's budget covering all expenditures
other  than capital items shall be prepared in accordance with generally
accepted accounting principles and there shall be  substantial  progress
in  each  such  fiscal year towards achieving a city budget covering all
expenditures other than capital items the results  of  which  would  not
show  a  deficit  when  reported  in  accordance with generally accepted
accounting principles. The city shall eliminate expense items  from  its
capital budget not later than the commencement of the fiscal year ending
June  thirtieth, nineteen hundred eighty-two. For the fiscal year ending
June thirtieth, nineteen hundred eighty-nine, and for each  fiscal  year
thereafter,  the  budgets  covering  all expenditures other than capital
items of each  of  the  covered  organizations  shall  be  prepared  and
balanced  so  that  the  results  thereof  would not show a deficit when
reported in accordance with generally  accepted  accounting  principles;
and  for  each  fiscal  year  prior  thereto, there shall be substantial
progress towards such goal.    NOTWITHSTANDING  THE  FOREGOING  AND  THE
PROVISIONS  OF  ANY  GENERAL  OR  SPECIAL  STATE LAW OR LOCAL LAW TO THE
CONTRARY, INCLUDING BUT NOT LIMITED TO THE NEW YORK  CITY  CHARTER,  ALL
COSTS  THAT WOULD BE CAPITAL COSTS IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES, BUT FOR THE APPLICATION OF GOVERNMENTAL  ACCOUNT-
ING  STANDARDS  BOARD STATEMENT NUMBER FORTY-NINE, SHALL BE DEEMED TO BE
CAPITAL COSTS FOR PURPOSES OF THIS CHAPTER AND ANY  OTHER  PROVISION  OF
STATE OR LOCAL LAW, INCLUDING BUT NOT LIMITED TO THE NEW YORK CITY CHAR-
TER, RELEVANT TO THE TREATMENT OF SUCH COSTS.
  S 2. This act shall take effect immediately.

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