S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4484
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 2, 2017
                                ___________
 
 Introduced  by M. of A. MAGEE -- read once and referred to the Committee
   on Governmental Operations
 
 AN ACT to amend the state finance law, in relation to prompt payments to
   local governments of certain state aid associated with disaster relief
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 179-d of the state finance law, as added by chapter
 153 of the laws of 1984, is amended to read as follows:
   §  179-d. Legislative intent. Firms and organizations that do business
 with the state of New York expect and deserve to be paid in a prompt and
 timely manner.   Unjustified  delays  in  paying  vendors,  construction
 contractors,  and  providers  of  service  may discourage such firms and
 organizations from doing business with the state of  New  York  and  may
 ultimately  increase  the  costs  to  the state government of purchasing
 materials, equipment, and supplies; undertaking construction and  recon-
 struction  projects;  and  obtaining  a wide variety of professional and
 other specialized services including those that are provided to  persons
 in  need.  Consequently, this legislation sets standards for the payment
 of bills incurred by state agencies within specified periods of time and
 requires interest payments in situations where contract payments do  not
 conform  to these standards. Consistent with accepted business practices
 and with sound principles of fiscal management, it is the intent of this
 legislation to encourage state agencies in all three branches  of  state
 government  to make payments at least as expeditiously as they currently
 do and further to reduce  existing  payment  processing  times  whenever
 feasible,  while  at  the  same  time  permitting  the state agencies to
 perform proper and reasonable financial oversight activities designed to
 ensure that the state government  receives  the  quality  of  goods  and
 services  to  which  it  is entitled and to ensure that public funds are
 spent in a prudent and responsible manner.    ADDITIONALLY,  THE  PROMPT
 PAYMENT  OF  AMOUNTS DUE TO LOCAL GOVERNMENT UNITS ASSOCIATED WITH STORM
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD04905-01-7

 A. 4484                             2
 
 RELIEF AND RECOVERY IS VITAL TO THE CONTINUED ECONOMIC VIABILITY OF  THE
 STATE AS A WHOLE. STORM-RAVAGED COMMUNITIES MUST BE PROVIDED RELIEF IN A
 MANNER  THAT  ALLOWS FOR EXPEDITED REPAIR OF MUNICIPAL INFRASTRUCTURE SO
 THAT RESIDENTS OF SUCH COMMUNITIES CAN CONTINUE THEIR DAY-TO-DAY LIVES.
   § 2. Section 179-e of the state finance law is amended by adding a new
 subdivision 11 to read as follows:
   11. "UNIT OF LOCAL GOVERNMENT" MEANS COUNTIES, CITIES, TOWNS, VILLAGES
 AND SCHOOL DISTRICTS.
   §  3.  Subdivisions 1 and 2 of section 179-f of the state finance law,
 subdivision 1 as amended by chapter 332 of the laws of 1989 and subdivi-
 sion 2 as amended by chapter 548 of the laws of  2015,  are  amended  to
 read as follows:
   1.  Each  state  agency which is required to make a payment from state
 funds pursuant to a contract OR PURSUANT TO A STATE OR FEDERAL STATUTORY
 OR REGULATORY OBLIGATION TO MAKE A PAYMENT TO A UNIT OF LOCAL GOVERNMENT
 WHERE SUCH PAYMENT IS MEANT TO ASSIST SUCH UNIT  WITH  RECOVERY  FROM  A
 NATURAL  DISASTER and which does not make such [contract] payment by the
 required payment date shall make an interest payment to  the  contractor
 OR  UNIT  OF  LOCAL  GOVERNMENT  in  accordance with this article on the
 amount of the [contract] payment which is due, unless  failure  to  make
 such  [contract]  payment  is the result of a lien, attachment, or other
 legal process against the money due said contractor  OR  UNIT  OF  LOCAL
 GOVERNMENT,  or unless the amount of the interest payment as computed in
 accordance with the provisions of section one hundred seventy-nine-g  of
 this article is less than ten dollars. A pro rata share of such interest
 shall be paid by the contractor or subcontractor, as the case may be, to
 subcontractors  and  materialmen in a proportion equal to the percentage
 of their pro rata share of the contract payment. Such pro rata share  of
 interest  shall  be  due to such subcontractors and materialmen only for
 those payments which are not paid to such subcontractors and materialmen
 prior to the date upon which interest begins to accrue between the state
 agency and the contractor. Such pro rata  share  of  interest  shall  be
 computed  daily  until  such payments are made to the subcontractors and
 materialmen.
   2. The required payment date shall be thirty calendar days,  excluding
 legal holidays, or in the case of final payments on highway construction
 contracts  seventy-five  calendar  days, excluding legal holidays, after
 receipt of an invoice for the amount of the contract payment due; except
 when:
   (a) the state comptroller in the course of his audit  determines  that
 there  is  reasonable  cause to believe that payment may not properly be
 due, in whole or in part;
   (b) in accordance with specific statutory or  contractual  provisions,
 payment  must  be  preceded  by  an  inspection period or by an audit to
 determine the resources applied or used by a  contractor  in  fulfilling
 the terms of the contract;
   (c) the necessary state government appropriation required to authorize
 payment has yet to be enacted;
   (d)  a proper invoice must be examined by the federal government prior
 to payment;
   (e) the goods or property have not been delivered or the services have
 not been rendered by the contractor in  compliance  with  the  terms  or
 conditions of the contract;
   (f)  the required payment date is modified in accordance with subdivi-
 sion three of this section; or

 A. 4484                             3
 
   (g) in the case of final payments on  highway  construction  contracts
 the  commissioner  of  transportation determines that the contractor has
 failed to properly submit the necessary documents and other  submissions
 prescribed  by  the  contract  specifications  and  requirements, by the
 provisions  of  subdivision eight of section thirty-eight of the highway
 law, and by all other applicable state and  federal  laws  in  order  to
 enable  the  department  of  transportation to process the final payment
 properly and expeditiously.
   Any time taken to satisfy or rectify any of the  types  of  conditions
 described in paragraphs (a) through (e) or (g) of this subdivision shall
 extend  the  required  payment  date  by  an equal period of time.   FOR
 PURPOSES OF A PAYMENT TO A UNIT OF LOCAL GOVERNMENT WHERE  SUCH  PAYMENT
 IS  MEANT TO ASSIST SUCH UNIT WITH RECOVERY FROM A NATURAL DISASTER, THE
 REQUIRED PAYMENT DATE SHALL BE NO LATER THAN REQUIRED BY LAW.
   § 4. Subdivision 2 of section 179-f  of  the  state  finance  law,  as
 amended  by  chapter  36  of  the  laws  of  2016, is amended to read as
 follows:
   2. The required payment date shall be thirty calendar days,  excluding
 legal  holidays,  provided,  however,  that  for  a  small  business the
 required payment date shall be fifteen calendar  days,  excluding  legal
 holidays,  [absent  a showing by the contracting agency of circumstances
 beyond its control, provided that the small business submits its invoice
 electronically, in conformance with the policies and procedures  of  the
 accounting and financial management system of state government and iden-
 tifies  that it is seeking expedited payment as a small business,] or in
 the case of final payments on highway  construction  contracts  seventy-
 five  calendar  days,  excluding  legal  holidays,  after  receipt of an
 invoice for the amount of the contract payment due; except when:
   (a) the state comptroller in the course of his or her audit determines
 that there is reasonable cause to believe that payment may not  properly
 be due, in whole or in part;
   (b)  in  accordance with specific statutory or contractual provisions,
 payment must be preceded by an inspection  period  or  by  an  audit  to
 determine  the  resources  applied or used by a contractor in fulfilling
 the terms of the contract;
   (c) the necessary state government appropriation required to authorize
 payment has yet to be enacted;
   (d) a proper invoice must be examined by the federal government  prior
 to payment;
   (e) the goods or property have not been delivered or the services have
 not  been  rendered  by  the  contractor in compliance with the terms or
 conditions of the contract;
   (f) the required payment date is modified in accordance with  subdivi-
 sion three of this section; or
   (g)  in  the  case of final payments on highway construction contracts
 the commissioner of transportation determines that  the  contractor  has
 failed  to properly submit the necessary documents and other submissions
 prescribed by the  contract  specifications  and  requirements,  by  the
 provisions  of  subdivision eight of section thirty-eight of the highway
 law, and by all other applicable state and  federal  laws  in  order  to
 enable  the  department  of  transportation to process the final payment
 properly and expeditiously.
   Any time taken to satisfy or rectify any of the  types  of  conditions
 described in paragraphs (a) through (e) or (g) of this subdivision shall
 extend  the  required payment date by an equal period of time, provided,
 however, that for small businesses, the required payment date  shall  be

 A. 4484                             4
 
 fifteen  calendar  days, excluding legal holidays, after such conditions
 have been satisfied or rectified, and provided further that all  reason-
 able  and  practicable efforts shall be taken to satisfy or rectify such
 conditions  as soon as possible.  FOR PURPOSES OF A PAYMENT TO A UNIT OF
 LOCAL GOVERNMENT WHERE SUCH PAYMENT IS MEANT TO ASSIST  SUCH  UNIT  WITH
 RECOVERY  FROM A NATURAL DISASTER, THE REQUIRED PAYMENT DATE SHALL BE NO
 LATER THAN REQUIRED BY LAW.
   § 5. Section 179-g of the state finance law, as amended by chapter  61
 of the laws of 1989, is amended to read as follows:
   § 179-g. Computation of interest payment. Interest payments on amounts
 due  to a contractor, OR UNIT OF LOCAL GOVERNMENT pursuant to this arti-
 cle shall be paid to the contractor, OR UNIT OF LOCAL GOVERNMENT for the
 period beginning on the day after the required payment date  and  ending
 on  the payment date for those payments required according to this arti-
 cle and shall be paid at the rate of interest in effect on the date when
 the interest payment is made. Notwithstanding any other provision of law
 to the contrary, interest shall be computed at the  rate  equal  to  the
 overpayment  rate set by the commissioner of taxation and finance pursu-
 ant to subsection (e) of section one thousand ninety-six of the tax law.
   § 6. Section 179-h of the state finance law, as amended by chapter 153
 of the laws of 1984, is amended to read as follows:
   §  179-h.  Determination  of  appropriations  against  which  interest
 payments are to be charged. Except in situations when federal law or the
 provisions of section one hundred seventy-nine-o of this article require
 otherwise,  an  interest  payment required by this article shall be paid
 from the same appropriation  as  that  from  which  the  related  proper
 invoice, OR NATURAL DISASTER RELIEF ASSISTANCE is paid; provided, howev-
 er,  (1)  that the interest payment shall not reduce the amount of money
 that otherwise will be payable to  the  contractor,  OR  UNIT  OF  LOCAL
 GOVERNMENT under the terms of the relevant contract, OR NATURAL DISASTER
 RELIEF  ASSISTANCE RESPECTIVELY and, FOR PURPOSES OF AN INTEREST PAYMENT
 OWED TO A CONTRACTOR (2) that if the  obligation  to  make  an  interest
 payment  is incurred in whole or in part because it takes the department
 of audit and control more than  eight  calendar  days,  excluding  legal
 holidays,  from  the date it receives an approvable voucher from another
 state agency to process a contract payment,  then  the  portion  of  the
 total  interest payment that is attributable to delays by the department
 of audit and control shall be paid from  funds  made  available  to  the
 department  of audit and control. Notwithstanding any other provision of
 law to the contrary, if the amount of  money  available  from  any  such
 appropriation  to  the state agency which received the proper invoice is
 insufficient to pay the interest and if for any reason it is not  feasi-
 ble  for  the  director of the budget to exercise the transfer or inter-
 change authority established by section  fifty-one  or  ninety-three  of
 this  chapter,  the  director  of  the budget may issue a certificate or
 certificates transferring or interchanging within a fund such amount  as
 is  needed  to  pay  the interest to said appropriation within such fund
 from the unspent balance of any appropriation that is available  to  the
 same  state  agency.  In  exercising  the latter transfer or interchange
 authority, the director of the  budget  shall  transfer  or  interchange
 amounts  that  are  not  needed to accomplish the purposes for which the
 appropriation was made, except, however, the director of the budget may,
 to the extent he deems it practicable, transfer or  interchange  amounts
 from  appropriations  that otherwise would be available for the adminis-
 tration and operations of the state agency which incurred  the  interest
 payment.  Any such certificate or certificates issued by the director of

 A. 4484                             5
 
 the budget shall be sent to the state comptroller and  copies  shall  be
 filed with the chairman of the senate finance committee and the chairman
 of the assembly ways and means committee.
   §  7.  Section 179-k of the state finance law, as added by chapter 153
 of the laws of 1984, is amended to read as follows:
   § 179-k. Acceptance of payment. The acceptance of payment, in whole or
 in part, by a contractor, OR UNIT  OF  LOCAL  GOVERNMENT  shall  not  be
 deemed  to  constitute  a  waiver  of  interest  otherwise due under the
 provisions of this article nor to supersede the  provisions  of  section
 one hundred forty-five of this chapter.
   § 8. Subdivision 1 of section 179-m of the state finance law, as added
 by  chapter  153  of the laws of 1984, paragraph d as amended by chapter
 618 of the laws of 1994, is amended to read as follows:
   1. The state comptroller shall:
   a. Promulgate such rules and regulations as may be necessary to  carry
 out the comptroller's responsibilities under this article.
   b.  Develop  and  implement  a procedure for calculating the amount of
 interest, if any, due to any contractor, OR  UNIT  OF  LOCAL  GOVERNMENT
 pursuant  to  the  provisions of this article. [Such] FOR PURPOSES OF AN
 INTEREST PAYMENT OWED TO A  CONTRACTOR,  SUCH  procedure  shall  include
 provisions  for  calculating  (i)  the amount of time, in calendar days,
 between the date of receipt of a proper invoice by the state agency  and
 the date on which an approvable voucher was delivered to the state comp-
 troller; (ii) the amount of time between the date on which an approvable
 voucher  was  delivered  to  the state comptroller and the payment date;
 (iii) the amount of interest, if any, chargeable  to  the  state  agency
 involved  pursuant  to this article; and (iv) the amount of interest, if
 any, chargeable to the department of audit and control pursuant to  this
 article.
   c. [Develop] FOR PURPOSES OF AN INTEREST PAYMENT OWED TO A CONTRACTOR,
 DEVELOP  and  implement a procedure for paying such interest in not more
 than seven days from the payment date on those proper invoices for which
 interest is due and for which the director of the budget does not  issue
 a certificate or certificates increasing, transferring, or interchanging
 funds so that an interest payment can be made [pusuant] PURSUANT to this
 article.    The comptroller shall also develop and implement a procedure
 for paying such interest in not more than fourteen days from the payment
 date on those proper invoices for which interest is due  and  for  which
 the  director  of  the  budget  does issue a certificate or certificates
 increasing, transferring, or interchanging funds  so  that  an  interest
 payment can be made pursuant to this article.
   d. [Develop] FOR PURPOSES OF AN INTEREST PAYMENT OWED TO A CONTRACTOR,
 DEVELOP and implement a procedure by which every state agency will noti-
 fy  contractors  promptly  and  directly  whenever the state comptroller
 rejects a voucher and returns it to the state agency due to an error  or
 omission in the voucher by the contractor.
   §  9.  Section 179-p of the state finance law, as added by chapter 153
 of the laws of 1984, is amended to read as follows:
   § 179-p. Inapplicability of the provisions.  The  provisions  of  this
 article shall not apply to payments due and owing by the state:
   1. under the eminent domain procedure law;
   2.  as  interest  allowed on judgments rendered by a court pursuant to
 any provision of law other than those provisions contained in this arti-
 cle;
   3. to the federal government; to  any  state  agency  or  its  related
 instrumentalities;  to  any  duly  constituted  unit of local government

 A. 4484                             6

 including, but not limited to, counties, cities, towns, villages, school
 districts, special districts, or any of their related  instrumentalities
 EXCEPT IN THE CASE IN WHICH STATE PAYMENTS ARE MADE FOR EXPENSES RELATED
 TO  DAMAGE RESULTING FROM A NATURAL DISASTER; to any public authority or
 public benefit corporation; or  to  employees  of  state  agencies  when
 acting in, or incidental to, their public employment capacity;
   4. to contractors of third party payment agreements including, but not
 limited  to, the fiscal agent or fiscal intermediary designated pursuant
 to section three hundred sixty-seven-b of the social services law;
   5. to entities which receive  state  funds  through  any  intermediary
 organization other than a state agency; or
   6.  in situations where the comptroller exercises a legally authorized
 set-off against all or part of the payment due the contractor.
   § 10. This act shall take effect immediately; provided  however,  that
 section  four  of this act shall take effect on the same date and in the
 same manner as section 2 of chapter 568 of the laws of 2015, as amended,
 takes effect.